Is Webull FDIC Insured and SIPC Protected?
Whether you already have an account at Webull or are thinking of opening one, you might be wondering what insurance the broker uses to protect your investment capital. It is, of course, an important question to answer.
Your funds and securities held at Webull are insured, but some limitations to the insurance exist. Keep reading to learn more.
Is Webull Insured?
The short answer to whether Webull is insured is yes but understanding the 'how' is essential.
Webull is a member of SIPC, which covers securities and the cash balance in investor accounts. Thanks
to its membership with SIPC, Webull can cover
up to $500,000 per investor. Webull's clearing firm, Apex, brings an additional layer of security, providing over $38 million in coverage for each Webull customer.
Although there is a large amount of coverage available, Webull protects investor funds differently from
a bank. Because Webull is not a bank, and because the broker does not have a cash sweep program, there
is no FDIC insurance protecting uninvested funds.
As you can see, the longer answer is a bit more complicated. Here is how Webull keeps your money safe.
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Does Webull Have SIPC Insurance?
As mentioned, Webull is a member of SIPC. SIPC insurance protects investors from broker-related
problems. The insurance covers securities and cash in investment accounts, but there is a limit to
how much cash can be covered. Without the additional coverage from Apex, Webull's SIPC insurance
protects up to $250,000 in cash and up to $500,000 in securities.
Replacing lost securities is the primary goal of SIPC, but they can also reimburse investors with
cash if the replacement securities are not available. Apex's additional SIPC insurance covers
$900,000 in cash and $37.5 million in securities.
Something to keep in mind with SIPC is that it does not cover losses from depreciating value. If your broker's poor business practices hurt your account, the insurance comes into play. In addition, SIPC insurance does not protect digital assets like Bitcoin (BTC), Ethereum (ETH), and Shiba Inu (SHIB).
Does Webull Have FDIC Insurance?
No. Webull is not a bank or a cash management company. Since FDIC is an insurance program for banks and other financial institutions, it does not apply to Webull or its services.
Are there any Additional Protections?
Yes. Webull's clearing firm, Apex Clearing, provides Excess SIPC Insurance. This additional protection is from a private insurance company but follows the SIPC's insurance model. The types of securities covered and the limitations to the coverage are the same, but the amounts it covers are much larger.
Are Your Investments Safe at Webull?
Your investments and cash balance are as safe at Webull as at any other SIPC member broker. The rules for membership in the program are strict, and Webull adheres to them. Understanding SIPC insurance and its limitations is necessary for assuring that your accounts are protected.
Here are some reminders:
Cryptocurrencies are not covered, so any crypto holdings would carry some risk in the unlikely event that Webull or Apex had systemic problems.
There is a limit to how much SIPC can cover. If your account is within that allowable threshold, then you are fine. If not, some rebalancing may be required.
SIPC does not protect investors from poor trading decisions, devalued securities, market downturns, or crashes.
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Ways to Avoid SIPC Limitations
To keep your accounts safe at Webull, you can do a few things.
First, maintain a balanced portfolio. While too much balancing can create stagnation, using strategic hedging can help save you from flash crashes and other black swan-type events.
Next, ensure that your cryptocurrency holdings are at a size and scope that fits the risk parameters of your account. Digital assets are highly volatile, so some consideration is important.
Finally, monitor the size of your cash and securities regularly. Once your net liquidating value rises above the coverage limits of SIPC, you can transfer excess funds and securities to another broker or financial institution.
Ben Wright is an investor, a trader, an educator, and something of an explorer. He spends his days in the markets when he is not teaching or spending time with his family. Ben writes about stockbrokers, markets, investment vehicles, promotional offers, and tools that help investors make the most of their time in the markets.
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