What Happens If a Crypto Exchange Fails? Protection by Country

If a crypto exchange goes bankrupt, your protection depends on the country, the company's terms and the insolvency process. Whether a national scheme covers crypto held at an exchange differs from one country to the next. Offers from strangers to get your coins back for a fee are a further risk to watch for.

What happens to your crypto if an exchange goes bankrupt

On an exchange where the company holds the keys, your balance is its record of what it owes you (do you own crypto on an exchange?). A company is insolvent when it cannot pay its debts, and bankruptcy is one formal way that plays out.

If a crypto exchange goes bust, the outcome can depend on:

• whether the terms say the crypto stays yours;
• whether customer coins are kept apart from the company's own;
• whether the company may lend or pledge them;
• the insolvency process the company goes through.

In a January 2023 opinion (opens in a new tab), the US bankruptcy court handling the Celsius case ruled that, under Celsius's Terms of Use, crypto deposited in its Earn accounts became the company's property. Earn account holders were unsecured creditors: owed money, with no claim on specific assets, and paid from what is distributed under a plan or the Bankruptcy Code.

The court added that this did not mean they would get nothing. They had unsecured claims in dollars or in kind, depending on any confirmed plan. The ruling covered Earn accounts only.

Is your crypto protected? Country by country

As of October 2026:

United States

Is crypto protected by FDIC? No. FDIC deposit insurance does not apply to crypto assets (opens in a new tab), and it does not protect against the default, insolvency or bankruptcy of any non-bank entity, including crypto custodians, exchanges, brokers and wallet providers.

In SIPC's own wording, it does not protect digital asset securities (opens in a new tab) that are investment contracts not registered with the SEC, even if a SIPC member brokerage firm holds them. SIPC also does not protect any digital or crypto asset that does not qualify as a security.

United Kingdom

Is crypto protected by FSCS, the UK's Financial Services Compensation Scheme? The FCA says (opens in a new tab) crypto is largely unregulated in the UK, so it is highly unlikely you will be covered, and you should not expect any compensation for crypto-related losses.

European Union

The EU supervisory authorities' joint warning (opens in a new tab) says the protections of MiCA, the EU's crypto law, are not as extensive as those for traditional financial products. Its example is that you will not benefit from compensation schemes.

MiCA does require a crypto-asset service provider that holds clients' crypto in custody to keep it separate from its own (opens in a new tab), so the provider's creditors have no recourse to it, in particular in insolvency. That is a duty for the provider, not a promise that you get everything back. To check that a firm serves your country, read how to check an exchange's country restrictions.

Canada

CIPF says (opens in a new tab) crypto assets that a CIPF member firm holds on your behalf are not covered by CIPF. It lists cash held in your crypto trading account with a member among what can be covered.

Australia

ASIC says (opens in a new tab) consumers are only protected by the financial services laws it administers to the extent that digital assets and related services are subject to those laws. If you invest in something unlicensed or unregulated in Australia, it is harder to get help if things go wrong.

Other countries

Check your own country's financial regulator before you deposit, and ask what it says about crypto held at an exchange.

Cash, shares and crypto in the same app

As of October 2026, one app can hold cash, shares and crypto, and each can have a different protection, or none. Canada shows the cash and crypto split for CIPF.

In the US, the FDIC pays only after an insured bank fails (opens in a new tab), and only for deposits held in that bank. Robinhood's US disclosures (opens in a new tab) show how this splits. Funds in its Cash Card account at Sutton Bank are eligible for FDIC insurance, contingent on Robinhood keeping records the FDIC accepts if that bank fails. Brokerage services come through Robinhood Financial LLC, a member of SIPC. Crypto is held through Robinhood Crypto, LLC, and it says that is not FDIC insured or SIPC protected.

SIPC's job (opens in a new tab) is to recover missing cash or securities if your brokerage firm has gone out of business. Open your app's own disclosures, usually in a footer or the terms, and find which legal entity holds each balance. Do not assume a protection that covers one balance reaches the others.

What to check before you leave crypto on an exchange

Read these in the platform's terms and help pages before you deposit:

1. The legal entity and its country. Search it in your country's register, then compare the country with the table above.
2. Ownership. Look for wording on whether the crypto stays yours or becomes the company's, and what rights you keep.
3. Separation. Look for whether customer crypto is kept apart from the company's own assets, and how the company records each customer's share.
4. Lending. Look for whether the company may lend, pledge or otherwise use your crypto, and with what limits.
5. Withdrawal pauses. Look for when the company may suspend withdrawals, and how long a notice must be.

If the terms do not answer a check, ask support in writing before you deposit. If a platform publishes a proof-of-reserves report, also check which assets and which date it covers.

If your exchange stops withdrawals or fails: what to do first

1. Save your records now

   Download or screenshot your balances, trade history and statements while you can still log in. See which crypto records to keep. In a formal insolvency, you may later need to compare what the company lists as owed to you with your own records.

2. Follow only official notices

   As of October 2026, GOV.UK guidance (opens in a new tab) for England and Wales says you can find which companies are in formal insolvency, and who is dealing with the case, by searching Companies House for a company liquidation or administration, and that if you have not been contacted and an insolvency practitioner is dealing with a company in administration or liquidation, you should contact the practitioner. Elsewhere, look for the notice the company or the court publishes, and reach it from the company's official site, not from a message.

3. Stop sending money or crypto to the platform

   Until an official notice says otherwise, make no new deposits to the platform.

4. Pay no one who offers help for a fee

   The FTC says (opens in a new tab) not to trust calls, letters, emails, texts or social media messages from someone who says they can recover money you lost in a scam for a fee. If a message says an official claims deadline is close, check it against the notice from step 2.

Common misconceptions

• "The platform says it is insured, so my balance is." In 2022, the FDIC warned (opens in a new tab) that some crypto companies told customers their products were eligible for FDIC insurance, which may lead customers to believe, mistakenly, that their money or investments are safe. If a platform says it has insurance, ask in writing what it covers and who it pays.
• "A registered company means my money is protected." A register entry names the company; the table above shows which schemes your country has, and a registration is not one of them.
• "A proof-of-reserves report means it cannot fail." A report is a snapshot of one date and a set of assets. Kraken's review shows one platform's own list of what its report cannot show.

Is it safe to keep crypto on an exchange? The trade-off

No answer fits everyone. The two places carry different risks:

• On an exchange, the company can fail or suspend withdrawals, and you rely on its terms.
• In your own wallet, you look after the recovery phrase yourself. As of October 2026, the EU supervisory authorities' joint warning (opens in a new tab) says losing private keys to crypto-assets results in the permanent and irreversible loss of access and ownership.

Match this to how often you trade and how well you can look after a backup. For the choice itself, read custodial and non-custodial wallets.

Risks to understand

• Long waits and partial recovery. GOV.UK guidance on insolvencies in England and Wales (opens in a new tab) says it often takes a long time to deal with a person's or company's assets, in some cases a number of years. If there are few or no assets, you will not get your money back. You could lose all the money you put in.
• Changing rules. Schemes and their limits change, so check the pages linked in the table on the day you decide.
• Self-description. What a platform says about itself, including insurance or reserves, is its own claim.
• Scams that follow a collapse. If you lose money, see where to report a crypto scam.

Before you choose where to keep coins, read how to store crypto safely and compare platforms on the exchanges page.