The FDIC and SIPC logos often appear side by side on the same website, which makes them look like two versions of the same promise. They are not. The FDIC insures the dollar value of bank deposits when a bank fails. SIPC steps in when a brokerage firm fails and customer securities or cash are missing, and it returns what was in your account rather than what it was once worth. Knowing which one applies to each part of your money, and what falls through both, is the point of this comparison.
What is the difference between FDIC and SIPC?
The FDIC insures bank deposits against the bank's failure, while SIPC restores securities and cash that are missing when a brokerage firm fails.
FDIC insurance covers $250,000 per depositor, per insured bank, per ownership category. SIPC protection covers $500,000 per customer, including up to $250,000 in cash, for each separate capacity in which you hold accounts at a member firm. The numbers look comparable, but the promises are different in kind.
FDIC insurance protects a value: a $100,000 deposit is worth $100,000 plus interest when the bank fails. SIPC protects the custody function of a broker. SIPC itself says its protection is not the same as protection for cash at an FDIC-insured bank, because it does not protect the value of any security. If shares you owned at a failed broker fell 30% before the firm collapsed, SIPC works to give you back those shares, not their old price.
FDIC and SIPC compared side by side
The table sets out how the two programs differ on every point that matters to a depositor or investor.
| Feature | FDIC | SIPC |
|---|---|---|
| What it is | Independent agency of the federal government, created in 1933 | Nonprofit membership corporation created by Congress in 1970; not a government agency |
| Backing | Full faith and credit of the US government | A fund paid for by member broker-dealers, plus a line of credit of up to $2.5 billion with the Treasury |
| Who is covered | Depositors at FDIC-insured banks and savings associations | Customers of SIPC-member brokerage firms |
| What is protected | Deposits: checking, savings, money market deposit accounts, CDs, cashier's checks | Securities and cash held in custody: stocks, bonds, Treasuries, CDs, mutual funds and money market funds |
| Standard limit | $250,000 per depositor, per bank, per ownership category | $500,000 per customer, of which no more than $250,000 for cash, per separate capacity |
| What triggers it | The bank fails and is closed | The brokerage fails and is placed in liquidation with customer property missing |
| What you get back | The balance plus accrued interest, up to the limit | The missing securities where possible, otherwise their value on the filing date, plus cash, up to the limit |
| Typical timing | The FDIC aims to pay within two business days | A bulk transfer can restore access in as little as a week; claims can take months or years |
| Claim needed | No, for most deposits | Yes in a liquidation, by court-set deadlines; the SEC advises filing even after a transfer |
| Citizenship | Not required | Not required |
| Separate coverage | Single, joint, retirement, trust, business and other categories | Separate capacities such as individual, joint, IRA, Roth IRA, trust and corporate accounts |
| Track record | No depositor has lost a penny of insured funds since 1934 | At least 99% of eligible customers have received their investments back |
| Does not cover | Investments, Treasuries, crypto, safe deposit boxes, failures of non-bank companies | Market losses, bad advice, worthless securities, commodity futures, currency trades, unregistered investment contracts, fixed annuities, crypto that is not a registered security, stablecoins |
What triggers an FDIC or SIPC payout?
An FDIC payout starts when a bank is closed; SIPC acts only when a brokerage firm cannot meet its obligations to customers and a court orders its liquidation.
Bank failures follow a set routine. The FDIC usually arranges for a healthy bank to take over insured deposits, so customers wake up at a new bank with their balances intact; if no buyer appears, it pays by check. Amounts above the limit become a claim on the failed bank's remaining assets.
Worked example: A bank fails holding $310,000 in one person's name
- Single-category balance, including interest to the closing date: $310,000
- Insured, paid through the acquiring bank or by FDIC check: $250,000
- Uninsured: $60,000, which becomes a receivership claim repaid from the sale of the bank's assets, possibly in part and over time
Broker failures work differently, and customer property is meant to survive them, because brokers must keep it segregated from their own business. A closing firm may be able to transfer its customer accounts to another broker without SIPC at all. When it cannot, a trustee pools the customer property that remains, shares it out pro rata, and uses SIPC advances to fill shortfalls up to the limits. Anything still unpaid becomes a general creditor claim.
Worked example: A broker fails with customer property missing
A customer's valid claim is $150,000 in securities and $380,000 in cash, $530,000 in total.
- Maximum SIPC advance for securities: $150,000
- Maximum SIPC advance for cash: $250,000, the cash limit
- Maximum total advance: $400,000, within the $500,000 overall limit
- The other $130,000 can come only from the customer's pro rata share of recovered customer property; what that does not cover becomes a general creditor claim
Had the $380,000 been swept into deposits at two partner banks instead, it would have sat at those banks rather than with the broker, insured by the FDIC against the banks' failure within each bank's limits.
How do claims and timing differ?
The FDIC pays most insured deposits without any claim; SIPC customers file a claim with the trustee and face two deadlines.
The FDIC's goal is to pay within two business days, though deposits placed through brokers, formal trusts and employee benefit plans can take longer because the FDIC needs documents first.
