Unlike a bank where deposits are FDIC-insured up to $250,000, crypto assets held on Coinbase have no equivalent federal insurance, and the insolvency risk means users could lose their entire holdings if Coinbase fails.
Coinbase's User Agreement gives the company broad unilateral powers to suspend accounts, freeze funds, and reverse transactions with limited notice, directly affecting your access to your money and cryptocurrency. In the event of Coinbase's insolvency, cryptocurrency held in your Coinbase account may be treated as Coinbase's property under bankruptcy law, leaving you as an unsecured creditor rather than the outright owner of your assets. You can withdraw your cryptocurrency to a self-custodied hardware or software wallet to avoid platform insolvency risk, and you can opt out of mandatory arbitration by sending written notice to Coinbase within 30 days of first accepting the agreement.