FDIC Doesn’t Support Any Crypto Companies

In response to a string of questions from the Senate-FDIC, the organization that protects the U.S. financial system reaffirmed that crypto is not covered by its safeguards.

Sen. Bob Menendez, D-N.J., a senior member of the Senate Banking Committee, questioned Acting Federal Deposit Insurance Corp. Chair Martin Gruenberg about whether or not crypto companies or digital assets are covered by the FDIC insurance, which backs bank and credit union deposits in the event of theft or institutional failure in the United States.

“In fact at this time FDIC insurance does not cover cryptocurrency of any kind, is that correct?” asked Menendez. 

“That is correct,” Gruenberg, who was nominated as full chair by President Joe Biden on Monday, confirmed. 

 The collapse of FTX should be a “renewed call for Congress to take a serious look at crypto exchanges and lending platforms,” Menendez continued.

The discussion, which was held during a Senate Banking Committee hearing on financial regulation, referred to earlier remarks made by companies like FTX.US and Voyager Digital, which the FDIC had criticized for misrepresenting their insurance in their statements. Following this, both businesses sought bankruptcy protection, and clients are no longer able to access their money.

“The strength of the FDIC is the public’s confidence in our deposit insurance system. So if that confidence is put in question, it really puts the system at risk,” Gruenberg said.

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