Binance US Ends FDIC Insurance Coverage for Crypto Holdings
Binance’s American entity has notified users that their cryptocurrency holdings with the exchange are no longer FDIC-insured. The update comes after Binance US made changes to its terms of service in accordance with guidance from the Federal Deposit Insurance Corporation (FDIC). Previously, Binance US had announced in a blog post that accounts were insured up to $250,000. However, the updated terms of service now state that accounts and digital assets are not eligible for FDIC insurance protections.
Withdrawals Limited to Stablecoins or Cryptocurrencies
In addition to the removal of FDIC insurance coverage, Binance US users will no longer be able to withdraw U.S. dollars directly. Instead, they will have to convert them into stablecoins or another cryptocurrency before making a withdrawal. Stablecoins are cryptocurrencies pegged to fiat currencies like the U.S. dollar.
Federal Agencies Warn About Lack of FDIC Insurance for Crypto
The update from Binance US follows recent warnings from federal agencies regarding the lack of FDIC insurance for cryptocurrency deposits. The FDIC explicitly stated that crypto deposits are not FDIC-insured and individuals should not assume government assistance in case of loss. This warning came after the Federal Trade Commission charged Stephen Ehrlich, former CEO of Voyager Digital, for falsely claiming that customer accounts were FDIC-insured.
Hot Take: Crypto Investors Should Be Cautious About FDIC Insurance Claims
With the removal of FDIC insurance coverage by Binance US and recent cases of false claims by crypto companies, it is important for crypto investors to exercise caution when it comes to FDIC insurance. The government-backed protection does not extend to cryptocurrencies, and individuals should thoroughly research and verify any claims made by crypto-based financial services providers. It is crucial to understand the risks associated with the cryptocurrency industry and take appropriate measures to protect your investments.
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