How does SIPC coverage work for cryptocurrency holdings?

3 answers

• Dec 27, 2021 · 3 years ago
  Sure! The Securities Investor Protection Corporation (SIPC) is a non-profit organization established by Congress to protect investors in the event of the failure of a brokerage firm. While SIPC coverage primarily applies to traditional securities, such as stocks and bonds, it does not cover cryptocurrencies directly. This is because cryptocurrencies are not considered securities under the U.S. federal securities laws. However, some brokerage firms that offer cryptocurrency trading may provide additional insurance coverage for their customers' digital assets. It's important to check with your specific brokerage firm to understand the extent of coverage they offer for cryptocurrency holdings.
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• Dec 27, 2021 · 3 years ago
  SIPC coverage is designed to protect investors against the loss of cash and securities held by a brokerage firm. In the case of traditional securities, SIPC provides up to $500,000 of protection, including up to $250,000 in cash. However, it's important to note that SIPC coverage does not protect against investment losses or market fluctuations. It is primarily intended to safeguard investors' assets in the event of a brokerage firm's failure or insolvency. As cryptocurrencies are not covered directly by SIPC, investors should consider other measures, such as securing their private keys and using reputable cryptocurrency exchanges, to protect their digital assets.
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• Dec 27, 2021 · 3 years ago
  While SIPC coverage does not directly apply to cryptocurrencies, some brokerage firms may offer additional insurance coverage for their customers' digital assets. For example, at BYDFi, we provide a separate insurance policy that covers cryptocurrency holdings for our customers. This additional coverage is designed to protect against theft, hacking, and other risks associated with holding cryptocurrencies. It's important to understand the specific insurance policies and coverage offered by your chosen brokerage firm when considering the safety of your cryptocurrency holdings.
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