Robinhood's FDIC and SIPC coverage explained

Robinhood itself is not FDIC insured, but the cash you hold in your Robinhood account may be, depending on where that cash sits. Robinhood is a brokerage firm regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), not a bank. However, Robinhood partners with banks to hold customer cash, and those banks carry FDIC insurance on deposits up to $250,000 per depositor, per bank, per account category.

Your securities — stocks, ETFs, options, and cryptocurrencies — are protected differently. They are covered by the Securities Investor Protection Corporation (SIPC), which is a nonprofit created by Congress to protect brokerage customers if a firm fails. SIPC covers up to $500,000 per customer per brokerage firm, with a $250,000 limit on cash within that total. This protection applies whether you hold one share or thousands.

The key distinction: FDIC protects cash held at banks from bank failure. SIPC protects securities and cash held at brokerages from brokerage failure. Both can explore to your Robinhood account at the same time, but they cover different risks and have different limits.

Key Takeaways

  • Cash in your Robinhood account may be FDIC insured up to $250,000 if Robinhood deposits it with a partner bank, but you should verify which banks hold your cash.
  • Your stocks, ETFs, options, and other securities are protected by SIPC up to $500,000 per account if Robinhood fails, with a $250,000 limit on cash within that total.
  • FDIC and SIPC protect against different failures — bank failure versus brokerage failure — and both can cover your account simultaneously.
  • Robinhood does not carry FDIC insurance itself; it is a brokerage regulated by the SEC and FINRA, not a bank.
  • If you hold more than $250,000 in cash or more than $500,000 in total assets, portions of your account may fall outside both protections.

How FDIC coverage works for Robinhood cash

When you deposit money into Robinhood, the cash does not sit in Robinhood's own accounts. Robinhood transfers customer cash to partner banks, where it is held in trust. Those banks are FDIC members, which means deposits are insured by the Federal Deposit Insurance Corporation. The FDIC covers up to $250,000 per depositor, per bank, per account category — so if Robinhood uses multiple banks, you may have $250,000 coverage at each one.

Robinhood has disclosed partnerships with banks including Sutton Bank and other institutions, though the specific banks holding your cash may change. You can contact Robinhood support to ask which bank currently holds your deposits. The FDIC insurance is automatic — you do not need to do anything to set up it — but it only covers cash, not securities or cryptocurrency.

One important limit: if you hold more than $250,000 in uninvested cash at a single partner bank, the amount above $250,000 is not FDIC insured. Many investors move excess cash into money market funds or sweep it into higher-yield savings accounts at other banks to stay within the $250,000 limit per institution.

How SIPC coverage protects your securities

SIPC protection covers the securities themselves — your stocks, ETFs, options contracts, and fractional shares — as well as any cash held at the brokerage. If Robinhood were to fail or become insolvent, SIPC would step in to return your securities to you or liquidate them and return the cash value. The coverage limit is $500,000 per customer per brokerage firm, with a maximum of $250,000 of that in cash.

This means if you hold $300,000 in stocks and $100,000 in cash at Robinhood, both are covered under the $500,000 SIPC limit. However, if you hold $300,000 in stocks and $300,000 in cash, the full $300,000 in cash is not covered — only $250,000 of it is, leaving $50,000 unprotected. The securities themselves remain fully covered up to the $500,000 total.

SIPC does not protect against market losses or poor investment decisions. It protects only against the brokerage firm's failure to return your assets. If your stocks drop in value, that is a market risk, not a SIPC matter. SIPC also does not cover cryptocurrency held on Robinhood Crypto, which is a separate service and operates under different rules.

What is not covered by FDIC or SIPC

Cryptocurrency holdings on Robinhood Crypto are not covered by FDIC or SIPC. Robinhood Crypto is a separate service, and digital assets fall outside the scope of both protections. If you hold Bitcoin, Ethereum, or other cryptocurrencies through Robinhood, those assets are not insured against loss or theft.

Margin loans and borrowed funds are also not covered. If you use Robinhood's margin feature to borrow money to buy securities, the borrowed amount itself is not protected — only the securities you purchase with it. If the value of those securities drops below the loan amount, you remain responsible for repaying the full loan.

Accounts over the coverage limits are partially unprotected. If you hold $600,000 in securities at Robinhood, $100,000 of that is outside the $500,000 SIPC limit. If you hold $350,000 in cash, $100,000 is outside the $250,000 FDIC limit (assuming a single partner bank). Amounts beyond the limits are at risk if Robinhood fails.

How to verify your coverage and manage risk

You can view your Robinhood account details in the app or on the website, but Robinhood does not display FDIC or SIPC coverage information directly. To confirm which bank holds your cash, contact Robinhood support through the app or website. They can tell you the current partner bank and your coverage status.

If you want to stay well within coverage limits, keep uninvested cash below $250,000 at any single brokerage. If you have more than $500,000 to invest, consider splitting assets across multiple brokerages — each brokerage carries its own $500,000 SIPC limit. For example, $300,000 at Robinhood and $300,000 at another broker means both amounts are fully covered.

For cash reserves beyond what you plan to invest, consider keeping them in a separate bank account or high-yield savings account. Those accounts carry their own FDIC coverage, and you can spread deposits across multiple banks to stay within the $250,000 limit at each. This approach separates your emergency cash from your investment account and keeps both protected.

Robinhood's regulatory status and what it means for your account

Robinhood Markets, Inc. is a registered broker-dealer with the SEC and a member of FINRA. This means Robinhood is subject to SEC rules on customer protection, capital requirements, and disclosure. FINRA conducts audits and enforces conduct rules. However, neither the SEC nor FINRA insures customer accounts — that is the role of FDIC and SIPC.

Robinhood must segregate customer assets from its own assets, which means your securities and cash are held separately and cannot be used to pay Robinhood's debts. This segregation is a legal requirement, not optional. If Robinhood fails, customer assets are returned before Robinhood's creditors are paid.

The SEC and FINRA also require brokerages to maintain certain capital levels and to report regularly on their financial health. These rules reduce the risk of brokerage failure, but they do not eliminate it. SIPC exists precisely because brokerage failures, though rare, do happen.

Frequently Asked Questions

Is my cash at Robinhood FDIC insured?

Your cash may be FDIC insured up to $250,000 if Robinhood deposits it with a partner bank that is FDIC insured. Robinhood does not carry FDIC insurance itself. Contact Robinhood to confirm which bank holds your cash and your coverage amount. Amounts above $250,000 at a single bank are not covered.

What happens to my stocks if Robinhood goes out of business?

Your stocks are protected by SIPC up to $500,000 per account. SIPC would transfer your securities to another brokerage or liquidate them and return the cash value. This protection applies even if Robinhood fails completely. Amounts above $500,000 in total assets may fall outside SIPC coverage.

Does SIPC cover cryptocurrency on Robinhood?

No. Cryptocurrency held through Robinhood Crypto is not covered by SIPC or FDIC. Digital assets are not treated as securities under SIPC rules. If you hold Bitcoin or other cryptocurrencies on Robinhood, those holdings are not insured against loss or theft.

Can I have more than $250,000 in cash and still be fully covered?

Yes, if Robinhood uses multiple partner banks. Each bank carries its own $250,000 FDIC limit. However, you would need to confirm with Robinhood which banks hold your deposits. If all your cash is at a single partner bank, only $250,000 is covered. Amounts above that are uninsured.

Does SIPC protect me from losing money in the stock market?

No. SIPC protects against brokerage failure only — the risk that Robinhood cannot return your assets. It does not protect against market losses. If you buy a stock and its price drops, SIPC does not cover that loss. You bear the investment risk yourself.