Welcome to USD1fdic.com

What this page covers

On USD1fdic.com, the phrase USD1 stablecoins is used in a generic, descriptive way. It refers to any digital token designed to be redeemable one for one for U.S. dollars. This page focuses on the "fdic" part of the domain name: how the Federal Deposit Insurance Corporation (FDIC) connects to USD1 stablecoins through deposit insurance, consumer disclosures, and the way banks interact with token systems.

If you have ever seen the words "FDIC-insured" near a wallet, a crypto exchange, a fintech app, or a stable-value token, you have seen a common source of confusion. FDIC deposit insurance is a specific protection for certain bank deposits, up to set limits, when an FDIC-insured bank fails.^[1] It is not a broad guarantee that covers every product offered by a bank, and it is not a guarantee that covers crypto assets offered by non-bank firms.^[1]^[2]

This page aims to answer one practical question: when people talk about the FDIC in the context of USD1 stablecoins, what are they really talking about, and what should you not assume?

This is an educational overview, not legal or financial advice.

FDIC basics in plain English

The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the United States government that protects bank depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails.^[1] FDIC insurance is backed by the full faith and credit of the United States government, and it applies automatically to covered deposit accounts at an FDIC-insured bank.^[1]

A few building blocks help keep the rest of this page grounded:

Deposit (money placed in a bank account as a balance you can withdraw or spend, such as a checking or savings account).^[1]
Deposit insurance (a promise that certain deposits will be paid up to a cap if the insured bank fails).^[1]
FDIC-insured bank (a bank or savings association whose deposits are insured by the FDIC).^[1]
Ownership category (how the account is legally held, such as a single-owner account or a joint account, which affects how insurance caps apply).^[1]

The standard insurance cap is $250,000 per depositor, per FDIC-insured bank, per ownership category.^[1] The FDIC also notes that deposit insurance covers certain deposit products such as checking accounts, savings accounts, money market deposit accounts, and certificates of deposit.^[1] Other financial products that are not deposits are not covered by FDIC deposit insurance.^[1]

The FDIC has also emphasized that it only pays deposit insurance after an insured bank fails, and it has historically protected insured depositors from loss of insured funds in bank failures.^[2] That protection is powerful, but it is also narrow: it is about deposits at insured banks.

Two practical checks help people avoid confusion:

Ask "Is this balance a deposit at an insured bank, or is it a token or investment product?"
If you are not sure whether a bank is FDIC-insured, the FDIC points people to tools like BankFind (a public FDIC database that helps you confirm an institution is insured).^[1]^[10]

USD1 stablecoins basics in plain English

A stablecoin (a digital token designed to keep a steady price, often near one U.S. dollar) is a type of crypto asset. USD1 stablecoins, as used on this page, means any stablecoin designed to be redeemable one for one for U.S. dollars.

A few terms come up constantly in stablecoin discussions:

Token (a digital unit recorded on a blockchain, which is a shared database that many computers keep in sync).
Blockchain (a shared ledger system where transactions are grouped and linked together).
Issuer (the organization that creates the token and promises redemption).
Redemption (turning a token back into U.S. dollars at the stated rate, often one token for one dollar).
Par (the face value in a one-for-one design, meaning one token is intended to redeem for one dollar).
Reserve (assets held to support redemptions, such as cash or Treasury bills).

In everyday use, USD1 stablecoins can behave like a digital dollar substitute, but they are not literally U.S. dollars in a bank account. The legal structure is usually closer to: you hold a token that is a claim on an issuer, and the issuer holds assets that it says will let it redeem tokens at par.

That distinction is the bridge to the FDIC topic: FDIC deposit insurance protects bank deposits. A token is not a bank deposit.

Insured deposits versus tokens

The FDIC has put the contrast in direct language aimed at the public. In a fact sheet about crypto companies and deposit insurance, the FDIC states that it only insures deposits held in insured banks and does not insure assets issued by non-bank entities such as crypto companies.^[2] The same fact sheet states that FDIC deposit insurance does not apply to crypto assets, and it does not protect against the insolvency or bankruptcy of non-bank firms such as custodians, exchanges, brokers, and wallet providers.^[2]

Those statements map cleanly to USD1 stablecoins:

USD1 stablecoins are crypto assets, not insured deposits.
A wallet provider or exchange is often a non-bank firm, so its failure is not an FDIC bank failure event.
"FDIC-insured" and "stablecoin" do not automatically belong in the same sentence, unless the claim is carefully limited to actual bank deposits.

This does not mean USD1 stablecoins are always unsafe. It means the risk type is different.

