Responding to a series of questions from Senate-FDIC, the organization responsible for protecting the U.S. financial sector reaffirmed that crypto is not protected by its safeguards. Bob Menendez (D-N.J.), a senior member the Senate Banking Committee, asked Acting Federal Deposit Insurance Corp. Chair Martin Gruenberg asked whether crypto companies and digital assets are covered under the FDIC insurance. This insurance protects deposits at banks and credit unions in the event that they are stolen or fail to function properly in the United States.
Menendez asked, “In fact, at the moment FDIC insurance doesn’t cover cryptocurrency of any type.”
Gruenberg, who was confirmed by President Joe Biden as full chair, said “That is correct.” Menendez said that the collapse of FTX should be a “renewed appeal for Congress to look at crypto exchanges, lending platforms,” Menendez added. Menendez also referred to earlier comments made by Voyager Digital and FTX.US, which were criticized by the FDIC for misrepresenting their insurance statements. Both businesses applied for bankruptcy protection and clients have lost access to their money.
“The strength and stability of the FDIC depends on the public’s confidence that our deposit insurance system is safe. Gruenberg stated that if this confidence is questioned, it puts the system at serious risk.
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