According to ChainCatcher, citing Bloomberg, the head of the Federal Deposit Insurance Corporation (FDIC) stated that the agency is developing guidelines for tokenized deposit insurance to help financial institutions expand their digital asset business.
Acting Chairman Travis Hill stated that the shift of deposits from the traditional financial world to the blockchain or distributed ledger world should not change their legal nature. Hill made these remarks amidst a debate about how fintech companies not directly insured by the FDIC should fully compensate consumers if their funds are lost. While many fintech companies partner with FDIC-insured banks to offer products covered by "look-through deposit insurance," this protection can be challenged if the third party goes bankrupt, failing to effectively safeguard consumer rights. The U.S. government's deposit insurance fund is a cornerstone of the financial system, designed to protect depositors in the event of bank failure.
