Protection Funds, Insurance and FDIC/SIPC: What Actually Covers What
Crypto held directly on a major exchange is generally not covered by FDIC or SIPC protection.
Those programs are designed for different kinds of financial failures. What many crypto exchanges offer instead is a protection fund: a corporate reserve intended to absorb certain losses or security incidents.
That can still be valuable, but it is not the same thing as statutory deposit or brokerage protection.
The key distinction is not simply how large a protection fund is. It is what the fund covers, who controls it, how transparently it is maintained, and whether users have a legal right to a payout.
Are Funds on a Crypto Exchange FDIC Insured?
Not when the asset in question is crypto.
TheFDICstates that deposit insurance protects eligible deposits held at an FDIC-insured bank if that bank fails. It does not insure crypto assets, and it does not protect customers against the...
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