With a bank deposit, the FDIC is a backstop for the bank failure scenario, within limits.^[1] With a token, you are looking at issuer risk (risk the issuer cannot redeem), custody risk (risk a provider holding assets for you fails or is hacked), legal risk (risk rules or court outcomes change access), and market structure risk (risk trading and redemption break down under stress).

A bank deposit is a liability (a legal obligation) of a regulated bank. A stablecoin is usually a liability of an issuer, and its value depends on reserves and redemption mechanics.

Where confusion often happens

Most confusion comes from a few repeated patterns:

A product mixes insured deposits and uninsured crypto assets in the same app experience.
A non-bank firm uses an insured bank in the background and markets that relationship as if it makes the whole product insured.
The words "cash" and "dollars" get used loosely to describe token balances.

The FDIC itself has pointed out that customers may be confused about whether, and how, they may be covered when dealing with crypto custodians, exchanges, brokers, wallet providers, and "neobanks" (a non-bank company that offers bank-like services through partner banks).^[2] It has also told FDIC-insured institutions that customer confusion can lead to consumer harm and can create legal and liquidity risks for banks when non-bank partners misstate the scope of deposit insurance.^[3]

Below are common real-world situations where USD1 stablecoins and FDIC language collide.

Fintech apps that offer a deposit account and a USD1 stablecoins feature

Some apps offer a deposit account held at a partner bank and also offer the ability to buy, sell, or store USD1 stablecoins. In that setup, you can have both insured and uninsured balances in the same app.

The insured piece is the deposit account at the FDIC-insured bank, within the normal coverage limits and based on account ownership structure.^[1] The uninsured piece is the token balance.

The risk is that a customer sees one "FDIC-insured" badge and assumes it covers everything on the screen.

The FDIC has taken action against firms that blur this boundary. In January 2024, the FDIC announced it sent letters demanding that five entities and associated parties stop making false and misleading statements about FDIC deposit insurance, including statements suggesting that an entity is FDIC-insured or that uninsured products are insured, misuse of the FDIC name or logo, or a failure to clearly identify the insured banks where deposits may be held.^[4]

Wallets or exchanges that say "your funds are FDIC-insured"

Sometimes a wallet or exchange keeps customer cash at an insured bank. That can be a real deposit relationship in the background. Even so, the FDIC has emphasized that it does not insure crypto assets and only insures deposits held in insured banks, and only after an insured bank fails.^[2]

Two separate balances can exist:

Cash held as a bank deposit (which may be insurable, depending on structure).
USD1 stablecoins held as tokens (not insurable as bank deposits).

If a wallet provider fails, FDIC insurance is not designed to protect you from that non-bank failure. The FDIC fact sheet is explicit that deposit insurance does not protect against the bankruptcy of non-bank firms that offer crypto custody or trading services.^[2]

"Backed by FDIC-insured accounts" language

A USD1 stablecoins issuer may say it holds reserves as cash in bank accounts. Some marketers then slide into a claim like "the stablecoin is FDIC-insured" or "your token is insured because reserves sit at insured banks."

That is not how deposit insurance works. Deposit insurance is tied to a depositor's deposits at an insured bank, up to the cap, in the event of bank failure.^[1] If the issuer has a deposit account at a bank, the issuer may have deposit insurance coverage on that deposit up to applicable limits. That is very different from token holders having insured status.

Token holders typically have a claim on the issuer, not on the bank that holds reserves. That means the insured party, if any, is not automatically you.

Mixing supervision and insurance

A common mistake is to treat "regulated by the FDIC" as if it means "insured by the FDIC."

Supervision (ongoing oversight of a bank's safety and soundness, meaning its ability to operate safely, manage risk, and remain solvent) is different from insurance (a promise to pay insured deposits after a bank failure). A bank can be supervised by the FDIC and still offer services around digital assets that are not insured deposits.

In 2025, the FDIC issued guidance clarifying that FDIC-supervised institutions may engage in permissible crypto-related activities if they manage risks and follow applicable laws, and it rescinded an earlier approach that had called for prior notification for these activities.^[5] That guidance speaks to what banks can do and how they should manage risk. It does not say tokens become insured deposits.

Pooled accounts and pass-through coverage

Some stablecoins-related services include a cash management feature. The feature might place customer cash into one or more pooled deposit accounts at FDIC-insured banks. This is where pass-through coverage can come up.

