are my stocks insured? Protection explained

are my stocks insured? Protection explained

Are my stocks insured? If you keep stocks, ETFs, mutual funds or swept cash at a brokerage, it’s natural to ask whether those assets are "insured" and what that protection actually covers. This article gives a clear, beginner-friendly walkthrough of the two main U.S. protections (SIPC and FDIC), what they do and do not cover, special considerations for digital assets, how clearing vs introducing brokers affect custody, and step-by-step actions you can take today to verify and improve protection. You’ll also find example scenarios and a glossary to make terms concrete. Read on to learn whether your holdings are insured and what to check at your broker (including Bitget custody and Bitget Wallet options).

As of 2024-05-01, according to the SEC investor bulletin and SIPC guidance, the rules described below reflect standard U.S. practice for broker-dealer custody and bank deposit protection.

Two different protections to understand — SIPC vs FDIC

A core point to start with: "are my stocks insured" has two separate answers depending on whether the assets are securities held in brokerage custody or bank deposits swept to banks.

• SIPC (Securities Investor Protection Corporation) protects customer securities and brokerage cash when a SIPC-member broker-dealer fails and customer assets are missing from custody records. SIPC is focused on restoring missing customer property — it is not a guarantee against market losses.
• FDIC (Federal Deposit Insurance Corporation) protects bank deposit accounts if an insured bank fails, typically up to $250,000 per depositor per ownership category.

Knowing which protection applies depends on where your assets are held: brokerage custody vs bank deposit. If you ask "are my stocks insured," SIPC is the primary relevant protection for typical U.S. brokerage securities accounts. For cash that’s been swept to banks, FDIC coverage may apply instead.

What is SIPC?

The Securities Investor Protection Corporation (SIPC) is a nonprofit created by Congress to provide limited protection to customers of brokerage firms that are SIPC members. When a SIPC-member broker-dealer fails and customer assets are missing from custody, SIPC works with a court-appointed trustee to return customer cash and securities, or to advance funds to enable a prompt transfer of customer accounts to another firm.

Most U.S. broker-dealers are SIPC members; membership is automatic for many registered broker-dealers but always verify membership for your firm. SIPC coverage is focused on the return of missing assets, not on investment performance or losses due to market movements.

When SIPC steps in

SIPC steps in when two things happen:

1. A SIPC-member brokerage firm becomes insolvent or fails, and
2. Customer cash or securities are missing from the firm’s custody or records.

SIPC does not cover losses from market declines, poor investment advice, or trading losses. Instead, SIPC’s role is to restore missing customer property or facilitate the transfer of accounts to another broker using SIPC advances when necessary.

When SIPC intervenes, a court-appointed trustee typically oversees the liquidation or transfer process. Customers may need to file claims and provide documentation (account statements, trade confirmations) to help prove ownership.

SIPC coverage limits and how they’re applied

The standard SIPC protection: up to $500,000 per "separate customer," which includes a limit of up to $250,000 for cash awaiting investment (cash claims). The $500,000 figure covers the aggregate of securities and cash that are missing and due to the customer.

How "separate customer" or "separate capacity" works:

• Different ownership capacities (individual accounts, joint accounts, IRAs, certain trust capacities) can create separate SIPC protection buckets. That means an individual taxable account and an individual IRA at the same SIPC-member broker may be treated as separate customers for SIPC limits, potentially providing multiple $500,000 buckets.
• Corporate accounts, partnership accounts and other account types are treated separately where legal distinctions exist, but terminology and handling can be complex — check broker disclosures and consult legal counsel for high-value or complex arrangements.

SIPC’s limits are statutory and applied based on customer status and how assets are registered. They do not increase to cover market losses, and they apply only when assets are missing due to broker failure.

What SIPC covers

Typical assets SIPC covers (if missing from brokerage custody) include:

• Stocks (registered securities)
• Bonds
• ETFs and mutual fund shares
• Money market mutual funds and other money market fund shares (treated as securities for SIPC restoration)
• U.S. Treasury securities and other registered government securities
• Registered negotiable certificates of deposit (CDs) when held as customer securities
• Options and other registered securities products (subject to specifics of the member firm’s records)

SIPC’s focus is on custody reconciliation — if the brokerage’s records don’t show that a customer owns the assets and the broker is insolvent, SIPC may act to restore or facilitate deliverance of equivalent securities.

