Is Robinhood SIPC/FDIC insured brokerage company? Does Robinhood offer insurance on customer
accounts?
Is My Money Insured with Robinhood?
Have you ever wondered about how safe your money is with Robinhood? Maybe you’re curious about
whether or not your money is SIPC or FDIC insured?
If so, you’ve come to the right place! Read on to learn more about if your money is insured with Robinhood.
Is Robinhood SIPC Insured?
Robinhood is a member of SIPC, which means that your securities are covered up to $500,000, including up to $250,000 for cash claims.
Robinhood is also a FINRA member, with an SEC# of 8-691888 (San Francisco District Office). Notably, FINRA ordered Robinhood to pay roughly $70 million in July of 2021 for “systemic supervisory failures and significant harm suffered by millions of customers.”
Nonetheless, thanks to SIPC coverage, your cash and securities are as protected with Robinhood as
with any other major broker.
Are Cryptocurrencies Covered by Robinhood?
Keep in mind that cryptocurrency investments through Robinhood Crypto are not protected by SIPC.
Is Robinhood FDIC Insured?
There is also Robinhood’s Cash Management feature, which is an option with Robinhood’s brokerage
account. It allows clients to gain 0.50% APY on cash held in the account. Although Robinhood is
not a bank, it functions similarly. To provide FDIC (Federal Deposit Insurance Corp.) insurance, Robinhood performs bank sweeps, which means the cash moves to partner banks.
Cash “held” in your account (that’s really moved to these banks) is eligible for FIDC insurance
up to a maximum of $1.25 million (up to $250,000 per program bank). Robinhood notes, however,
that it is the responsibility of each customer to monitor whether “the total amount on deposit
exceeds the limit of available FDIC insurance.”
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Is Robinhood FDIC Insured Wrapping Up
So, in short, your money is protected with Robinhood, except in the case of cryptocurrency.
When it’s in the form of securities (stocks or ETFs), or cash that hasn’t yet been swept to a program bank, your investments are SIPC protected. When they are swept to a program bank, they are then covered by FDIC protection.
Robinhood certainly
has some pros and cons but has evolved into a major discount broker through its appeal to millennial and Gen Z investors. It might not be the best choice if you’re a serious investor, but at least you don’t have to worry about the security of your funds.
Robinhood Review
First of all, Robinhood is a commission-free stock trading and investing app. Due to its free
trades, embrace of meme stocks and crypto, and overall targeting of younger investors, Robinhood
has exploded in popularity in recent years.
But does that mean it’s a good broker choice? Maybe.
Learn more in
Robinhood Review
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