FDIC Insurance Protects Eligible Deposits as Bitcoin Faces Price Risk

U.S. bank deposits and Bitcoin (BTC) carry different protections: eligible balances at insured banks receive limited federal coverage, while Bitcoin’s market price can fall without an equivalent deposit guarantee. The Federal Deposit Insurance Corp. (FDIC) sets a standard limit of $250,000 for each depositor at an FDIC-insured bank, calculated separately for each ownership category. Coverage applies to eligible deposits. It does not extend to crypto assets or cover the failure of a nonbank exchange, broker, custodian or wallet provider. That cap protects deposits within a set limit if an insured bank fails; it does not guarantee every dollar in every account. Five banks failed in 2023. Silicon Valley Bank saw deposit outflows of more than $40 billion on March 9 of that year.

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