WASHINGTON — The Federal Deposit Insurance Corp. issued a
FDIC said the company's promotional materials on its website and social media account falsely suggested FDIC insurance encompasses cryptocurrency, and further implied the agency's insurance would protect Unbanked, Inc.'s investors against potential losses. While the FDIC noted Unbanked has advertised it holds partner-banking relationships with two actual FDIC-insured banks, the agency strictly prohibits conflating such partnerships with deposit insurance coverage, particularly over digital assets, which the
"FDIC insurance does not cover cryptocurrency or digital assets," the agency wrote in a press release announcing the action. "In addition, the FDIC only insures deposits held in FDIC-insured financial institutions and only protects against losses caused by the failure of an FDIC-insured financial institution."
FDIC chair Martin Gruenberg has repeatedly said he will work to defend the reputation and credibility of its deposit insurance, something he says is threatened when non-banks misrepresent the nature of coverage. In an increasingly online banking ecosystem, a
While not a primary regulator for the crypto industry itself, the FDIC is once again asserting its regulatory dominance over an area where it has unquestionable authority: How firms may represent deposit insurance. The agency's ongoing diligence to ensure consumers clearly understand which products and companies are FDIC insured has largely defined FDIC's approach to crypto regulation in recent years.
The Federal Deposit Insurance Act empowers the agency to regulate which companies can claim to be FDIC insured, how companies use the agency's logo and name in advertising and which products companies may represent as FDIC insured. In short, companies are prohibited from employing the agency's likeness to profit off of the FDIC's long-cultivated reputation and trust.
In recent years, the FDIC has stepped-up its enforcement against such misleading representations by crypto non-banks. Last July, the agency sent a similar letter to the crypto exchange