The Federal Deposit Insurance Corporation (FDIC) has sent a termination letter to CEX.IO

It is reported that the Federal Deposit Insurance Corporation (FDIC) has sent a termination letter to CEX.IO, requesting CEX.IO, a cryptocurrency exchange headquartered in Naperville, Illinois, to stop claiming that the dollar held in its legal currency wallet is insured by FDIC. The agency said that a part of the CEX.IO website incorrectly pointed out that “the dollar held in your CEX.IO legal currency wallet is insured by FDIC, and the maximum amount of each account is 250000 dollars.”

Interpretation of this information:

The Federal Deposit Insurance Corporation (FDIC) has sent a letter to cryptocurrency exchange CEX.IO, asking them to stop claiming that the dollar held in their legal currency wallet is insured by FDIC. The agency stated that part of the website misleadingly claimed that the maximum amount of each account is $250,000, which is the maximum amount that FDIC insures for bank accounts.

This move by the FDIC highlights the regulatory grey area surrounding cryptocurrency exchanges and their relationship with traditional financial institutions. CEX.IO could be seen as attempting to gain legitimacy by claiming FDIC insurance, but in doing so they may have brushed up against regulatory red tape.

Cryptocurrency is not currently regulated by the FDIC or any other government agency in the same way as traditional financial institutions. This has led to some confusion as to whether cryptocurrency holdings should be insured like bank accounts. The FDIC’s letter to CEX.IO indicates that they are taking a cautious approach and are unwilling to allow cryptocurrency exchanges to claim FDIC insurance until there is a clearer regulatory framework in place.

It is worth noting that CEX.IO has reportedly removed the claims of FDIC insurance from its website since receiving the letter, indicating that they are willing to comply with regulatory requests.