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In a footnote on that page: > FDIC insurance applies only to the USD reserve funds. GUSD exist as ERC-20 tokens on the Ethereum blockchain; tokens are under th
by zucker42 5y ago
In a footnote on that page:
> FDIC insurance applies only to the USD reserve funds. GUSD exist as ERC-20 tokens on the Ethereum blockchain; tokens are under the user’s self-custody, and are not insured through Gemini.
- gruez 5y agoThat seems pretty reasonable? It just means, the reserves held by the bank are insured, but if your wallet gets hacked you're not covered.
- alisonkisk 5y agoThat means that the backers of GUSD have FDIC protection for solvency. If you "lose your keys" to your account, you lose your account, as is standard in crypto; no KYC backup/protection. In the middle you have "what if Gemini the business shuts down anyway, and stops letting you redeem GUSD for USD? You can sue, but legal expenses might eat away a lot of the value.
- kenneth 5y agoThe way FDIC insurance works is that each account is insured for 250k. If the dollars are held in an omnibus account on behalf of GUSD holders, and the bank holding it were to go bust, Gemini could distribute $250k pro-rata to the billions of dollars of GUSD liabilities. Not particularly useful. And if Gemini itself isn't trustworthy, FDIC does absolutely nothing. FDIC insures Gemini's bank's failure, not Gemini's failure. Gemini is not a bank.
- gruez 5y ago>and the bank holding it were to go bust, Gemini could distribute $250k pro-rata to the billions of dollars of GUSD liabilities. Not particularly useful. According to the gemini dollar site, it's insured for $250k per account, not for all the accounts combined.
- mring33621 5y agoWe're all good then! The company's website says so!