Jane Dotson
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It is not an FDIC-insured bank, and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). However, Coinbase offers crime insurance that protects a portion of digital currencies held across its storage systems against losses from theft, including cybersecurity breaches. Additionally, for U.S. customers, Coinbase combines cash balances with funds from other customers and holds them in custodial accounts at FDIC-insured banks, providing pass-through FDIC insurance protection. While this insures the value of USD funds, it is important to note that it does not cover crypto assets or non-fungible tokens.
| Characteristics | Values |
|---|---|
| Are Coinbase deposits insured? | Coinbase deposits are insured by the Federal Deposit Insurance Corporation (FDIC) only if they are maintained in pooled custodial accounts at one or more banks insured by the FDIC. |
| Are cryptocurrencies insured? | Cryptocurrencies are not insured by the FDIC. Only fiat deposits like U.S. Dollars, British Pounds, and Euros are insured. |
| Are there any other types of insurance provided by Coinbase? | Coinbase and its operating subsidiaries are covered by Coinbase Global, Inc.'s crime insurance, which protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches. |
| What happens if Coinbase goes out of business? | If Coinbase falls, users will not be covered by FDIC insurance and may lose their money. |
| Are there any alternative ways to insure my cryptocurrency? | Yes, you can purchase a cold storage wallet or device to store your cryptocurrency. This gives you control over the keys that access your balance. |
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What You'll Learn
Coinbase crime insurance covers losses from theft and cybersecurity breaches
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. While it is not an FDIC-insured bank, it does have crime insurance that covers losses from theft and cybersecurity breaches. This insurance protects a portion of the digital currencies held across Coinbase's storage systems. However, it is important to note that the insurance does not cover losses resulting from unauthorised access to personal or business Coinbase accounts due to a breach or loss of credentials. It also does not cover non-fungible tokens.
In the event of a security breach, Coinbase will endeavour to make customers whole through their crime insurance policies. However, total losses may exceed insurance recoveries, so funds could still be at risk. For U.S. customers, Coinbase combines customer balances and holds them in custodial accounts at U.S. financial institutions or invests them in accordance with state money transmitter laws. Non-U.S. customers' funds are held as cash in dedicated custodial accounts separate from Coinbase funds.
While Coinbase itself is not FDIC-insured, the cash balances of U.S. customers, such as U.S. Dollars held in their Coinbase accounts, may be covered by FDIC pass-through insurance. This insurance protects funds held on behalf of Coinbase customers if an FDIC-insured bank where Coinbase maintains custodial accounts fails. It is important to note that this insurance only applies to fiat currencies like U.S. Dollars and does not extend to cryptocurrencies.
To summarise, Coinbase's crime insurance provides coverage for losses resulting from theft and cybersecurity breaches, but it does not cover unauthorised access to accounts due to lost or stolen credentials. Additionally, while Coinbase is not FDIC-insured, certain cash balances of U.S. customers may be covered by FDIC pass-through insurance if held in custodial accounts at FDIC-insured banks.
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FDIC insurance covers Coinbase if an FDIC-insured bank fails
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. Coinbase deposits are insured by the Federal Deposit Insurance Corporation (FDIC) for US customers. FDIC insurance covers Coinbase if an FDIC-insured bank where Coinbase maintains custodial accounts fails. This insurance protects customer funds held on behalf of Coinbase against the risk of loss. It is important to note that FDIC insurance does not cover Coinbase in the event of its own failure, only in the case of a failure of an FDIC-insured bank where Coinbase holds funds.
For US customers, Coinbase combines customer balances and holds them in custodial accounts at US financial institutions. These custodial accounts are insured by the FDIC, providing protection for customer funds. The FDIC insurance coverage limit is currently $250,000 per individual. This means that each customer is insured up to $250,000 in the event of a failure of an FDIC-insured bank where Coinbase holds their funds.
Coinbase also offers crime insurance that protects a portion of the digital currencies held in its storage systems against losses from theft, including cybersecurity breaches. However, this insurance does not cover losses resulting from unauthorized access to personal or business Coinbase accounts due to a breach or loss of credentials. It is important for customers to maintain strong passwords and control their login credentials.
While Coinbase provides insurance for certain aspects of its platform, it is important to understand that digital currency is not legal tender and is not backed by any government. Coinbase explicitly states that it is not an FDIC-insured bank, and digital currencies are not insured or guaranteed by the FDIC or other similar entities. Therefore, despite the FDIC insurance coverage for custodial accounts, customers should be aware that digital currencies held on Coinbase may lose value and are subject to risks.
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Non-USD deposits are not FDIC insured
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It is important to note that Coinbase is not an FDIC-insured bank, and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC). While Coinbase has crime insurance that protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches, it does not cover all scenarios.
