1. SIPC vs FDIC: the one-line difference
Quick Answer: FDIC covers the failure of a bank. SIPC covers the failure of a brokerage firm. The FDIC replaces insured deposits with cash. SIPC puts your actual stocks and bonds back in your hands. Both stop cold at market losses, which is why our investing guides treat them as plumbing, not padding.
Most people meet these acronyms in the footer of an app screen and assume one is a bigger version of the other. The question FDIC answers is: my bank went under, where is my money? SIPC answers a different one: my brokerage went under, where are my shares?
- Different failures. A failed insured bank on one side, a failed brokerage with assets missing from customer accounts on the other.
- Different assets. Deposits on one side, stocks, bonds, funds and the cash beside them on the other.
- Different fixes. The FDIC pays you the insured balance. SIPC hands back the securities, usually by moving your account to a healthy firm.
At DollarVisor we get asked about the limits first and the mechanism never, when the mechanism decides your outcome.
Here is a short explainer before we go through what each one covers.
2. What SIPC actually protects
Quick Answer: SIPC protects the custody job your broker does. If a member firm fails and securities or cash are missing from customer accounts, SIPC steps in, up to $500,000 per separate capacity including a $250,000 cash cap. It never protects the value of what you own, such as a mutual fund that drops.
Congress created SIPC in 1970, after a paperwork crisis and a market slide pushed hundreds of broker-dealers out of business. It is a non-profit funded by its member firms, not a government agency.
SIPC says the limit is $500,000, which includes a $250,000 limit for cash. Inside that limit, the list is wider than most people expect:
- Protected as securities. Stocks, bonds, Treasury securities, certificates of deposit, mutual funds and money market mutual funds.
- Protected as cash. Money the broker holds from selling securities, or waiting to buy them.
- Not protected. Commodity futures, foreign exchange, fixed annuities and unregistered limited partnerships.
- Not protected, and this surprises people. Unregistered digital asset securities, stablecoins and any crypto that is not a security, even when a member firm holds it.
The costliest exclusion is simpler. SIPC does not bail you out when your holdings fall in value, and it does not compensate you for bad advice. That is a complaint, not a claim.
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3. What FDIC insurance actually protects
Quick Answer: FDIC insurance covers deposits at an insured bank up to $250,000 per depositor, per bank, per ownership category. Checking, savings, money market deposit accounts and bank CDs qualify. Investments sold through the bank do not, even with the bank’s name on the statement.
Deposit insurance is automatic. You never buy it and never file for it. When an insured bank fails, the FDIC usually moves the accounts to a healthy bank over a weekend.
The FDIC’s record is the strongest number here: since insurance began on January 1, 1934, no depositor has lost a penny of insured funds in a bank failure.
Two details do the heavy lifting, and both sit in the phrase “per ownership category”:
- Categories count separately. The FDIC recognises 14 ownership categories, including single, joint, retirement and trust. Each gets its own $250,000.
- Accounts in one category do not stack. Three savings accounts in your own name at one bank are one $250,000 bucket, not three.
Never insured, wherever you bought it: stocks, bonds, mutual funds, annuities, life insurance and the contents of a safe deposit box.
4. SIPC vs FDIC vs NCUA, side by side
Quick Answer: Three safety nets cover most American households. FDIC covers banks, NCUA covers federally insured credit unions at the same $250,000, and SIPC covers brokerage custody at $500,000 per capacity. Only the first two are backed by the United States government.
| Program | What it covers | Limit | Trigger | Never covers |
|---|---|---|---|---|
| FDIC | Deposits at insured banks | $250,000 per depositor, per bank, per ownership category | The bank fails | Stocks, bonds, funds, annuities, crypto |
| NCUA | Shares at federally insured credit unions | $250,000 per member, per credit union, per category | The credit union fails | Investments sold on credit union premises |
| SIPC | Securities and cash held at a member brokerage | $500,000 per separate capacity, cash capped at $250,000 | The brokerage fails and assets are missing | Market losses, futures, forex, unregistered digital assets |
| Excess SIPC | Private cover some brokers buy above the SIPC limit | Set by the firm’s policy, not by law | After SIPC limits run out | Market losses, plus policy exclusions |
Sources: SIPC “What SIPC Protects”; FDIC account ownership categories guide; NCUA share insurance coverage, 2026.
Excess SIPC is a commercial policy the firm buys, so its terms live in the firm’s disclosures, not in any statute.
