U.S. FDIC Proposal Would Update Disclosure Rules for Federal Deposit Insurance in Digital Channels

Signs for Deposit-Taking Channels

The NPRM would require the use of different signage in digital deposit-taking channels for deposit products and nondeposit products.² A “non-deposit product” would be defined to mean any product that is not a deposit under the Federal Deposit Insurance Act and would include stocks, bonds, government and municipal securities, mutual funds, annuities (fixed and variable), life insurance policies (whole and variable), savings bonds, and cryptoassets and would exclude any credit product. Significantly, the NPRM would define a “crypto-asset” as any digital asset implemented using cryptographic techniques, but the NPRM does not define a digital asset.³

An IDI would have to clearly, continuously, and conspicuously display the FDIC’s sign for digital deposit-taking channels in the following pages or screens:

• the initial or homepage of the website or application
• landing or login pages
• pages where the customer may transact with deposits⁴

Moreover, if a digital deposit-taking channel offers both access to deposits at an IDI and nondeposit products, the IDI would have to clearly and conspicuously display signage indicating that the nondeposit products are not insured by the FDIC, are not deposits, and may lose value. This signage would have to be displayed

• via a one-time notification that is dismissed by an action of the user, when the page is initially accessed 
• continuously on each page relating to nondeposit products⁵

Disclosures by Fintechs

Fintechs and others that enable customer access to IDI deposit products would also have to comply with new requirements in the NPRM. The NPRM would prohibit use of the FDIC-associated terms or FDIC-associated images in a manner that inaccurately states or implies that a person other than an IDI is insured by the FDIC.⁶ Moreover, the NPRM would consider a statement materially false or misleading, and consequently a violation of the regulations, if it states, suggests, or implies that a person is insured or guaranteed by the FDIC and the person is not. Examples would include the following:

• a statement made by a person other than an IDI that represents or implies that an advertised product is insured by the FDIC that fails to identify the IDI with which the representing party has a direct or indirect business relationship for the placement of deposits and into which the consumer’s deposits may be placed
• a statement made by a person that is not an IDI regarding deposit insurance that fails to clearly and conspicuously disclose that the person is not an FDIC-insured depository institution and that FDIC insurance covers only the failure of the IDI; a statement that a person is not an FDIC-insured bank and deposit insurance covers the failure of an insured bank would be considered a clear statement
• a statement made by a person regarding deposit insurance in a context where deposits and nondeposit products are involved that fails to clearly and conspicuously differentiate between insured deposits and nondeposit products by disclosing that nondeposit products are not insured by the FDIC, are not deposits, and may lose value
• a statement made by a person regarding pass-through deposit insurance coverage that fails to clearly and conspicuously disclose that certain conditions must be satisfied for pass-through deposit insurance coverage to apply

Considerations for Arrangements Between IDIs and Fintechs

The NPRM presents some potential questions and challenges for some online partnership between IDIs and fintechs. As an initial matter, while the FDIC’s objective is to require clear disclosures to customers to avoid misunderstandings, the repeated signage displays may create burdens on IDIs and fintechs without a commensurate improvement in clarity. Some of the disclosure requirements may also need to be reconsidered. For example, the use by a fintech of the FDIC signage would have to be specific to an IDI, so it would not be permissible for the fintech to use the signage in the context of general references to a multibank sweep program. Additionally, requiring disclosure to consumers that certain conditions must be satisfied for pass-through deposit insurance to apply might itself cause confusion because many consumers will not understand what this means.

Finally, by treating all cryptoassets as nondeposit products, the NPRM does not contemplate the possibility of a stablecoin that, as a matter of future legislation or regulation, provides the holder with pass-through FDIC deposit insurance.

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¹ 87 Fed. Reg. 78,017 (Dec. 21, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-12-21/pdf/2022-27349.pdf.

² The NPRM would define a “digital deposit-taking channel” as any electronic communications method through which an IDI accepts deposits.

³ However, the supplementary information to the NPRM includes a broad definition of “digital asset” as a digital representation of value that functions as a medium of exchange, a unit of account, and, or a store of value as well as a digital asset that has an equivalent value in and is convertible to real currency or that acts as a substitute for real currency and is not legal tender.

⁴ A digital sign continuously displayed near the top of the relevant page or screen in close proximity to the IDI’s name would be considered clear and conspicuous.

⁵ This nondeposit signage may not be displayed in close proximity to the FDIC’s sign for digital deposit-taking channels.

⁶ The existing regulation defines the terms “FDIC-associated terms” and “FDIC-associated images.”

“FDIC-associated terms” means the abbreviation “FDIC” and the following words or phrases: “Federal Deposit Insurance Corporation,” “Federal Deposit,” “Federal Deposit Insurance,” “FDIC-insured,” “FDIC insurance,” “insured by FDIC,” “member FDIC,” any similar words or phrases, or any other terms that may represent or imply that any deposit, liability, obligation certificate, or share is insured or guaranteed by the FDIC.

“FDIC-associated images” means the seal of the FDIC, alone or within the letter C of the term FDIC; the official sign and symbol of the FDIC; the official advertising statement, as set forth in the regulations; any similar images; and any other signs and symbols that may represent or imply that any deposit, liability, obligation certificate, or share is insured or guaranteed in whole or in part by the FDIC.

12 C.F.R. § 328.101.