WASHINGTON — The Federal Deposit Insurance Corp. is warning banks about the dangers posed by crypto-company partners that overstate the protections afforded by deposit insurance.
The FDIC issued an advisory Friday that it’s “concerned about the risks of consumer confusion or harm” arising from digital assets that are offered in connection with an insured depository institution. It came a day after the FDIC and the Federal Reserve issued a cease-and-desist order to Voyager Digital, a crypto firm that went bankrupt in July, to stop any marketing or promotions that suggested FDIC insurance applies to cryptocurrency holdings.
Concerns about bank-crypto partnerships, especially how those partnerships are marketed and the extent of deposit insurance coverage, are gaining traction at the FDIC. The advisory underlines that those concerns extend beyond the Voyager case.