What CDIC and CIPF Say About Crypto

Two Canadian safety nets come up often when people talk about money held with a financial firm. One is deposit insurance, run by the Canada Deposit Insurance Corporation (CDIC). The other is investor protection, run by the Canadian Investor Protection Fund (CIPF). Because both names sound reassuring, a reader may assume they cover anything that sits in an account with a crypto-related firm. This article does not make that assumption, and neither do the two bodies. It reads what each one publishes about crypto in its own words, and it adds nothing to those words. The goal is to show where each safety net starts and where, according to its own pages, it stops.

Start with the deposit insurer. According to CDIC, cryptocurrencies, including stablecoins, are among the products not eligible for coverage. The list sits on the page that sets out what is covered, so the reader sees the exclusion next to the description of cover. CDIC also says that coverage is automatic and comes at no cost to the depositor when banking with a member institution. Those two statements fit together. Cover is described in terms of banking with a member institution, not in terms of an app, a brand or a slogan. Reading the page closely matters more than relying on a name that sounds official or familiar to the reader.

A joint statement from November 2022, published through the Financial Consumer Agency of Canada, is more direct. According to that statement, crypto-assets are not eligible for deposit insurance under the CDIC Act. It also says that firms must not mislead customers about this. The second sentence matters as much as the first. It means that a firm which hints at deposit insurance for crypto is, on the face of the statement, doing something the authorities have told it not to do. For a reader, the practical lesson is to treat any suggestion of deposit insurance on a crypto product as a statement that can be checked against these pages, and that the firm should be able to explain in writing.

Now the investor side. According to the CIPF, it describes limited protection for property held by a member firm for an eligible client if the firm becomes insolvent. That is a narrow situation. The fund says eligible client property excludes crypto assets, and it states that it does not protect against other types of risk or loss. Consider a made-up case. Lena holds crypto through an online platform and also holds ordinary securities through a separate member firm. She reads the fund's page and learns that the description of limited protection concerns the member firm and eligible property, and that crypto assets are not in that group. Her platform account and her securities account are therefore described by two different sets of words.

Stablecoins attract the most confusion, because the name suggests stability and a link to ordinary money. According to the Department of Finance, stablecoins are not bank deposits and are not covered by CDIC deposit insurance. That sentence puts the stablecoin on the same side as other crypto-assets for this purpose. A few questions help a reader sort the claims. Does the product sit in a deposit account at a CDIC member, or is it a token? Is the firm a member of the CIPF, and does the fund's description reach the property in question? Does any advertisement imply cover that the official pages do not state? Each answer can be checked on the body's own site, in a few minutes, without relying on the product's marketing.

For the full wording, read the CDIC page on what is covered, the CIPF home page and the 2022 joint statement. Wording on official pages can be updated, so check the date and the current text before relying on any detail given here. This page is general education about what two public bodies say. It does not rate any firm or product, it cannot decide whether a given account is covered, and it does not offer legal or financial advice. For a particular account, the safest reading is the one printed by CDIC, the CIPF or the firm's own written terms, taken together and read in full, with the date in view.

• According to CDIC, cryptocurrencies, including stablecoins, are not eligible for deposit insurance
• The CIPF says eligible client property excludes crypto assets and that it does not protect against other loss
• Check any claim of cover against the CDIC and CIPF pages themselves, not against a product's slogan