In a SIPC liquidation, the date the court acts is usually the filing date, and securities are valued as of that day. Customers are mailed a claim form. Filing within the first deadline, which the court sets at usually 30 or 60 days after notice, lets you insist on getting your securities back where they can be found or bought. Filing later, but within six months, leaves the trustee free to pay cash instead. After six months, the claim is denied. A bulk transfer can give you access to your account at a new broker in about a week, but the SEC still advises filing a claim in case the transfer leaves gaps.
Big cases show both the speed and the limits. After Lehman Brothers Inc. failed in 2008, more than 110,000 customer accounts holding over $92 billion were moved within weeks. In the Madoff liquidation, where customer assets had been stolen, the trustee had recovered $14.556 billion and distributed nearly $14.33 billion by 2023, making whole every customer with a net claim up to about $1.705 million. Since 1970, SIPC reports advancing $3.6 billion to make possible the recovery of $143.8 billion for an estimated 773,000 investors.
What does neither FDIC nor SIPC cover?
Neither program protects you from losses that happen while every institution involved is still standing.
- Market losses. A stock, bond fund or crypto price that falls is outside both programs.
- Scams you authorize. If you send money to a fraudster yourself, no deposit insurance or SIPC protection applies. Regulation E caps your liability for unauthorized electronic transfers, at $50 if you report a lost or stolen card within two business days and $500 if later, and leaves transfers made more than 60 days after the statement uncapped. A payment you approved yourself is not unauthorized under that rule.
- Crypto that is not a registered security. SIPC says it does not protect any digital asset that does not qualify as a security under the law, and it notes that bitcoin, ether, solana and XRP are among the SEC and CFTC's examples of digital commodities. The Bitcoin page shows how far prices move, which no program would cover in any case.
- Payment stablecoins. The GENIUS Act says payment stablecoins are not backed by the full faith and credit of the United States and are not insured by the FDIC; issuers may not claim otherwise. The law's timeline: Signed July 18, 2025 (Public Law 119-27); takes effect January 18, 2027. SIPC's definition of a security excludes stablecoins. Compare coins on the top stablecoins page.
- Non-bank failures. The FDIC is explicit that non-bank companies are never FDIC insured and that deposit insurance does not protect against a non-bank's insolvency.
How are fintech, crypto and sweep balances protected?
Protection follows the money, not the logo: the question is always which institution holds the funds, and in whose name.
Fintech apps. Money you send to an app is not eligible for FDIC insurance until the app deposits it at an insured bank, and then only if records show who owns how much. Even then, it covers the bank's failure, not the app's. The 2024 collapse of Synapse, a middleware firm between apps and their partner banks, left customers without access for months because the records did not match, even though no bank failed; cash sweep accounts explained walks through the case.
Broker sweeps. Uninvested cash at a broker is either left as a cash balance at the broker, under SIPC, or swept to a money market fund, which SIPC treats as a security, or to partner banks, where the FDIC applies. Each route has different protection and usually a different yield.
Crypto platforms. SIPC membership, where a platform has it, does not extend to crypto that is not a registered security, so customers' position in a collapse depends on bankruptcy law and the platform's terms.
Worked example: One brokerage account, two protections
An account holds $200,000 of ETFs and Treasury bills and $300,000 of cash.
- If the cash is swept to two program banks at $150,000 each, and the account holder has no other deposits there, all $300,000 is FDIC insured, and the $200,000 of securities falls under SIPC.
- If the cash instead sits at the broker, SIPC's limits cover $200,000 of securities plus $250,000 of cash, leaving $50,000 exposed if customer property were missing and could not be recovered.
How to check which protection applies to your money
A few lookups answer the question for each account.
Five checks
- Confirm a bank is insured, and which charter it uses, in the FDIC's BankFind tool.
- Confirm a broker is a SIPC member on SIPC's member list, and research the firm on FINRA's BrokerCheck.
- Read the sweep disclosure to see whether cash goes to a money market fund or to banks, and which banks.
- In any app, find the name of the partner bank and whether the account is a deposit or a balance with the app itself.
- Keep statements and trade confirmations, which support an FDIC or SIPC claim if records are disputed.
What are the risks of relying on the wrong protection?
The biggest risk is assuming that a logo covers something it does not, which tends to surface only after a failure.
- Cash parked at a broker. More than $250,000 of uninvested cash at one broker exceeds SIPC's cash limit.
- Valuation on the filing date. If the trustee pays cash, you receive the filing-date value, whatever the market does next.
- Missed deadlines. A late SIPC claim can lose the right to get securities back, and one filed after six months is forfeited.
- Excess SIPC policies. They are private insurance with terms set by each firm's policy, not federal protection.
- App and middleware failures. FDIC coverage cannot help when an app or its middleware fails, and recovery runs through bankruptcy.
- Uninsured bank deposits. Balances above the FDIC limit can take years to recover, and may not be repaid in full.
For a fuller map of where cash can sit and what protects it, see FDIC insurance explained, how to insure more than $250,000, the ten risks in types of investment risk and the safe investments hub. The Treasury bill calculator shows what bills held at a broker would earn.