FDIC Unveils New Signage Regulations to Combat Misleading Crypto Claims and Enhance Consumer Protection

FDIC Unveils New Signage Regulations to Combat Misleading Crypto Claims and Enhance Consumer Protection

Crypto News – The Federal Deposit Insurance Corporation (FDIC) has introduced a landmark regulation that significantly impacts the way its official signage and advertising are used, with particular implications for the cryptocurrency sector. On December 20, the FDIC’s board of directors finalized a set of rules designed to clamp down on deceptive advertising, incorrect claims about deposit insurance coverage, and the improper use of the FDIC’s name and logo.

Starting in 2025, FDIC-insured institutions will be mandated to display a new sign featuring black and navy blue, a departure from the traditional gold and black signage that has been prevalent since the 1930s. This change will be visible across multiple platforms including websites, mobile applications, physical bank locations, and selected ATMs. This revision marks the first major overhaul of the FDIC’s signage and advertising guidelines since 2006.

The primary objective of these updates is to prevent misleading claims by entities suggesting that their customer’s funds are FDIC-insured when they are not. The initiative is particularly relevant in the context of the cryptocurrency industry, which has seen its fair share of abuses relating to false insurance claims.

Dennis Kelleher, President and CEO of the nonprofit organization Better Markets, commented on the issue:

“The crypto industry, while not the sole focus of these regulations, has experienced rampant abuse, compelling the FDIC to enact several measures to combat this issue. Instances where investors were duped by firms like Gemini Earn, FTX US, and Voyager Digital into believing their investments were FDIC-insured highlight the necessity of these updated rules.”

The backdrop to this regulatory update includes a tumultuous year for banks associated with crypto firms, involving closures, regulatory actions, and voluntary liquidations. This has sparked a broader debate among policymakers regarding the safety of user funds. Notably, the FDIC worked alongside the New York State Department of Financial Services to shut down Signature Bank. Additionally, the collapse of Silicon Valley Bank, which had ties to the stablecoin issuer Circle and venture capital firm Sequoia Capital, further underscored the need for these new regulations.

The FDIC typically provides insurance coverage for deposits up to $250,000 per depositor. However, the Consumer Financial Protection Bureau issued a warning earlier this year, noting that payment apps engaged in crypto transactions might not offer this FDIC insurance, thus posing a risk to users’ funds.

Recognizing the “novel and complex risks” posed by cryptocurrency activities to U.S. banks, particularly given their uncertain legal and regulatory framework, the FDIC’s updated signage and advertising rules are aimed at enhancing transparency and protection for consumers and investors within the crypto industry.

This development is in line with a global trend towards the wider adoption and regulation of cryptocurrencies. More than 40 countries have made significant progress this year in developing specific regulations and legislation tailored to the cryptocurrency industry, signaling a move towards integrating these digital assets into the mainstream financial system.