Earlier this month, the Federal Deposit Insurance Corporation (FDIC) issued cease-and-desist letters to a cryptocurrency exchange and a fintech, demanding that each of these entities immediately stop making false and misleading statements about FDIC coverage of their financial products. The FDIC also issued cease and desist letters to two marketing websites, demanding that they remove false and misleading statements about FDIC insurance coverage with respect to the cryptocurrency exchange.
These most recent FDIC enforcement activities demonstrate the agency’s ongoing determination to crack down on misleading representations about deposit insurance by any person or entity. The letters cite to the FDIC’s broad enforcement authority under the Federal Deposit Insurance Act (“FDIA”), and final regulations adopted under the FDIA last year that expanded the scope of the previously existing official signage and advertising rules by adding more detail about prohibitions against engaging in false advertising or making misrepresentations about deposit insurance. Previous agency actions in furtherance of eliminating such misrepresentations include cease-and-desist letters issued to five crypto companies in August, 2022 and issuance of an advisory to FDIC-insured institutions regarding deposit insurance and crypto companies.
The FDIC recently proposed further updates and clarifications to these rules, and has extended the comment period on that proposal through April 7, 2023.
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