FDIC says more than 85 businesses are lying about being insured

This year, the FDIC’s annual risk review includes a section on crypto

article-image

DCStockPhotography/Shutterstock modified by Blockworks

share

In its latest risk review, the Federal Deposit Insurance Corporation has doubled down on its crypto warnings. 

Digital assets pose “novel and complex risks,” the FDIC said, making it challenging to fully assess how capital markets and banking institutions will be impacted. 

The FDIC’s risk review is an annual summary the agency publishes to inform community banks and other institutions about potential threats to stability and stressors on the banking system. The 2023 report, published Monday, includes a section on digital assets for the first time. 

“The FDIC, in coordination with the other federal banking agencies, continues to closely monitor crypto-asset-related activities of banking organizations,” the agency wrote in the report. “As warranted, the FDIC will issue additional statements related to engagement by banking organizations in crypto-asset-related activities.” 

The review also notes that the FDIC has taken action against more than 85 businesses and entities that have misrepresented the “nature, extent, or availability of deposit insurance,” an issue the agency has cracked down on this summer. 

In June, the Consumer Financial Protection Bureau (CFPB) released warnings that “popular digital payment apps,” such as Venmo and PayPal, which recently launched its own stablecoin, are inherently dangerous because users are not entitled to FDIC coverage. “Billions of dollars” are currently stored in apps like Venmo and PayPal, the release said, but if these platforms were to go under, there is no guarantee clients would be made whole.

Also in June, the FDIC issued a letter to crypto exchange OKCoin and demanded that it stop making allegedly misleading claims about being insured. The agency said there were three instances where the exchange made false claims, including advertising that OKCoin is “licensed across the US with FDIC insurance.” 

Read more: FDIC warns OKCoin about deceiving customers with protection claims

In addition to putting a stop to false claims, the FDIC is primarily concerned with the “dynamic” nature of crypto, as it can lead to increased fraud, legal uncertainties and poor risk management, due to a “lack of maturity and robustness,” the agency wrote. 

The FDIC expects to continue issuing statements and warnings to investors and banking institutions involved in crypto assets as it monitors the space and identifies areas of risk. 

“The FDIC also has developed processes to engage in robust supervisory discussions with banking organizations regarding proposed and existing crypto-asset-related activities and provide case-specific supervisory feedback,” the review added.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

A memecoin short squeeze pushed Hyperliquid to the brink — and revealed decentralization limits

article-image

Tools for Humanity’s Developer Reward pilot program kicks off on April 1

article-image

Blockworks Research analyst Boccaccio explains the HyperLiquid controversy and why they need to adjust risk and margin

article-image

What Grayscale’s watching going into the second quarter and why crypto had a rough start to the year

article-image

Sol’s price drop was partially triggered by one of the year’s more chaotic memecoin events

article-image

Are digital assets just part of “normal” finance conversations now?