The day after demanding Voyager Digital erase its claims that customers’ funds would get government protections, the U.S. Federal Deposit Insurance Corporation has issued a broader warning to bankers that they need to keep their crypto partners in line.
The agency, which maintains an insurance fund to pay back depositors if their banks fail, doesn’t extend that protection to failing cryptocurrency firms that use those banks, according to an FDIC letter to banks posted Friday.
“FDIC insurance does not protect a nonbank’s customers against the default, insolvency, or bankruptcy of any nonbank entity, including crypto custodians, exchanges, brokers, wallet providers or other entities that appear to mimic banks but are not,” the agency instructed.
The FDIC guidance added that if a bank’s crypto partner “makes misrepresentations about the nature and scope of deposit insurance,” there could be legal risks for that regulated lender.
‘Enforcement 40’ for 2020
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