Is Robinhood FDIC Insured?
We never know when things can go wrong. Investors all over the world want to maintain their financial assets safe and sound in case something bad happens.
In the case of Robinhood, we are about an online platform that offers Robinhood brokerage account services to users.
Investment is always risky, that’s why FDIC and SIPC insurance is so important.
But do Robinhood’s accounts enjoy these insurance coverages? In today’s post, we will be talking about:
- Is Robinhood FDIC insured?;
- What to know about FDIC and SIPC insurance on Robinhood;
- How does Robinhood insurance work?
Is Robinhood FDIC Insured?
For starters, it is important to consider that FDIC insurance is for banks only.
Therefore, Robinhood accounts, and we mean brokerage accounts, do not have FDIC coverage by themselves.
However, if you use your Robinhood account to sign up for the Cash Management program offered through Robinhood financial product, then your cash will be protected by partner banks.
This lets Robinhood customers earn interest through this Deposit Sweep Program while they also maintain their cash deposited safely on Cash Management accounts.
Overall, Robinhood offers brokerage services and personal finance perks that are top-notch.
There are no account minimums and features such as Robinhood Gold, where users get bigger instant deposits, and a Robinhood debit card issued by Sutton Bank.
How Does Robinhood FDIC Insurance Work?
Customers can access the Robinhood Cash Management Feature to have their uninvested cash protected by the partner banks.
If your account happens to be eligible for FDIC, then you will have nothing to worry about.
The FDIC coverage is basically a Cash Sweep Program by IntraFi Network Deposit services, which means that Robinhood Cash Management is actually third-party.
Remember that Robinhood is backed by immense institutions, such as Google Ventures, Index Ventures, and more.
Besides, not every single Robinhood account will be protected by the Robinhood Cash Management program.
According to the Robinhood Website, there’s a waitlist to join your brokerage account in this Cash Management program with partner banks.
Is Robinhood SIPC Insured?
Yes, Robinhood Financial LLC has SIPC coverage. Users can rest assured that the platform is SIPC insured, which means that SIPC coverage is available for all forms of accounts within the website.
How Does Robinhood SIPC Insurance Work?
Robinhood’s SIPC coverage does not protect you against personal losses, but against brokerage failures.
If, for one reason or another, Robinhood loses your assets, the SIPC insured program will cover up to $500,000.
That means that the only responsible for cash losses won’t be the FDIC or SIPC - it’s you.
Then again, the SIPC program protects only losses caused by a greater force within the platform you are participating in, in this case, Robinhood.
Is Robinhood Crypto Insured?
No. Robinhood Cryptocurrency trading and operations are not covered by any financial institution.
Remember that cryptocurrencies are decentralized assets, and although Robinhood crypto ownership still falls into a great area, there are no federal assurances regarding crypto.
Thus, if you use the platform for crypto operations, make sure to know what you are doing.
Remember that market research is always the investor’s responsibility and not the other way around.
Nonetheless, you can indeed get crime insurance for cryptocurrencies. This means that your crypto assets are protected by Robinhood.
Authorizations take place within the platform’s safety measures, and although they are not unbreakable, they are as good as they get.
Robinhood FDIC Insurance: Wrapping Up
Although we know that Robinhood FDIC insurance might seem a little complicated, the truth is that the platform still offers great levels of safety to all their customers.
We summarize all the information in this blog post in the following three points:
- Robinhood has a “third-party” FDIC insurance backed up by partnered banks, and applicable only to some accounts that sign up for Cash Management features. Otherwise, other accounts won’t have FDIC coverage;
- All accounts on Robinhood have SIPC coverage without exceptions. This protects all users in the event that the brokerage firm fails without further notice;
- Cryptocurrencies have no SIPC or FDIC coverage at all, but they are protected by crime insurance rules on Robinhood.
That will be all for now! You can rest assured that your assets are safe on this platform.
If you need more Robinhood insights, Grow Following is the way to go.
FAQ
What Is Federal Deposit Insurance Corporation (FDIC)?
The FDIC is an agency that examines and supervises financial institutions and financial markets for safety purposes. The FDIC acts to protect customers in the unfortunate events of bank failures and so on.
What Is Securities Investor Protection Corporation (SIPC)?
The SIPC is the agency that protects securities customers and brokerage customers against the loss of securities and cash in the rare case the brokerage firm fails.
Steve specializes in cryptocurrency and finance. As a born researcher, he won’t leave any stone unturned when it comes to topics he covers.