Binance.US customers have been informed that their digital assets on the exchange are no longer covered by FDIC insurance. Learn about the change, the implications for users, and the recent warning from the FDIC about crypto-based financial services.
Binance’s American entity, Binance.US, has announced that digital assets held on their platform are no longer covered by the Federal Deposit Insurance Corporation (FDIC). This announcement comes in response to a prior warning from the FDIC, which clarified that funds placed with financial service providers dealing in cryptocurrency aren’t protected by FDIC insurance.
Customers of Binance.US received email notifications detailing the change in deposit insurance terms. The updated terms explicitly state that “Your accounts and digital assets are not eligible for FDIC insurance protections,” marking a significant shift from previous assurances.
Furthermore, this change has operational implications for users. Binance.US now requires customers to convert their USD into stablecoins or other cryptocurrencies before they can withdraw their funds. This shift in withdrawal procedures is noteworthy.
The FDIC’s recent warning highlighted the lack of FDIC insurance for funds deposited with “crypto-based financial services providers.” In case of issues, the government is not obligated to assist in recovering crypto-related losses.
This development underscores the regulatory challenges within the crypto industry, as seen in the case of Voyager Digital and its former CEO, Stephen Ehrlich, who falsely claimed FDIC insurance for customer accounts.