Pass-through deposit insurance (a method of insuring depositors whose funds are placed and held at an FDIC-insured bank through a third party) is described by the FDIC as a way deposit insurance can apply to the people who own the money even when a third party opens the deposit account for their benefit.^[9]

A few terms help here:

Custodial account (an account held by one party on behalf of others).
Omnibus account (a pooled account that holds funds for many customers).
Beneficial owner (the person who ultimately owns the funds even if the account is in another name).

In many fintech arrangements, the deposit account at the bank is titled in the name of a program manager or a platform, and the platform keeps records that show which beneficial owners own which parts of the pooled deposit. When the structure is set up correctly and records are clear, deposit insurance can pass through to the beneficial owners of the deposits (up to the usual cap), even though the account is held by a third party.^[9]

Now the key USD1 stablecoins distinction:

Pass-through coverage is about deposits at insured banks.
USD1 stablecoins are tokens, not deposits.

So a platform might correctly say, "Customer cash held as deposits at our partner banks may be eligible for pass-through FDIC coverage," while also correctly saying, "USD1 stablecoins token balances are not bank deposits and are not covered by FDIC deposit insurance."^[2]^[3]

If a marketing message collapses those two ideas into "everything in this app is FDIC-insured," that is where confusion and enforcement risk show up.^[4]

Reserves, bank accounts, and what "backed" can mean

Many stablecoin discussions revolve around reserves. Reserve assets are held to support redemptions, meaning the issuer can pay out U.S. dollars when a holder turns in USD1 stablecoins.

Common reserve assets include:

Bank deposits (cash held in deposit accounts).
Treasury bills (short-term U.S. government debt).
Repurchase agreements (a short-term secured loan structure, often collateralized by Treasuries).
Money market funds (pooled investments that aim for stable value but are not bank deposits).

These assets are not equal in terms of liquidity (how quickly you can turn an asset into spendable cash) and credit risk (risk that a borrower cannot pay). Reserve quality can matter a lot for how resilient a stablecoin is under stress.

Still, reserve quality is not the same thing as FDIC insurance.

The FDIC fact sheet makes two points that are easy to apply here:

FDIC deposit insurance does not apply to crypto assets.^[2]
FDIC deposit insurance does not protect against the bankruptcy of non-bank firms such as exchanges and wallet providers.^[2]

So when you see a claim like "reserves are held at FDIC-insured banks," treat it as a statement about where the issuer keeps some cash, not as a statement that your token balance is insured.

Why the legal chain matters

To understand the gap, it helps to trace who is who:

You (the holder) own USD1 stablecoins tokens.
The issuer promises redemption.
A bank or custodian may hold the issuer's cash reserves.

If a bank fails, deposit insurance is designed to protect deposits at that bank, within limits, and only in that bank failure scenario.^[1] The insured depositor is the legal owner of the deposit account at the bank.

If the deposit account is in the issuer's name, the issuer is the depositor. Even if the issuer says reserves support token holders, deposit insurance is not automatically a pass-through guarantee to token holders. Pass-through coverage is a deposit concept tied to account structure and recordkeeping, not a token concept.^[9]

In other words, reserves can be a deposit, but the token is not.

What "one for one" does and does not mean

A stablecoin can be designed to redeem one token for one U.S. dollar. That tells you about the issuer's promise. It does not tell you whether a government insurance program will step in if the issuer cannot keep that promise.

The FDIC protects insured deposits when an insured bank fails.^[1] The FDIC does not insure crypto assets issued by non-bank firms.^[2] Those two statements can both be true even if a stablecoin is well-managed and well-reserved.

Failure scenarios and who you are exposed to

A reliable way to think about FDIC relevance is to walk through failure modes and ask: is there a bank failure event involving an insured deposit I own?

Scenario A: Your bank fails

If you hold U.S. dollars in a checking or savings account at an FDIC-insured bank, the FDIC protects insured deposits up to the standard cap per depositor, per bank, per ownership category.^[1] The FDIC also explains that, historically, insured depositors are paid quickly after a bank is closed, often by moving insured balances to another insured bank or by issuing a check for the insured amount.^[1]

How this connects to USD1 stablecoins:

While your U.S. dollars are a deposit at your bank, FDIC insurance may apply (within limits).
When you convert those dollars into USD1 stablecoins, you no longer hold a deposit. You hold a token.
When you sell USD1 stablecoins for U.S. dollars and place those dollars back into a bank account, you are back in the world of deposits.

The FDIC protects deposits, not the act of moving money between products.

Scenario B: A wallet provider or exchange fails

The FDIC fact sheet is direct that deposit insurance does not protect against the bankruptcy of non-bank firms such as crypto custodians, exchanges, brokers, and wallet providers.^[2] If a wallet provider fails, your outcome depends on that firm's asset segregation (keeping customer assets separate from the firm's assets), its user agreement, and applicable bankruptcy law.