5. Which one covers you? Ten real situations
Quick Answer: The fastest way to settle SIPC vs FDIC in your head is to run your own accounts through real situations. In three of the ten below the honest answer is “neither,” which is why people get caught out after the fact.
| Situation | Covered by | What happens |
|---|---|---|
| Bank fails, $80,000 in checking | FDIC | Balance restored, usually within days |
| Bank fails, $400,000 in one name | FDIC, partly | $250,000 insured; $150,000 becomes a receivership claim |
| Brokerage fails, shares missing | SIPC | Securities restored where possible, up to the limit |
| Brokerage fails, $300,000 uninvested cash | SIPC, partly | $250,000 cash cap applies; the rest is a general claim |
| Your index fund falls 30% | Neither | Market risk, never insured by anyone |
| Crypto held in a brokerage app | Neither | Unregistered digital assets sit outside SIPA |
| Money market mutual fund at a broker | SIPC | Treated as a security, not as cash |
| Brokerage cash swept to partner banks | FDIC | Insured at each program bank, if records are accurate |
| A fintech app fails, partner bank is fine | Neither, yet | No bank failed, so no insurance event |
| Federally insured credit union fails | NCUA | Shares insured to $250,000 per category |
Sources: SIPC coverage rules; FDIC deposit insurance rules; NCUA share insurance, 2026. Illustrative situations.
6. Why $500,000 is not twice as good as $250,000
Quick Answer: Comparing the two headline numbers is the most common mistake in the SIPC vs FDIC debate. The FDIC limit is what you get paid. The SIPC limit only backstops a shortfall, and in most brokerage failures the assets are there and simply get transferred.
Brokerage firms must keep customer securities separate from their own assets, so a failure usually ends in a transfer rather than a payout. The trustee moves whole accounts to a healthy broker, and customers keep positions worth far more than $500,000.
The record backs this up. Since 1970, SIPC advanced $3.6 billion to make possible the recovery of $143.8 billion in assets for an estimated 773,000 investors. It says no fewer than 99 percent of eligible people get their investments back.
$3.6 billion of SIPC money moved $143.8 billion of customer assets back where they belonged. The limit is the floor, not the ceiling.
Lehman Brothers Inc. makes the point at scale. Within weeks of the 2008 failure the trustee moved more than 110,000 customer accounts holding over $92 billion. Almost none of that was a $500,000 payment.
The FDIC number behaves differently. If your bank fails with $400,000 in single-name savings, $250,000 is insured and the other $150,000 becomes a claim that may pay cents on the dollar.
7. What the two limits have been since 1934
Quick Answer: The SIPC securities limit has been $500,000 since 1980 and has never been raised. The FDIC limit moved several times before settling at $250,000 in 2008. Inflation has quietly shrunk both ever since.
| Year | FDIC limit | SIPC securities limit | SIPC cash sub-limit |
|---|---|---|---|
| 1934 | $2,500 | Did not exist | $0 |
| 1970 | $20,000 | $50,000 | $20,000 |
| 1978 | $40,000 | $100,000 | $40,000 |
| 1980 | $100,000 | $500,000 | $100,000 |
| 2008 | $250,000 | $500,000 | $100,000 |
| 2010 | $250,000, made permanent | $500,000 | $250,000 |
| 2026 | $250,000, unchanged for 18 years | $500,000, unchanged for 46 years | $250,000 |
Sources: SIPC history and track record; FDIC statutory coverage history, 1934 to 2026.
The 2010 Dodd-Frank Act raised the SIPC cash sub-limit to $250,000 and gave it an inflation adjustment, but left the securities figure alone. It has now stood for nearly half a century.
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8. How much one household can protect at a single firm
Quick Answer: A married couple can hold $2.5 million of SIPC-covered capacity at one brokerage, using individual, joint and retirement titles. At one bank, the same couple can insure $1.5 million. Titling does the work, not the firm.
SIPC measures coverage by “separate capacity.” Two accounts in your own name at one firm share a single $500,000 bucket. An individual account, a joint account and an IRA are three different capacities, each with its own limit.
| Setup | Protected balance | Total |
|---|---|---|
| One person, one brokerage account | $500,000 | |
| One person, plus IRA and Roth IRA | $1,500,000 | |
| Couple: two individual, one joint | $1,500,000 | |
| Couple: the above, plus two IRAs | $2,500,000 | |
| Same couple, deposits at one bank | $1,500,000 |
Modeled scenario using SIPC separate-capacity rules and FDIC ownership categories. Sources: SIPC investors with multiple accounts; FDIC ownership categories.
The bank row assumes two single accounts, a joint account insuring $250,000 per co-owner, and two retirement accounts. Trust titling can push it higher again.
