What Is the Role of the Securities Investor Protection Corporation (SIPC) in Crypto?
The Securities Investor Protection Corporation (SIPC) is a US entity that protects investors' securities and cash held at a brokerage firm in the event of the firm's failure. However, SIPC protection does not currently apply to most cryptocurrencies because they are generally not classified as securities.
If a brokerage firm that offers both securities and crypto fails, the SIPC would only cover the securities and cash, not the crypto assets. This leaves a significant gap in investor protection for crypto compared to traditional financial markets.
