Better Market CEO Points to Crypto Market Abuses as Reasons for FDIC Rule Amendment
Better Market CEO lambasts frequent market abuses and false advertising strategies of digital asset firms as a major reason for the Federal Deposit Insurance Corporation’s (FDIC) rule change to protect investors.
In a Dec 20 press release, the CEO reacted to the official FDIC statement amending its rules to clamp down on misleading and false insurance suggestions in financial markets.
“FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo.”
According to him, the FDIC deposit insurance is the gold standard that brings trust to all stakeholders in finance including the final depositors leading to bad actors forging or falsely claiming that they are insured by the FDIC.
False advert policies harm market participants
With some players in the crypto market making false claims, these claims harm all parties including investors, insurance schemes, and the banking system, he added listing the effect of misleading information on consumers.
“too many in the crypto industry want to misleadingly if not falsely suggest to crypto investors that their money is protected by the FDIC. That false comfort not only harms investors, but also the insurance program, insured banks, and the broader banking system as people lose faith in the FDIC.”
Furthermore, he noted that the rule change is not limited to the crypto market but because of rampant occurrences, the FDIC has acted to stop it. Buttressing his stance, he highlighted the role of FTX US, Gemini Earn, and Voyager Digital in misleading users that deposits were insured by the FDIC.
This year has witnessed a massive surge of cryptocurrency and decentralized finance (DeFi) market regulations as authorities cite the need to protect investors and avoid loss of assets. Last year’s collapse of the Terra Network and subsequently FTX saw billions wiped off the market pushing regulators to roll out new directives and frameworks for the sector.
FDIC’s new rules
On Dec 20, the FDIC adopted a new rule to amend part 328 of its rules on official signs and advertising statements used by companies.
According to the statement, the rules reflect certainty and assurance of the official FDIC sign at a bank’s teller windows or through digital channels where deposits do banking business.
The rules also clarify regulations on false advertising, deposits on insurance coverage, and misuse of the official sign/ logo of the corporation.
“In addition, the final rule modernizes requirements for display of the FDIC official sign in bank branches and other physical premises to account for evolving designs of bank branches and other physical bank locations where customers make deposits.”
Currently, financial institutions will differentiate between insured deposits and non-insured ones indicating that “they are not insured by the FDIC, are not deposits, and may lose value.”
