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The US Federal Deposit Insurance Corporation (FDIC) is taking a look at claims by bankrupt crypto broker Voyager that its customer deposits held in an omnibus account at New York-based Metropolitan Commercial Bank were FDIC insured. The FDIC protects customers from losing their funds in the event of a bank collapse, insuring up to $250,000 per account. This insurance, however, usually only applies to an actual bank failure, not upon failure of the bank's client, i.e., Voyager's collapse wouldn't necessarily trigger an FDIC backstop.

The Federal Deposit Insurance Corp. (FDIC) is reportedly studying whether certain stablecoins might be eligible for its coverage. The agency is trying to analyze what so-called pass-through FDIC insurance might look like for the reserves that stablecoin issuers hold at banks. Such coverage would insure holders of the tokens against losses up to $250,000 if the bank holding the collateral were to fail. The FDIC is also looking at what regular, direct deposit insurance might look like for banks that want to issue stablecoins.

The US Federal Deposit Insurance Corporation (FDIC) put out a request for public feedback on depository institutions holding digital assets. The announcement calls for information on digital assets in payments, settlement, reserve holdings, custody and investing at member banks. The questions involved are notably open-ended, including: "Are there any unique aspects of digital asset activities that the FDIC should take into account from a supervisory perspective?" https://www.fdic.gov/news/press-releases/2021/pr21046a.pdf

With its rule change, the FDIC has significantly broadened the ability of fintechs and nonprofits to partner with banks without having being characterized as a "deposit broker" - so long as the third party's primary business is not accepting deposits. More importantly, the FDIC has initiated an application process where any third party can apply to the FDIC and receive an exemption if it meets the requirements of the new rule. Once the exemption is granted, banks can receive deposits from the fintech's customers without the deposits being characterized as "brokered deposits" by regulators.

"On May 17, 2022, the FDIC board approved a final rule, effective July 5, 2022, addressing false advertising, misuse of the FDIC's name, and misrepresentations about deposit insurance, based on section 18(a)(4) of the Federal Deposit Insurance Act (FDIA). This section prohibits any person from engaging in false advertising by misusing the name or logo of the FDIC or from making knowing misrepresentations about the existence of or the extent or manner of deposit insurance."

FDIC-insured banks don't hold digital assets. They hold US dollars. So this should read "collateralized 1-to-1 with US dollars held at US-domiciled, FDIC-insured banks." But even when corrected, this statement is so misleading it amounts to mis-selling. It implies that anyone who invests in this altcoin benefits from FDIC insurance. This is not the first time I have seen this claim made about cryptocurrency investments. It wasn't true last time, and it isn't now.

The U.S. Federal Deposit Insurance Corp. is seeking comment about a potential set of standards and a certification program intended to make it easier and less costly for financial institutions to partner with technology firms. The request for information will address several matters. For instance, it seeks comment on the idea of the FDIC partnering with a standards-setting organization that would develop best practices for technology firms that want to work with banks. The standards-setter would focus on areas such as credit underwriting models. The FDIC is also exploring the possibility of a voluntary certification program that would assess a technology company's compliance with the standards.

Government COVID-related relief payments contributed to a drop in the number of unbanked households in the U.S. in 2021, according to the Federal Deposit Insurance Corp. (FDIC). Roughly 1.2 million more households are banked, compared with 2019 figures, with nearly half of newly banked households that received pandemic relief payments saying the payments contributed to their decision to open a bank account. But still an estimated 4.5% of Americans, representing 5.9 million households, lacked a bank or credit union account in 2021. https://www.fdic.gov/news/press-releases/2022/pr22075.html

"Representations about deposit insurance may be particularly relevant with respect to new financial products or services, especially those involving new technologies such as digital assets, including crypto-assets. New technologies may yield significant benefits for consumers, workers, and small businesses. Nonetheless, especially with respect to new technologies, some market participants may seek to entice consumers to use their products or services by deceptively advertising that uninsured products or services are FDIC-insured. These misrepresentations disadvantage financial institutions that truthfully market FDIC-insured accounts to consumers. Such misrepresentations also harm consumers, who may find that their assets are not insured in a time of financial distress."

"Federal bank regulators in recent years have upended the decades-old, delicate power balance between the states and the federal government in banking. Congress tasked the Fed and FDIC with running utilities; it did not give the Fed and FDIC veto power over U.S. states - and, in turn, power to block the responsible innovations that state banking authorities create as they fulfill their economic development mandates. By usurping state power, the Fed and the FDIC are politicizing what should otherwise stay an apolitical industry. "

"This memorandum reviews this recent FDIC guidance, as well as related guidance from the Securities and Exchange Commission ("SEC") concerning when a broker-dealer or other intermediary6 may have created a separate obligation to its customers that would be a "security" for purposes of the Securities Act of 1933 ("Securities Act"), rather than merely acting as a custodian for customer assets. In our view, failure to comply with the SEC's guidance concerning the creation of a separate security would pose a significant threat to the availability of "pass-through" deposit insurance."

The Wild West of cryptocurrency trading is getting something typically associated with the safest of savings accounts: FDIC protection.

Crypto market prime dealer and trading system SFOX is partnering with NY-based MY Safra Bank to offer its traders deposit accounts backed by the Federal Deposit Insurance Corporation (FDIC).

Mobile banking firm Varo Money is now set to receive the first "de novo national bank charter" ever given to a fintech startup, with approval from the Federal Deposit Insurance Corporation for deposit insurance. The Office of the Comptroller of the Currency first awarded Varo preliminary approval in September 2018. Varo Bank is now on track to obtain its final national bank charter pending completion of organizational requirements and meeting the conditions of both the OCC's and FDIC's Federal Reserve membership. Upon full charter approval, Varo plans to expand to additional types of services including credit cards, loans, and additional savings products. https://www.fdic.gov/regulations/laws/bankdecisions/depins/varo-bank-na-draper-utah.pdf

An account that meets the definition of a fiduciary or agency account is entitled to "pass-through" deposit insurance coverage from the FDIC through the third party who establishes the account to the actual owner/principal, provided certain conditions are met.

UK-based challenger bank Revolut has reportedly filed a draft application for a banking licence with the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation. Revolut currently offers financial services in the US through a relationship with FDIC-insured Metropolitan Commercial Bank.

Acting Comptroller Michael Hsu told a US House Financial Services Committee hearing that he had spoken with fellow regulators Randal Quarles, vice chair at the Federal Reserve, and Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corporation (FDIC), about forming a "sprint team" around crypto.

San Francisco-based Varo Money has become the first U.S. consumer fintech firm to be granted a national bank charter, enabling the digital challenger to offer a full suite of FDIC-insured services. It was granted the charter by the Office of the Comptroller of the Currency and has secured regulatory approvals from the FDIC and Federal Reserve to open Varo Bank N.A. Varo Money currently provides a range of savings, loans and account-based services through a relationship with The Bancorp Bank. Varo Bank will enable it to expand its services to target a broader set of customer needs including credit cards, loans, and other savings products.

Overdraft fees - when a bank charges a customer who spends more than they have in their bank account - aren't new. But they are at least partly responsible for driving many people to become underbanked, says the Center - and former FDIC Chief Sheila Bair.

A new U.S. Congressional bill would require prospective stablecoin issuers to obtain a banking charter, and notify and obtain approval from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the appropriate banking agency 6 months prior to its issuance. Such issuers would also be required to conduct an ongoing analysis of any systemic risk; and have FDIC insurance or maintain reserves at the Federal Reserve for easy conversion back into U.S. dollars, on demand. https://tlaib.house.gov/media/press-releases/tlaib-garcia-and-lynch-stableact