FDIC Finalizes New Regulations For Bank Signage and Crypto Ads

The Federal Deposit Insurance Corporation (FDIC) has completed the formulation of fresh regulations regarding the utilization of its official signage and promotional materials. Announced on December 20, these regulations impact how banks and financial institutions, including those associated with cryptocurrencies, represent FDIC insurance to the public.

New FDIC Signage Addresses Crypto Industry Abuses

The FDIC’s board of directors has introduced a mandate requiring insured institutions to display a redesigned official sign. This new sign, featuring black and navy blue colors, will replace the traditional gold and black signage that has existed since the 1930s. Effective 2025, the requirement extends to all digital platforms, physical bank locations, and select ATMs. This change is part of the FDIC’s efforts to prevent misleading representations of deposit insurance coverage and misuse of the FDIC’s name or logo.

The decision marks the first major update to the FDIC’s sign and advertising rules since 2006. The organization emphasizes that these changes are essential for addressing issues where customers might be misled into believing their funds are FDIC-insured when they are not. The updated rule, while not limited to the crypto industry, is partly in response to abuses by certain crypto firms.

Regulatory Shifts Focus on Crypto Banking Practices

The crypto industry has been specifically highlighted in this regulatory update. Notable instances, including those involving Gemini Earn, FTX US, and Voyager Digital, have shown how investors believed their investments were FDIC-insured. This misunderstanding has prompted regulatory bodies like the FDIC to strengthen their rules to prevent misrepresentations.

In 2023, the collapse and liquidation of several banks with connections to crypto firms intensified the discussions about protecting user funds. The insurance body’s role in closing banks like Signature Bank and Silicon Valley Bank, which held deposits from major crypto players like Circle and Sequoia Capital, underlines the need for clear and accurate information regarding FDIC insurance. This is especially significant as the organization insures deposits up to $250,000 per depositor, a critical safety net for depositors.

The broader implications of the FDIC’s updated rules extend beyond the crypto industry. The FDIC and regulatory bodies like the Consumer Financial Protection Bureau have been vocal about the risks of novel and complex financial products and services. This includes a warning in June about the potential lack of FDIC insurance for funds held in payment apps that allow crypto transactions.

Read Also: Binance US Loses Its FDIC-Insured Status, Halts All USD Withdrawals