Binance’s American entity, Binance US, announced that crypto assets on the platform have been removed from FDIC insurance. Users’ accounts and digital assets are no longer eligible for FDIC insurance protection. The company also made updates to its terms of service.
What is FDIC?
The Federal Deposit Insurance Corporation (FDIC) was established in 1933 following the Great Depression by President Franklin D. Roosevelt. The agency aims to protect American citizens’ money up to a certain amount in the event of a bank’s bankruptcy. In practice, the FDIC insures customers’ bank accounts up to $250,000 if a bank goes under.
Terms of Service Updated, FDIC Insurance Removed
In 2019, Binance US announced in a blog post that Binance US accounts were insured by the FDIC up to $250,000. According to that announcement, all USD deposits were held in pooled custodial accounts at multiple banks, and these accounts had direct access to FDIC insurance coverage.
However, a recent announcement indicated that this has changed. According to Binance US’s updated terms of service, users’ accounts and digital assets are no longer eligible for FDIC insurance protection. Furthermore, with this update, users now need to convert their US dollars into stablecoins or another cryptocurrency before making a direct withdrawal.