What SIPC does not cover

Important exclusions when asking "are my stocks insured" include:

• Market losses: SIPC will not reimburse losses due to declines in the value of securities.
• Commodities and futures: These are generally outside SIPC protection unless the product is a registered security.
• Unregistered investment contracts and certain private instruments.
• Losses due to fraud in advisory relationships or bad investment advice (those are civil claims against advisers or brokers, not SIPC coverage for investment outcomes).
• Assets of foreign subsidiaries or entities that are not SIPC members.
• Most cryptocurrencies and digital assets when those assets are not registered securities or are treated as commodities or unregistered investment contracts. (See the dedicated section below.)

Understanding these exclusions is key to answering "are my stocks insured" accurately: for typical listed stocks and registered securities held in custody at a SIPC-member brokerage, SIPC gives a level of restoration protection; for many other asset types, SIPC may not apply.

Special considerations for digital assets and cryptocurrencies

A frequent variant of the question "are my stocks insured" in recent years has become "are my crypto assets insured?" SIPC’s stance is nuanced: digital asset securities that are unregistered investment contracts generally are not protected by SIPC. For certain tokens that qualify as registered securities, SIPC protection might apply if those assets are held as customer securities in the broker’s custody and the broker is a SIPC member.

In practice, many crypto exchanges and custodians rely on private insurance policies to cover theft or security breaches, and those policies vary in scope, covered events, sublimits, and exclusions. Private insurance often excludes certain types of losses (insider theft, negligence, staking-related loss, or losses due to protocol failures) and usually covers a capped dollar amount.

Because of the complexity and evolving regulatory treatment of digital assets:

• Verify whether the platform treats crypto as a customer asset held in custody, or as an investment contract, or as a deposit.
• Ask for details on private insurance limits and exclusions.
• Prefer regulated custodians that disclose custody arrangements and insurance structures.

Bitget and Bitget Wallet provide custodial options with public custody disclosures; if you hold digital assets on Bitget, review Bitget’s custody and insurance statements to understand whether and how private coverage applies.

Clearing brokers vs introducing brokers and custody implications

Two brokerage roles affect custody and therefore SIPC restoration:

• Clearing brokers: These firms typically hold actual custody of customer securities and settle trades. Clearing brokers appear on custody records and their failures or record problems are the situations where SIPC restoration is triggered.
• Introducing brokers: These firms solicit and service customers but may route trade execution and custody to a clearing broker. In such arrangements, custody typically resides with the clearing broker. If an introducing broker fails but the clearing broker remains solvent and custody is intact, SIPC restoration for missing assets tied to clearing broker failure is the relevant scenario.

When you evaluate protection, ask whether the brokerage is an introducing broker, who the clearing partner is, and where assets are actually held. Custody location matters because SIPC acts when brokerage custody records show missing customer property.

FDIC and bank sweep accounts

If you ask "are my stocks insured," it’s equally important to ask where your uninvested cash is parked. Many brokerages offer sweep programs that move uninvested cash into either:

• Money market mutual funds (treated as securities and therefore within SIPC considerations if missing), or
• FDIC-insured bank deposit sweep programs that place your cash into one or more FDIC-insured banks.

FDIC insurance protects deposits at FDIC-insured banks up to $250,000 per depositor per ownership category. That coverage protects bank deposits in the event of a bank failure; it does not protect securities or mutual funds.

Key distinctions:

• Cash swept into a money market mutual fund is usually treated as a security (not a deposit) and could be subject to SIPC restoration if the brokerage’s records show missing fund shares. The mutual fund itself is not FDIC insured.
• Cash swept into FDIC-insured deposit accounts is protected by FDIC limits, not SIPC.

Always confirm where your broker’s sweep program places uninvested cash. The difference — FDIC coverage vs SIPC treatment — is material for the question "are my stocks insured?" because it affects how your cash is protected.