Even if that firm kept some customer cash in a bank account, the tokens are not deposits and do not become insured simply because cash is somewhere in the background.

Scenario C: A USD1 stablecoins issuer fails

Issuer failure is a different type of problem than bank failure. If an issuer cannot honor redemptions, token holders may have a claim on the issuer's reserves, but the nature of that claim varies widely based on the stablecoin's legal design, custody structure, and disclosures.

FDIC deposit insurance is not a substitute for issuer solvency. The FDIC does not insure crypto assets, and it does not protect against a non-bank firm's insolvency.^[2]

Scenario D: A token loses its stable value

A stablecoin can trade below one U.S. dollar for many reasons: uncertainty about reserves, liquidity strain, a loss of confidence, a legal freeze, a technical failure, or simple market panic. These are market events, not bank deposit events.

FDIC deposit insurance does not cover market losses on crypto assets.^[2] It is designed to pay insured deposit balances when an insured bank fails, not to hold a token at par.

Scenario E: Theft, hacking, or fraud

The FDIC fact sheet notes that deposit insurance does not protect against losses due to theft or fraud, which are addressed by other laws and systems.^[2] Some platforms may offer private insurance or reimbursement programs, but those are contractual protections, not FDIC insurance.

For USD1 stablecoins, operational security, custody design, and user behavior can matter as much as reserve design.

Advertising, names, and disclosure rules

Because confusion over "FDIC-insured" language can be widespread, the FDIC has focused on advertising and disclosures involving insured status.

Two kinds of FDIC material show how the agency approaches the problem:

Public actions challenging misleading claims.
Formal rules on how insured banks communicate membership and insured status in physical and digital channels.

On public actions, the FDIC press release from January 2024 lists several types of misleading conduct, such as suggesting an entity is FDIC-insured, suggesting uninsured products are insured, misusing the FDIC name or logo, misrepresenting the nature or extent of deposit insurance, or failing to clearly identify the insured banks where deposits may be held.^[4]

On rules and timelines, the FDIC issued a Financial Institution Letter in November 2025 describing an extension of the compliance date for certain digital FDIC sign obligations tied to its 2023 rulemaking on official signs and advertising statements, including moving a key compliance date to January 1, 2027 for specific digital channel provisions.^[6]

Why this matters for USD1 stablecoins:

If a platform offers USD1 stablecoins and also offers insured deposits, disclosures should make the boundary obvious.
If a platform uses FDIC imagery or language in a way that implies tokens are insured, the FDIC can challenge that claim.
Customers should treat "FDIC-insured" as a claim that must be tied to a named insured bank and a deposit product, not to a token.

The FDIC also issued a bank-facing advisory about deposit insurance and dealings with crypto companies. It suggests that non-bank partners can reduce confusion by clearly stating they are not an insured bank, naming the insured bank or banks where customer funds may be held as deposits, and stating that crypto assets are not FDIC-insured and may lose value.^[3] It also advises insured banks to monitor marketing materials of third-party partners so deposit insurance statements are not misleading.^[3]

Banks, supervision, and crypto-related activities

Even though USD1 stablecoins are not deposits, stablecoins often rely on banks for core rails:

Fiat (government-issued money such as U.S. dollars) on and off ramps (ways to convert between bank money and tokens).
Reserve custody (holding the cash and Treasury instruments that support redemption).
Payments connectivity through systems like ACH (Automated Clearing House, a U.S. bank-to-bank payment network) and wire transfers (bank-to-bank transfers that move money through specialized networks).

Because banks are in the middle, FDIC supervision can shape how stablecoin-linked activity is managed.

In March 2025, the FDIC issued guidance that rescinded an earlier crypto-specific notice letter and clarified that FDIC-supervised institutions may engage in permissible crypto-related activities without prior FDIC approval, as long as they manage associated risks and comply with applicable laws and regulations.^[5] The letter highlights risk areas banks should consider, including market and liquidity risk, operational and cybersecurity risk, consumer protection, and anti-money laundering controls.^[5]

This is relevant to USD1 stablecoins users because it tells you where regulators focus:

How a bank manages third-party risk (risk from relying on another company to deliver part of a service).
How customer disclosures are handled.
How liquidity and operational risks are controlled.

It does not turn USD1 stablecoins into insured deposits.

