Seeking Market Stability, Some Crypto Firms Implying Deposits Federally Insured

Source: American Banker

One of the latest casualties of the crypto market turmoil could portend a larger push by regulators to crack down on how industry players market themselves to consumers. 

Amid the carnage in the crypto market, some firms are offering an attractive prize: stability. 

Voyager Digital recently drew scrutiny from a regulator for suggesting to its customers that their USD deposits were insured by the Federal Deposit Insurance Corp. —  although it’s far from alone. 

Just on Wednesday, the president of the crypto exchange FTX.US, Brett Harrison, said on Twitter that the company is now offering direct deposits from employers into “individually FDIC-insured bank accounts in the users' names.” While there’s no indication that the FDIC is currently looking into that claim, it’s an example of the interest among crypto companies in tying their products to banks that have FDIC insurance.

Those representations of FDIC insurance — whether they end up getting the nod of approval from the agency or not — is an area of growing concern to policymakers, experts say. And with a new rule on the books, the FDIC is newly empowered to go after other companies the agency believes are misrepresenting how and to what degree their funds are protected.