Private/excess insurance and broker-specific protections

Many brokerages and custodians purchase private "excess of SIPC" insurance policies to extend coverage for customer securities above SIPC’s statutory limits. Important points:

• Excess insurance typically applies to securities shortfalls above SIPC limits (i.e., if SIPC’s restoration does not fully cover customers), not to market losses.
• Excess insurance terms vary by insurer and by firm. Coverage amounts, per-customer caps, sublimits, and exclusions differ.
• Excess insurance is subject to contract terms and the financial strength of the insurer; it is not a statutory guarantee.

If you hold large balances, ask your broker whether they offer excess-of-SIPC coverage, the per-customer limits, and the policy’s exclusions. Broker disclosure pages normally describe whether excess coverage exists and the insurer’s identity.

Bitget may carry particular custody and insurance arrangements for securities-like products and digital assets; review Bitget’s public disclosures for specifics.

What to do now — how to verify your protections

If you’re asking "are my stocks insured" about your own accounts, follow these practical steps:

1. Verify SIPC membership: Check the broker’s legal disclosures and the SIPC member list or ask your broker directly. Ask for written confirmation of membership.
2. Read account agreements and protection disclosures: Find descriptions of sweep programs, custody arrangements, and insurance policies (SIPC and private).
3. Confirm where your cash is swept: Is uninvested cash moved to FDIC-insured banks, or to money market funds? This determines FDIC vs SIPC treatment.
4. Ask about excess-of-SIPC insurance: If you have large securities balances, request the policy summary and per-customer limits.
5. For crypto and digital assets: Ask whether assets are treated as customer securities, how custody is structured, whether private insurance exists, and what exclusions apply.
6. Keep records: Maintain account statements, trade confirmations, and correspondence; these are essential if you must file a claim.
7. Consider account diversification: Use multiple account types (individual, joint, retirement) or multiple institutions if you need protection beyond SIPC/FDIC limits.
8. Confirm clearing/custody arrangements: If your broker is an introducing broker, know the clearing broker’s identity and custodian role.

If you use Bitget or Bitget Wallet for custody of digital assets, review Bitget’s custody disclosures and contact customer support for policy details.

If your brokerage fails — claims process overview

A brokerage failure typically follows these steps:

1. Regulatory or firm announcement of suspension or insolvency triggers a court-supervised proceeding.
2. A court-appointed trustee (often a bankruptcy trustee) works with SIPC if the firm is a SIPC member.
3. Customers receive instructions on how to file claims, with deadlines and required documentation (statements, confirmations, ID).
4. SIPC and the trustee reconcile records. If customer securities are locatable, accounts may be transferred to another firm. If securities are missing, SIPC may advance funds or provide cash-in-lieu payments up to coverage limits.
5. Complex cases can take months or years; timely documentation speeds processing.

If a firm fails, follow official communications and file the claim forms promptly. SIPC will publish guidance in major member-failure cases; keep your documentation organized and follow trustee instructions.

Common misconceptions and FAQs

Q: Does SIPC insure against market losses? A: No. SIPC does not compensate for declines in the value of securities. SIPC’s role is to restore missing customer property in a broker failure.

Q: Are all brokerage holdings FDIC insured? A: No. FDIC protects bank deposits placed at FDIC-insured banks, but it does not insure securities, mutual funds, or money market mutual funds. Only cash swept into FDIC-insured deposit accounts is covered by FDIC.

Q: Is my crypto protected by SIPC? A: Usually not. Most cryptocurrencies are treated as commodities or unregistered investment contracts; SIPC protection generally does not extend to those assets unless they are registered securities held in custody. Check your custodian’s disclosures and private insurance arrangements.

Q: Is private excess insurance the same as SIPC? A: No. Private excess insurance is a contractual policy that can extend the dollar amount of protection above SIPC’s statutory limits, subject to policy terms and exclusions. SIPC is a statutory protection mechanism for missing customer assets at failed broker-dealers.

Q: If I have accounts in different capacities (taxable vs IRA), does SIPC treat them separately? A: Often yes. Different legal account capacities (for example, an individual taxable account and a separate IRA) frequently create separate SIPC protection buckets. Always confirm with your broker how accounts are registered and treated.

