Robinhood said to not be properly insured to offer checking savings

INSUBCONTINENT EXCLUSIVE:
The CEO of the Securities Investor Protection Corporation, a nonprofit membership corporation that insures stock brokerages, tells
TechCrunch its insurance would not apply to checking and savings accounts the way Robinhood claims
treasuries in which it invests decline, and that only what users gamble on the stock market would be unprotected, as is standard
But now it appears that because Robinhood is misusing its brokerage classification to operate checking and savings accounts where it says
TechCrunch got in touch with the SEC, but it declined to comment.Robinhood planned to start shipping its Mastercard debit cards to customers
on December 18th with users being added off the waitlist in January
That might need to be delayed due to the insurance problem
touted how its checking and savings features have no minimum account balance, overdraft fees, foreign transaction fees or card replacement
fees
It also has 75,000 free-to-use ATMs in its network, which Bhatt claims is more than the top five United States banks combined
most name-brand banks outside of some credit unions.But for those perks, users must sacrifice brick-and-mortar bank branches that can help
them with troubles, and instead rely on a 24/7 live chat customer support feature from Robinhood
hoping to build a larger user base on top of its existing 6 million accounts by leveraging software scalability to provide such competitive
rates
interchange fees charged to merchants when you swipe your card
But long term, Robinhood may use checking and savings as a wedge into the larger financial services market from which it can launch more
Startups can suddenly fold or make too risky of decisions while chasing growth
That puts intense pressure on the company to grow to justify that massive valuation
In its rush to break into banking, it may have cut corners on becoming properly insured.[DIsclosure: The author of this article knows
Robinhood co-founders Baiju Bhatt and Vlad Tenev from college 10 years ago.]