Customers of Venmo, PayPal and CashApp should not store their money with those apps for the long term because the funds might not be safe during a crisis, the Consumer Financial Protection Bureau warned.
The alert comes several weeks after the failure of Silicon Valley Bank, Signature Bank and First Republic Bank, which all experienced bank runs after fearful customers with uninsured deposits pulled their money en masse.
The Federal Deposit Insurance Corporation insures bank accounts up to $250,000. But money stored in Venmo or CashApp or Apple Cash is not being held in a traditional bank account. So, if there is an event similar to a bank run with those payment apps, those funds may not be protected.
Some of the funds may be eligible for pass-through insurance coverage if customers do…
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Apple - 1 Issue, #606