How to increase safety of your investments

Practical, actionable steps:

• Choose regulated, well-capitalized custodians and brokers that publicly disclose SIPC membership and any excess insurance.
• Confirm and document where your cash is swept—money market funds vs FDIC-insured banks.
• For large balances, spread assets across ownership categories (individual, joint, IRA) and across institutions to create more insured buckets.
• Keep thorough records: monthly statements, trade confirmations and communications.
• For crypto, prefer regulated custodians that disclose custody architecture and insurance; consider using Bitget Wallet for self-custody when appropriate and review Bitget’s custody insurance statements.
• Consider transferring concentrated or high-value positions into accounts with explicit custody protections or direct registration when available.

These steps do not eliminate risk but increase the clarity and recoverability of assets in the rare event of custodian failure.

Sources and further reading

Foundational and authoritative sources investors should consult:

• SIPC official materials and the SIPC “What SIPC Protects” guidance (refer to SIPC member disclosures for firm-specific details).
• SEC investor bulletins on brokerage protection and SIPC basics (SEC publishes practical investor guides relevant to brokerage failures and SIPC coverage).
• FDIC coverage guides explaining deposit insurance limits and ownership categories.
• Major brokerages’ account-protection pages that describe custody, segregation, and any excess insurance (check your brokerage’s disclosures).

As of 2024-05-01, according to the SEC investor bulletin, SIPC’s statutory limits remain $500,000 per separate customer, including up to $250,000 for cash claims. Investors should consult SIPC, SEC and FDIC pages for the most current official statements.

Appendix A: Example scenarios

Scenario 1 — Individual taxable account and IRA at the same broker:

• You ask: "are my stocks insured if I hold them in both accounts?"
• If the broker is a SIPC member, your individual taxable account may have up to $500,000 of SIPC protection (including $250,000 cash), and your IRA may be treated as a separate customer with its own $500,000 SIPC bucket. Thus, the two accounts can create separate protection limits. Confirm how accounts are registered and treated by the broker.

Scenario 2 — Money market sweep vs bank sweep:

• You ask: "are my uninvested cash balances insured?"
• If your cash is swept into a money market mutual fund, it is a security and not FDIC-insured; SIPC protection applies only if the broker’s custody records show missing fund shares due to broker failure. If cash is swept into FDIC-insured bank deposits, FDIC coverage up to $250,000 per depositor per ownership category would apply.

Scenario 3 — Crypto held on an exchange/custodian:

• You ask: "are my crypto holdings insured like stocks?"
• Most crypto assets are not SIPC-protected. Custodians often rely on private insurance with limits and exclusions. If your digital asset is a registered security and is held as a customer security in a SIPC-member broker, SIPC protection may apply; otherwise, rely on the custodian’s private insurance and custody disclosures.

Appendix B: Glossary

• SIPC: Securities Investor Protection Corporation, a nonprofit providing limited restoration of missing customer securities and cash when a SIPC-member broker fails.
• FDIC: Federal Deposit Insurance Corporation, a federal agency that insures bank deposits up to statutory limits.
• Clearing broker: The firm that processes and settles trades and often holds custody of customer securities.
• Introducing broker: A broker that acquires customers and routes trades to a clearing broker for execution and custody.
• Custody: The holding and safekeeping of customer securities on behalf of clients.
• Sweep account: A program that automatically moves uninvested cash into a designated product (money market funds or bank deposits).
• Separate capacity / separate customer: Legal distinctions among account types (individual, joint, IRA) that can create separate SIPC protection buckets.
• Excess insurance: Private insurance purchased by brokerages to provide coverage above SIPC limits, subject to policy terms.

Further steps: verify your broker’s SIPC membership, confirm where your cash is swept, and keep statements and confirmations ready. If you use Bitget for digital assets, explore Bitget Wallet and Bitget custody disclosures to understand how your crypto holdings are held and what private insurance applies. Want to learn more about Bitget’s custody features? Explore Bitget’s help pages or contact Bitget support to request custody and insurance details.

More practical guidance and up-to-date official materials from SIPC, the SEC and the FDIC will help you answer "are my stocks insured" for your specific holdings and accounts.