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They aren't part of FDIC but they have SIPC insurance https://support.robinhood.com/hc/en-us/articles/360001469903 https://support.robinhood.com/hc/en-us/artic

They aren't part of FDIC but they have SIPC insurance https://support.robinhood.com/hc/en-us/articles/360001469903 https://support.robinhood.com/hc/en-us/articles/360001469903 Is my money insured? Your cash in Robinhood is insured up to $250,000 by the Securities Investor Protection Corporation (SIPC). SIPC protects cash deposits in your account in the unlikely event that Robinhood fails. Up to what amount? SIPC insurance covers your checking, savings and investments. Your cash and securities in Robinhood are protected up to a total of $500,000 by the SIPC, $250,000 of which can be in cash, the rest in securities. SIPC insurance provides protection for your cash balance and securities holdings if Robinhood fails financially, but does not cover investment losses due to declines in the value of securities themselves. Is this different from bank insurance? Similar to FDIC insurance, SIPC protects cash in your account if the financial firm fails. FDIC insurance covers deposits in FDIC-insured federal banks. SIPC insurance covers cash and securities at SIPC-member brokerage firms. Robinhood Securities, LLC is a member of SIPC. Additional information can be found at sipc.org.

danans 8y ago
Apparently, SIPC doesn't provide blanket coverage[1]. So no coverage against, i.e. fire, flood, robbery or embezzlement [2]. The first 3 may not be relevant with digital bank that doesn't handle cash, but the last one might be. EDIT: I misread the second reference. apparently FDIC does not insure against theft or embezzlement, but according to the first link FDIC does provide blanket coverage unlike SPIC. it's still not clear to me what blanket coverage means in this instance. [1] https://www.schwabmoneywise.com/public/moneywise/essentials/understanding_fdic_and_sipc_insurance https://www.schwabmoneywise.com/public/moneywise/essentials/... [2] https://www.fdic.gov/consumers/consumer/information/fdiciorn.html https://www.fdic.gov/consumers/consumer/information/fdiciorn...
- Someone1234 8y ago
  Where did you get the "So no coverage against, i.e. fire, flood, robbery or embezzlement" claim from? It isn't in [1] or [2] and contradicts this: https://www.fool.com/investing/brokerage/2014/05/11/what-sipc-does-and-does-not-cover.aspx https://www.fool.com/investing/brokerage/2014/05/11/what-sip...
  - intopieces 8y ago
    From your link: >SIPC does not protect customer funds placed with a broker-dealer just to earn interest. In this case, doesn't that mean the people who just use Robinhood has a checking / savings account aren't covered?
- russell_h 8y ago
  My understanding (which is limited, so someone please jump in if I'm wrong) is that SIPC does not protect against a decline in value of your assets. I'm wondering: First, whether Robin Hood is lending out deposits to margin traders. If not, what are they doing with the money? I don't think that they are, as the article implies, making > 3% on US treasuries. Second, if that investment loses money, are those losses passed on to account holders? If not, someone must be insuring that investment. Who?
  - danans 8y ago
    > SIPC does not protect against a decline in value of your assets. Neither does FDIC, right? Still doesn't explain what FDIC "blanket" coverage offers that SPIC doesnt

danans 8y ago

Apparently, SIPC doesn't provide blanket coverage[1]. So no coverage against, i.e. fire, flood, robbery or embezzlement [2]. The first 3 may not be relevant with digital bank that doesn't handle cash, but the last one might be. EDIT: I misread the second reference. apparently FDIC does not insure against theft or embezzlement, but according to the first link FDIC does provide blanket coverage unlike SPIC. it's still not clear to me what blanket coverage means in this instance. [1] https://www.schwabmoneywise.com/public/moneywise/essentials/understanding_fdic_and_sipc_insurance https://www.schwabmoneywise.com/public/moneywise/essentials/... [2] https://www.fdic.gov/consumers/consumer/information/fdiciorn.html https://www.fdic.gov/consumers/consumer/information/fdiciorn...

Someone1234 8y ago
Where did you get the "So no coverage against, i.e. fire, flood, robbery or embezzlement" claim from? It isn't in [1] or [2] and contradicts this: https://www.fool.com/investing/brokerage/2014/05/11/what-sipc-does-and-does-not-cover.aspx https://www.fool.com/investing/brokerage/2014/05/11/what-sip...
- intopieces 8y ago
  From your link: >SIPC does not protect customer funds placed with a broker-dealer just to earn interest. In this case, doesn't that mean the people who just use Robinhood has a checking / savings account aren't covered?
russell_h 8y ago
My understanding (which is limited, so someone please jump in if I'm wrong) is that SIPC does not protect against a decline in value of your assets. I'm wondering: First, whether Robin Hood is lending out deposits to margin traders. If not, what are they doing with the money? I don't think that they are, as the article implies, making > 3% on US treasuries. Second, if that investment loses money, are those losses passed on to account holders? If not, someone must be insuring that investment. Who?
- danans 8y ago
  > SIPC does not protect against a decline in value of your assets. Neither does FDIC, right? Still doesn't explain what FDIC "blanket" coverage offers that SPIC doesnt