Brex

## Does the Brex business account offer FDIC insurance coverage above the standard $250,000 limit?

## Overview Yes, the Brex business account offers Federal Deposit Insurance Corporation (FDIC) insurance coverage significantly above the standard $250,000 limit, providing protection for up to $6 million in uninvested cash. This enhanced coverage is a direct response to the needs of businesses, particularly startups and enterprises, that hold large capital reserves and require protection beyond what a single banking institution can offer. The mechanism for this extended coverage was notably enhanced in March 2023, following the collapse of Silicon Valley Bank, when Brex increased its coverage limit from a previous $2.25 million to the current $6 million to address heightened market concerns about uninsured deposits. This feature is a core component of Brex's cash management offering, designed to provide both security and liquidity. ## Key Features Mechanism: The Insured Cash Sweep (ICS) Network The extended FDIC coverage is achieved through a deposit sweep program, often referred to as an Insured Cash Sweep (ICS) network. This program is integrated into the 'Brex Vault' product. When a customer deposits funds, the system automatically sweeps the cash from a primary clearing bank into a network of multiple, unaffiliated FDIC-insured program banks. The funds are distributed among these banks in increments at or below the $250,000 FDIC limit per institution. By spreading the deposits across this network, the total coverage is aggregated. For example, with a network of 24 program banks, a total of $6 million ($250,000 x 24) in deposits can be fully insured by the FDIC. This process is managed automatically by Brex and its partners, so the customer interacts with a single Brex account interface while benefiting from the diversified protection of many banks. ## Technical Specifications Program Bank Structure and Partners: Brex's banking services and the sweep program are facilitated through key partnerships. As of June 2024, Brex's primary checking infrastructure is managed through Column, N.A., a Member FDIC institution that serves as the initial clearing bank. From there, funds designated for the 'Vault' are swept across the program bank network. As of November 2024, this network included over 20 institutions. Publicly disclosed partners have included prominent banks such as Axos Bank, East West Bank, CIBC Bank USA, UMB Bank, N.A., and various subsidiaries of Wintrust Financial. This multi-bank model is crucial for mitigating concentration risk and is the foundation of the extended insurance coverage. ## Limitations and Requirements Distinction from Non-FDIC Instruments: It is critical to distinguish between Brex's FDIC-insured products and its other cash management offerings. The up to $6 million in FDIC insurance applies specifically to cash held in the 'Brex Vault' sweep program. Brex also offers a 'Treasury' account, which allows customers to invest in money market funds (MMFs), such as the Dreyfus Government Cash Management fund (DGVXX). These MMFs are investment products and are explicitly not FDIC-insured. Instead, they may be protected by the Securities Investor Protection Corporation (SIPC), which insures securities customers up to $500,000 (including $250,000 for cash) against the failure of the brokerage firm, not against market losses. Brex clearly delineates these products to ensure customers understand the different types of protection associated with their funds. ## Comparison to Alternatives Comparison to Competitors: In the competitive fintech landscape, other platforms offer similar extended FDIC insurance products. For instance, Mercury provides up to $5 million in FDIC insurance through its 'Mercury Vault' product, which also uses a sweep network. Rho offers a significantly higher coverage cap of up to $75 million through a partnership with American Deposit Management Co. and a network of over 400 banks. Brex's $6 million coverage positions it competitively, especially among startups and mid-market companies, by balancing a high insurance limit with other features like yield-earning options and a fully integrated spend management platform. ## Summary In conclusion, the Brex business account provides FDIC insurance up to $6 million by utilizing an automated deposit sweep network that distributes funds across more than 20 program banks. This feature, enhanced after the 2023 banking crisis, is designed to offer superior deposit protection for businesses with large cash balances. The system operates seamlessly for the user, who manages their funds through a single interface while benefiting from the aggregated insurance of the entire network. This FDIC-insured offering is distinct from Brex's non-FDIC-insured investment products, such as money market funds.