The Federal Deposit Insurance Corporation on Tuesday proposed a new rule forcing banks to keep detailed records for customers of fintech apps after the failure of tech firm Synapse resulted in thousands of Americans being locked out of their accounts.
That's what happened in the Synapse collapse, which impacted more than 100,000 users of fintech apps including Yotta and Juno.
Customers with funds in these "for benefit of" accounts have been unable to access their money since May.
Keeping better records would allow the FDIC to quickly pay depositors in the event of a bank failure by helping to satisfy conditions needed for "pass-through insurance," FDIC officials said Tuesday in a briefing.
While FDIC insurance doesn't get paid out in the event the fintech provider fails, like in the Synapse situation, enhanced records would help a bankruptcy court determine who is owed what, the officials added.
Persons:
Biden
Organizations:
Federal Deposit Insurance Corporation, FDIC, Federal Register, Bank, JPMorgan Chase