Binance.US now requires customers to convert U.S. dollars into stablecoins or cryptocurrencies in order to withdraw funds.
Binance.US, the United States entity of Binance, has officially notified its customers that the digital assets they hold on the exchange are no longer insured by the Federal Deposit Insurance Corporation (FDIC).
The change follows an advisory previously issued by the U.S. agency, which reminded individuals that funds deposited with financial service providers that engage in cryptocurrency transactions are not protected by FDIC insurance.
Binance.US Crypto Assets Lose FDIC Coverage
Binance.US has notified its customers that their crypto assets are no longer insured by the federal FDIC. The notification was sent via email, stating that Binance.US had changed the language in its terms of service regarding deposit insurance, citing an update to the company’s terms of service under FDIC guidance.
Prior to this, the cryptocurrency exchange initially announced that it provided FDIC insurance for its user accounts, ensuring the safety of their funds up to $250,000. However, as stated in a now-deleted 2019 blog post, this guarantee is no longer in effect.
The updated terms of service clearly state: "Your account and digital assets are not eligible for FDIC insurance protection."
The change also introduces a major operational shift for users. Binance.US now requires customers to convert U.S. dollars into stablecoins or other cryptocurrencies before they can withdraw their funds, marking a major overhaul of the exchange’s withdrawal procedures.
FDIC issues warning to cryptocurrency users
This development comes on the heels of a recent FDIC warning that reminded individuals that funds deposited with “cryptocurrency-based financial services providers” are not insured or protected by the FDIC. The agency stressed that the government has no obligation to step in and assist in recovering crypto-related losses if anything goes wrong.
In a related case, the Federal Trade Commission (FTC) charged Stephen Ehrlich, the former CEO of now-defunct cryptocurrency broker Voyager Digital, with falsely claiming that customer accounts were insured by the FDIC.
Contrary to its claims, Voyager was never protected by an FDIC-insured bank. This caused its customers to face financial losses when Voyager eventually collapsed and declared bankruptcy. The U.S. Commodity and Futures Trading Commission (CFTC) also charged Ehrlich with fraud and registration failure, further highlighting the regulatory challenges of the crypto industry. #FDIC #Binance.US
