While Wealthfront, and Yotta, are not banks, your funds are actually deposited in a bank that is FDIC insured.No, they don't. There is no such thing as a "fintech bank." They design their websites cleverly, in a way that I think encourages mistakes....the Fintech banks all say they are FDIC insured...
A bank is a bank. A fintech is not a bank. Only banks can be members of the FDIC. Only members of the FDIC are FDIC-insured. Fintechs are not FDIC-insured.
Whatever they are using to take your money and then put it into a bank, whether it involves is a third party or not, is not FDIC-insured. It's just a business that handles money. Until the money is out of the fintech and into the bank, the FDIC has nothing to do with it.
When I've looked carefully at the websites of any of the fintechs, I've always seen language similar to this:For example, is the actual text from Wealthfront's web page:XYZ is a financial technology company, not a bank. Your funds are held at our partner bank, QRS Bank, member FDIC.Here's what it actually looks like:Cash Account is offered by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a Member of FINRA / SIPC. Neither Wealthfront Brokerage nor any of its affiliates are a bank, and Cash Account is not a checking or savings account. We convey funds to partner banks who accept and maintain deposits, provide the interest rate, and provide FDIC insurance.
To be fair, they say in bigger type, "Not quite a bank. Quite a bit better." Which is a clever way of saying "Not a bank."
To be perfectly clear about it, the FDIC has a website, Bankfind, where you can check to see if a bank is a member. Wealthfront isn't.
I think we all understand that, so let's not belabor this point.
The question is, has anyone lost money in one of these fintech failures where this was the setup? Do we have a real life example where the fintech system has failed and people have actually lost money? So a fintech failure has not been tested yet.
From what I understand, customers of Yotta have not actually money yet, they just don't have access to their money at the moment until it's sorted out. Is that correct?
Statistics: Posted by Helium — Mon Jun 24, 2024 5:43 am — Replies 98 — Views 9022