FDIC Coverage Protections

In the wake of increasing instances in which customers are confused and even misled about the extent to which fintech and cryptoasset holdings are insured deposits, the FDIC has finalized its proposal setting disclosure standards as well as modernizing IDI representations of their own FDIC-insured offerings in branches and through the fast-changing array of retail banking delivery channels.1 All IDIs will now have to ensure that branches, other physical locations admitting customers, ATMs, and digital/electronic-delivery channels comply with new signage and disclosure requirements differentiating insured deposits from other deposit and non-deposit products, including those offered in conjunction with third-parties. Nonbanks soliciting consumer funds will face new legal and reputational risk if deposit-insurance status is not clearly disclosed, with the new standards making it even more difficult for cryptoasset arrangements between banks and nonbank providers. The “rent-an-FDIC-sticker” business model is thus effectively barred for all but ventures willing to run significant enforcement risk.