Payment stablecoins and the GENIUS Act

In late 2025, the FDIC published material tied to the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), which the FDIC describes as establishing a framework for the issuance of payment stablecoins in the United States.^[7]

In a December 16, 2025 press release, the FDIC said it approved a notice of proposed rulemaking that would implement application provisions under the GENIUS Act, and that the GENIUS Act allows insured depository institutions to issue payment stablecoins through a subsidiary and to engage in certain related activities.^[7]

What this signals for USD1 stablecoins, in plain terms:

Bank-linked issuance of some payment stablecoins may become more standardized, since a regulator would review applications and set guardrails.^[7]
Even in a more formal framework, do not assume USD1 stablecoins become FDIC-insured deposits. The FDIC has stated that deposit insurance does not apply to crypto assets.^[2]
Disclosure discipline may improve as regulators focus on clear product boundaries, which can help reduce marketing confusion over time.^[3]^[6]

Because rulemakings evolve, readers who want the most accurate view should track the latest FDIC releases and final rules, rather than relying on summaries.

Why stablecoins matter to bank funding

The FDIC topic is not only about consumer marketing. It also connects to bank funding and financial stability.

Stablecoins can interact with bank deposits in a few ways:

If people shift money from bank deposits into USD1 stablecoins, banks may see changes in deposit levels or in the mix of deposit types.
If stablecoin issuers hold large amounts of reserves in banks, that can affect bank deposit composition and liquidity patterns.
If stress hits a stablecoin, redemption flows may move quickly through banks.

Research from the Federal Reserve has discussed how stablecoins could affect banks and deposits, including potential shifts in bank funding and the way credit intermediation works, depending on the structure of stablecoins and their adoption.^[8]

This is another reason regulators care about clear boundaries: if the public confuses a token with an insured deposit, a shock can spread confusion fast.

FAQ

Are USD1 stablecoins FDIC-insured?

As a general rule, no. The FDIC has stated that deposit insurance does not apply to crypto assets, and that it only insures deposits held at insured banks in the event of an insured bank failure.^[2]

Why do I see "FDIC-insured" language near a crypto app at all?

Because many crypto apps also offer a deposit account feature through an insured bank partner, or they hold customer cash in a bank deposit account. The risk is that this can be described in a confusing way. The FDIC has taken action against firms that suggested uninsured products were insured or that misused FDIC branding, and it has stressed clear identification of the insured banks involved when deposits are part of a product.^[4]

If a stablecoin issuer holds reserves at an insured bank, does that protect me?

It can be a positive signal about reserve custody, but it is not the same as FDIC insurance for token holders. Deposit insurance applies to deposits held at insured banks, up to caps, in a bank failure scenario.^[1] Token holders typically have a claim on the issuer, not on the bank deposit account in the issuer's name.

Can pass-through coverage apply to my USD1 stablecoins balance?

Pass-through coverage is a deposit concept for money held as deposits at insured banks through a third party, when the structure and records support it.^[9] USD1 stablecoins token balances are not deposits, so pass-through deposit insurance does not apply to the tokens themselves.^[2]

Does FDIC insurance protect me if the app is hacked?

No. The FDIC fact sheet notes that deposit insurance does not protect against theft or fraud losses.^[2]

Does FDIC supervision of a bank mean the bank can safely offer stablecoin services?

Supervision aims to enforce safe and sound banking practices, but it is not a blanket promise that every service is risk-free. The FDIC has said banks may engage in permissible crypto-related activities if they manage risks and follow applicable law.^[5] That does not make a token an insured deposit.

What should I take from FDIC actions on misleading claims?

Treat "FDIC-insured" as a claim that must be narrow and specific: a deposit product at a named insured bank. The FDIC has highlighted misleading patterns such as suggesting uninsured products are insured or failing to name the insured banks where deposits may be held.^[4]

Sources

^[1] FDIC Deposit Insurance FAQs
^[2] FDIC Fact Sheet on Deposit Insurance and Crypto Companies (July 28, 2022)
^[3] FDIC Advisory on Deposit Insurance and Dealings with Crypto Companies (FIL-35-2022)
^[4] FDIC Press Release on Misleading Deposit Insurance Claims (Jan 19, 2024)
^[5] FDIC Guidance on Banks Engaging in Crypto-Related Activities (Mar 28, 2025)
^[6] FDIC Financial Institution Letter: Compliance date extension for digital FDIC signs (Nov 25, 2025)
^[7] FDIC Press Release on GENIUS Act application procedures (Dec 16, 2025)
^[8] Federal Reserve FEDS Notes: Banks in the Age of Stablecoins (Dec 17, 2025)
^[9] FDIC: Pass-through deposit insurance coverage
^[10] FDIC BankFind Suite