That limit is $250,000 per bank. For 90% of Americans, government insurance is complete protection. If you consider only those Americans with at least some savings, 90% of Americans could be entirely protected by dividing their money into two banks.
What kind of events this insurance covers? My understanding is that it does not protect from wire fraud. It is there to cover bank bankruptcy, which is impossible as per se with a cryptowallet in the first place.
If an exchange lent out more than it had on its books, you could have a run on an exchange. Insurance would guarantee your money back if the exchange, your custodian, collapsed.
You don't have to store your money in an exchange, so the risk is very low at any given point of time.
Currently people pay for the prolonged version of that risk by receiving a benefit of convenience. But this will stop as soon as somebody creates an equally convenient cryptowallet infrastructure.
Comments
That limit is $250,000 per bank. For 90% of Americans, government insurance is complete protection. If you consider only those Americans with at least some savings, 90% of Americans could be entirely protected by dividing their money into two banks.
What kind of events this insurance covers? My understanding is that it does not protect from wire fraud. It is there to cover bank bankruptcy, which is impossible as per se with a cryptowallet in the first place.
Am I correct?
If an exchange lent out more than it had on its books, you could have a run on an exchange. Insurance would guarantee your money back if the exchange, your custodian, collapsed.
You don't have to store your money in an exchange, so the risk is very low at any given point of time.
Currently people pay for the prolonged version of that risk by receiving a benefit of convenience. But this will stop as soon as somebody creates an equally convenient cryptowallet infrastructure.