For U.S. customers, Coinbase combines customer balances, including U.S. Dollars, with the balances of other customers and holds those funds in custodial accounts at U.S. financial institutions. These funds may be invested in liquid U.S. Treasuries, USD-denominated money market funds, or other permissible investments, in accordance with state money transmitter laws. In the event of a failure of an FDIC-insured bank where Coinbase maintains custodial accounts, FDIC pass-through insurance may protect customer funds held in those accounts. However, this protection is contingent on Coinbase maintaining accurate records and the determinations of the FDIC as the receiver.
It is important to clarify that only the value of USD deposits held in custodial accounts at FDIC-insured banks is insured. Non-USD deposits, such as other fiat currencies or cryptocurrencies, are not FDIC-insured. This distinction is crucial because if Coinbase experiences financial difficulties or declares bankruptcy, customers with non-USD deposits may not have the same protections as those with USD deposits.
While Coinbase provides a secure platform for cryptocurrency transactions, it is essential for customers to understand the limitations of insurance coverage. Non-USD deposits are not FDIC-insured, and customers bear the risk of potential losses in the event of certain scenarios, such as unauthorized access due to a breach of their login credentials. Therefore, customers should carefully consider their risk exposure and take appropriate measures to safeguard their assets.
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Crypto deposits are not insured
Coinbase does have crime insurance that protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches. However, this policy does not cover any losses resulting from unauthorized access to your personal or business Coinbase account(s) due to a breach or loss of your credentials. It also does not cover non-fungible tokens. It is the user's responsibility to use a strong password and maintain control of all login credentials.
In the case of a security event covered by Coinbase's crime insurance policies, the company will endeavour to make the user whole. However, total losses may exceed insurance recoveries, so funds may still be at risk. For U.S. customers, Coinbase combines customer balances and holds those funds in custodial accounts at U.S. financial institutions and/or invests those funds in liquid U.S. Treasuries, USD-denominated money market funds, or other permissible investments in accordance with state money transmitter laws. For non-U.S. customers, funds are held as cash in dedicated custodial accounts separate from Coinbase funds.
While some users have speculated that Coinbase deposits are FDIC-insured, this is not the case. Only fiat deposits, such as U.S. Dollars, British Pounds, and Euros, are FDIC-insured. If Coinbase deposits these funds into an FDIC-insured institution, then the value of those funds is insured, but the funds themselves are not. Therefore, it is important to understand that your crypto deposits on Coinbase are not insured and may be at risk in the event of a security breach or if Coinbase ceases operations.
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Coinbase is not an FDIC-insured bank
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency. It is not an FDIC-insured bank, and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC"). This means that if Coinbase goes out of business or files for bankruptcy, its customers are not guaranteed to get their money back.
Coinbase does, however, have crime insurance that protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches. This insurance does not cover any losses resulting from unauthorized access to personal or business Coinbase accounts due to a breach or loss of credentials. It also does not cover non-fungible tokens (NFTs). It is the responsibility of the user to maintain strong passwords and control their login credentials.
While Coinbase is not FDIC-insured, certain assets held by Coinbase in banks on behalf of its customers may be FDIC-insured. For example, for U.S. customers, Coinbase combines customer balances and holds those funds in custodial accounts at U.S. financial institutions, some of which may be FDIC-insured. This means that if one of those banks fails, Coinbase may recover some of its assets, but it does not guarantee that customers will get their money back.
It is important to note that the volatile nature of cryptocurrencies and the lack of government backing or insurance for digital currencies means that funds held on Coinbase may be at risk. As such, some people choose to store their cryptocurrencies in cold storage wallets or other offline methods to mitigate the risk of losing their investment.
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Frequently asked questions
Coinbase is not an FDIC-insured bank and digital currency is not insured or guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). However, FDIC pass-through insurance protects funds held on behalf of a Coinbase customer against the risk of loss should any FDIC-insured bank(s) where they maintain custodial accounts fail.
If Coinbase deposits your funds in an FDIC-insured institution, your deposits may be insured.
Coinbase and its operating subsidiaries are covered by Coinbase Global, Inc.’s crime insurance, which protects a portion of the digital currencies held across its storage systems against losses from theft, including cybersecurity breaches.
Coinbase suggests that users purchase and use a cold storage device, which allows you to control the keys that access your Bitcoin balance.
For U.S. customers, Coinbase combines your balance with the balances of other customers and holds those funds in custodial accounts at U.S. banks and/or invests those funds in liquid U.S. Treasuries or USD-denominated money market funds in accordance with state money transmitter laws. Funds could be held in any one of these manners so customers should not assume that funds are being held in one manner over the other.