9. The gap in the middle: apps, sweep cash and crypto
Quick Answer: The riskiest money in 2026 sits in apps that are neither bank nor brokerage, holding your balance at a partner bank through a middleman. If the app fails while the bank survives, no insurance event has occurred and no safety net switches on.
This is not theoretical. When the middleware provider Synapse failed in 2024, tens of thousands of app customers were locked out of money sitting in pooled accounts at partner banks. CNBC reported that the promise of deposit insurance did not deliver, because no bank failed. What failed was the ledger recording whose money was whose. The FDIC proposed a custodial-account recordkeeping rule in September 2024.
Until rules like that bed in, three habits protect you:
- Find the bank’s name. If an app cannot tell you which insured bank holds your balance, treat it as uninsured.
- Read the sweep disclosure. Cash swept to program banks is covered by FDIC at each bank, not by SIPC, and counts against your other deposits there.
- Assume crypto has no net. Unregistered digital assets and stablecoins sit outside SIPA, and are not deposits.
10. How to check your own coverage in 15 minutes
Quick Answer: List every account, group them by institution and by title, then compare each group to the right cap. Most households finish in a quarter of an hour and find a balance that drifted past a limit since anyone last looked.
How to check whether your accounts are covered
Run these five steps yearly, and after any large transfer or inheritance.
- List every institution. Each bank, credit union, brokerage and app that holds money for you, with the balance at each.
- Confirm membership. Check the bank on FDIC BankFind, the credit union on the NCUA research tool, and the brokerage on the SIPC member list.
- Group by title, not by login. Group balances by ownership: single, joint, IRA, Roth, trust. Two accounts with the same title share one cap.
- Compare each group to its cap. $250,000 per bank or credit union category, $500,000 per brokerage capacity with $250,000 of that available for cash.
- Fix the overflow. Retitle, move the excess elsewhere, or shift idle cash into securities, which are covered as securities rather than as cash.
Step five is where the habit of investing steadily helps. Cash deployed on schedule spends less time against the $250,000 sub-limit.
11. The verdict
Quick Answer: Stop reading SIPC vs FDIC as a ranking. Use the FDIC and NCUA caps to decide where cash sits. Treat SIPC as a custody backstop, not a reason to spread accounts thinly. And accept that market risk is uninsured by design.
Our position, in three lines:
- Cash needs planning. The $250,000 caps are real limits. Split balances by title or by institution before you exceed them.
- Securities deserve less worry than they get. Your shares are your property, held in custody, and the record on returning them is strong.
- The gap needs attention. Apps, sweep programs and crypto are where the assumptions break.
None of it changes by state: $250,000 in Texas is $250,000 in New York. What carries a state postcode is the securities regulator you complain to, and whether a local credit union is federally or privately insured. Failures do cluster, as the FDIC failed bank list shows.
Neither program does anything about tax. When you sell, capital gains rules decide what you keep, and before acting on anyone’s advice, check whether they are a fiduciary. Coverage answers one narrow question, and not the one that decides your returns.
12. Frequently Asked Questions
1. Is SIPC insurance?
No. SIPC is a non-profit corporation created by Congress in 1970 and funded by its member firms. It is not an insurance company, and unlike the FDIC it does not carry the full faith and credit of the United States. Its job is to restore missing customer cash and securities when a member firm fails.
2. Does SIPC cover a brokerage account worth $900,000?
Your securities are your property, so a failure normally means the whole account moves to another firm whatever its size. The $500,000 per capacity applies to a shortfall the trustee cannot cover. Splitting across capacities, such as individual, joint and IRA, raises the backstop.
3. Is the cash in my brokerage account FDIC insured?
It depends where the cash sits. Cash held at the broker for buying or selling securities is SIPC-protected up to $250,000. Cash swept into partner banks is FDIC-insured at those banks instead, and counts toward your other deposits there.
4. Are crypto and stablecoins covered by SIPC or FDIC?
Neither. SIPC states that unregistered digital asset securities are not protected, even when a member brokerage holds them, and the statutory definition of a security excludes stablecoins and commodities. Crypto is also not a bank deposit, so FDIC insurance never applies. Assume no safety net.
5. Which is safer, a bank or a brokerage?
Neither, because they carry different risks. Bank deposits face the risk of the institution failing, capped at $250,000 per category. Brokerage holdings face market risk, which no program covers, plus a small custody risk that SIPC backstops. Match the account to the job the money is doing.
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Educational information, not legal or investment advice. Coverage depends on your own account facts, and federal rules change. See our disclaimer.