Robinhood announced that it was launching a “checking and savings” service paying 3% interest and said customer deposits would be insured by SIPC for up to USD 250,000. A day after the announcement, the CEO of SIPC, an industry nonprofit created by Congress to help recover customer assets when brokerages go under, told reporters he did not believe the fund would actually insure Robinhood’s accounts, according to Reuters.
In response Robinhood altered the product’s name on its website to “cash management” and removed references to SIPC insurance. A blog from the company’s founders did not clarify whether the new service would be insured.
As a result the senators asked for an update on how regulators “carefully monitor fintechs who, intentionally or not, blur financial products for a competitive advantage.”
Robinhood, which is valued at USD 5.6 billion, is best known with young consumers for its commission-free stock trading app. Like other fintech startups, it has been trying to branch out into other financial services, such as deposits.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now