Binance US Ends FDIC Insurance for Crypto Holdings, Citing Updated Terms of Service
The US Branch of the world's largest crypto exchange, Binance US, recently communicated to its users that their cryptocurrency deposits are no longer covered by Federal Deposit Insurance Corporation (FDIC) insurance.
In an email sent to its customers on October 16, Binance US announced updates to its terms of service regarding deposit insurance, aligning with guidance from the Federal Deposit Insurance Corporation (FDIC).
The modification pertains explicitly to the section related to the "BAM Fiat Wallet," which handles custody of US dollars.
Binance US stated that users will no longer have the option to withdraw US dollars from their accounts directly. Instead, they will need to convert them to stablecoins or other cryptocurrencies to manage their crypto holdings.
The email said:
"In the event that customers wish to withdraw US dollar funds from their account, they may do so by converting US dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn."
The change was done in compliance with guidance from the FDIC following the exchange's updated terms of service which now read: "Your accounts and digital assets are not eligible for FDIC insurance protections."
The revised terms emphasize that digital assets are not considered legal tender and do not have government backing. Consequently, accounts and value balances are not covered by FDIC or the Securities Investor Protection Corporation (SIPC) insurance.
This update marks a departure from previous terms posted in May 2023, which contained information about Binance US working with USD custodians to ensure US dollar deposits were held in FDIC-insured banks. The recent changes reflect Binance US's ongoing efforts to navigate regulatory requirements
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