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this Federal Deposit Insurance Corporation A new rule was proposed on Tuesday that would force banks to keep more detailed records for customers of fintech apps after the collapse of tech company Synapse left thousands of Americans locked out of their accounts.
The rule, which targets accounts opened by fintech companies that work with banks, requires the agency to keep records of account owners and daily balances attributable to the account owners, according to a memo from the Federal Deposit Insurance Corporation (FDIC).
Fintech apps typically use an account type in which many customers’ funds are pooled into one large account at a bank, which relies on the fintech or a third party to maintain a ledger of transactions and ownership.
This situation puts customers at risk that the non-bank institutions involved may keep shoddy or incomplete records, making it difficult to determine who to pay in the event of a failure. That’s what happened with the Synapse crash, which affected more than 100,000 end-users of fintech apps including Yotta and Juno. Customers who had funds in these “beneficiary” accounts have been unable to withdraw their funds since May. .
“In many cases, these funds are advertised as insured by the FDIC, and consumers may believe that their funds will remain safe and secure because of representations about depositing these funds with an FDIC member bank,” the regulator said in a statement. Easy to use”. memorandum.
Keeping better records would allow the FDIC to quickly pay depositors in the event of a bank failure and would also help bankruptcy courts determine who owes what to whom if a fintech provider fails, FDIC officials said in a Tuesday briefing.
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