NCUA Share Insurance Frequently Asked Questions

• What happens when federally insured credit unions merge?

  If a member has accounts in credit union A and credit union B, and credit union A merges into credit union B, accounts of credit union A continue to be insured separately from the share deposits of credit union B for six months after the date of the merger or, in the case of a share certificate, the earliest maturity date after the six-month period. In the case of a share certificate that matures within the six-month grace period that is renewed at the same dollar amount, either with or without accrued dividends having been added to the principal amount, and for the same term as the original share certificate, the separate insurance applies to the renewed share certificate until the first maturity date after the six-month period. A share certificate that matures within the six-month grace period that is renewed on any other basis, or that is not renewed, is separately insured only until the end of the six-month grace period.

• What happens if a federally insured credit union is liquidated?

  The NCUA would either transfer the insured member's account to another federally insured credit union or give the federally insured member a check equal to their insured account balance. This includes the principal and posted dividends through the date of the credit union's liquidation, up to the insurance limit.

• If a credit union is liquidated, what is the timeframe for payout of the funds that are insured if the credit union cannot be acquired by another credit union?

  Federal law requires the NCUA to make payments of insured accounts "as soon as possible" upon the failure of a federally insured credit union. While every credit union failure is unique, there are standard policies and procedures that the NCUA follows in making share insurance payments. Historically, insured funds are available to members within just a few days after the closure of an insured credit union.

• What happens to members with uninsured shares?

  Members who have uninsured shares may recover a portion of their uninsured shares, but there is no guarantee that they will recover any more than the insured amount. The amount of uninsured shares they may receive, if any, is based on the recovery of the failed credit union's assets. Depending on the quality and value of these assets, it may take several years to conclude recovery on all the assets. As recoveries are made, uninsured account holders may receive periodic payments on their uninsured shares claim.

• What happens to my direct deposits if a federally insured credit union is liquidated?

  If a liquidated credit union is acquired by another federally insured credit union, all direct deposits, including Social Security checks or paychecks delivered electronically, will be automatically deposited into your account at the assuming credit union. If the NCUA cannot find an acquirer for the liquidated credit union, the NCUA will advise members to make new arrangements.

• What happens to loans a member has at a liquidated federal credit union?

  The member remains liable for any payments due on a loan or credit card. The member would continue making payments as they did before the credit union failed until they are instructed to do otherwise in writing by the acquiring credit union or the NCUA. If a member's credit union is liquidated and the member has both a loan and shares at the credit union, the NCUA may deduct the loan balance from the share balance.

• What are digital assets and cryptocurrencies?

  Digital assets are broadly defined as any digital representation of value that is recorded on a cryptographically secured distributed ledger or any similar technology. Digital assets are not fiat currency, as they are not issued by a government entity. Digital assets include, but are not limited to:

  • Convertible virtual currency and cryptocurrency;
  • Stablecoins; and
  • Non-fungible tokens (NFTs).

  Cryptocurrencies are digital assets that can be used as a medium of exchange. Cryptocurrencies are not issued by a central bank, so no central authority (like the U.S. Federal Reserve) manages or upholds their value.

• Does NCUA share insurance cover digital assets or cryptocurrencies?

  The Share Insurance Fund administered by the NCUA does not insure digital assets or cryptocurrencies. The NCUA insurance only covers insured shares and deposits in the unlikely event of a credit union's failure.

• What does NCUA's share insurance cover?

  By federal law, the NCUA only insures shares and deposits held in federally insured credit unions, which includes both federal credit unions and the majority of state-chartered credit unions. The NCUA's share insurance coverage applies to accounts such as share drafts, regular shares, share certificates, and certain other accounts offered by a federally insured credit union.

• Are accounts maintained at other entities that hold digital assets and cryptocurrencies for credit union members covered by NCUA share insurance?

  NCUA share insurance does not cover digital assets or accounts maintained at other entities that hold digital assets or cryptocurrencies for credit union members. The following are not covered by share insurance.

  • The NCUA's share insurance does not cover digital assets or cryptocurrencies offered through third-party vendors to credit union members, nor does share insurance extend to digital assets or cryptocurrency stored or held in custody by a credit union. Federal credit unions are not authorized to serve as a custodian for cryptocurrencies and other digital assets. Whether federally insured, state-chartered credit unions chartered in a particular state have the authority to serve as a custodian for cryptocurrencies and other digital assets depends on state law and regulation. There is no prohibition in the Federal Credit Union Act or the NCUA's regulations preventing federally insured, state-chartered credit unions from conducting this activity, provided the credit union can do so safely and soundly and in compliance with all applicable laws and regulations.
  • The NCUA does not insure assets or accounts issued by any entities other than a federally insured credit union, such as cryptocurrency companies. The NCUA's share insurance does not protect against any such entity's default, insolvency, or bankruptcy, including cryptocurrency custodians, exchanges, brokers, and wallet providers.
  • The NCUA's share insurance does not apply to financial products held at investment companies or investment brokers, such as stocks, bonds, money market mutual funds, other types of securities, commodities, or cryptocurrencies.
• My credit union's mobile application displays the value of my digital asset, cryptocurrency holdings, and credit union share balances. Because my credit union's mobile application includes this information, does share insurance also cover these amounts?

  The Share Insurance Fund administered by the NCUA does not insure digital assets or cryptocurrencies. Credit unions use third-party service providers to provide their members with digital asset and cryptocurrency services. The services offered by these third-party providers can include exchange activities involving buying and selling digital assets or cryptocurrencies or digital asset storage services that hold these assets for credit union members.

  As a courtesy and for informational purposes only, some credit unions include the value of their members' digital assets and cryptocurrency holdings that are acquired through these third-party providers on the credit union's mobile application. However, digital assets and cryptocurrencies do not represent shares at the credit union and are not covered by the Share Insurance Fund.

  Listerhill does not provide services offered by third-party providers for digital assets or cryptocurrencies.

• Can a formal trust be named as a beneficiary on an account?

  If an informal revocable trust designates the account owner's formal trust as its beneficiary, the informal trust account will be treated as if titled in the name of the formal trust.