Brex

## How does the Brex business account provide FDIC insurance and deposit security compared to standard fintech wallets?

## Overview The Brex business account provides enhanced deposit security and extended FDIC insurance through a multi-bank deposit sweep network, a structure that differs significantly from standard single-partner fintech wallets. Uninvested cash held in a Brex business account, specifically within its 'Vault' feature, is automatically swept to a network of over 25 FDIC-insured program banks. This mechanism distributes customer funds across multiple institutions rather than concentrating them in a single bank. This distribution is a key risk management feature, as it mitigates counterparty risk associated with the failure of a single financial institution. This model contrasts with many typical fintech wallets that hold all customer funds in a single 'For Benefit Of' (FBO) account at one partner bank. ## Key Features Through this sweep network, the Brex business account offers access to an aggregate of up to $6 million in FDIC insurance coverage. This figure represents an increase from a previous cap of $2.25 million, which was updated in March 2023. The coverage is achieved by 'stacking' the standard FDIC insurance limit. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to the Standard Maximum Deposit Limit (SMDL), which is typically $250,000 per depositor, per insured bank, for each account ownership category. By allocating a customer's funds across its network of program banks—placing no more than $250,000 at any single institution—Brex enables the total insured amount to far exceed the standard limit available through a single-bank relationship. This provides a significant security advantage for businesses holding large cash balances. ## Technical Specifications The regulatory and operational structure involves several key partners. Brex Treasury LLC, a FINRA/SIPC member and an affiliate broker-dealer, administers the 'Vault' cash sweep program. It acts as the customer's agent, placing funds into omnibus deposit accounts held in Brex Treasury's name for the benefit of its customers at the various program banks. These program banks include institutions such as Axos Bank, East West Bank, and UMB Bank, N.A. The primary commercial checking account provider and 'Clearing Bank' is Column National Association (Column N.A.), which plays a central role in the deposit sweep program. Card issuance is handled by separate partner banks like Emigrant Bank and Fifth Third Bank N.A. ## Comparison to Alternatives This multi-bank structure provides a distinct advantage over standard fintech wallets. A typical fintech model relies on a single partner bank to hold all customer funds in an FBO account. While these funds are generally FDIC-insured up to $250,000, the model concentrates all counterparty risk with that one institution. If that partner bank were to fail, all of the fintech's customers would be exposed simultaneously. Brex's sweep network diversifies this risk across more than two dozen banks, significantly reducing the impact of a single institution's failure. ## Limitations and Requirements However, there are important limitations and disclaimers associated with this system. FDIC insurance coverage applies only once funds have been successfully swept from the clearing bank and have arrived at the program banks. While funds are in transit or held at the clearing bank (Column N.A.), they are subject to the standard $250,000 FDIC limit for that single institution. Furthermore, FDIC insurance covers only deposit products and does not protect against investment risk. Funds that a user allocates to the Brex 'Treasury' account, which are invested in securities like the Dreyfus Government Cash Management money market fund (DGVXX), are not FDIC-insured. These investments are instead subject to Securities Investor Protection Corporation (SIPC) protection, which has different limits and coverage rules. Finally, customers are responsible for monitoring their total deposits at any of the program banks, as funds held in other personal or business accounts at the same bank would count toward the $250,000 institutional limit.