The Federal Deposit Insurance Corp (FDIC) is a federal entity that covers banking and other financial institutions by:
The FDIC insures trillions of dollars of deposits held within US banking institutions.
This organization was established to protect money people have deposited into the banks in the unlikely event the financial institution goes out of business or shuts down for any other reason.
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According to the Gemini User Agreement, US dollars held within your Gemini account are eligible for FDIC insurance, however it is subject to a few limitations.
First of all, any digital assets or cryptocurrencies held within your account are not FDIC insured. Since digital assets are not federally regulated and are not considered securities or cash, they are not eligible for FDIC insurance.
Here's what Gemini says in their user agreement regarding "pass through" FDIC insurance for US dollar deposits:
U.S. dollar deposits in your Fiat Account held in one or more Omnibus Accounts at one or more Banks located in the United States are held with the intention that they be eligible for Federal Deposit Insurance Corporation (“FDIC”) “pass-through” deposit insurance, subject to the Standard Maximum Deposit Insurance Amount per FDIC regulations (currently $250,000 per eligible Gemini Customer) and other applicable limitations.
So, in a nutshell, US dollar deposits within Gemini are eligible for up to $250,000 of "pass through" FDIC insurance.
However, US dollar deposits held outside of the United States are not eligible for this insurance. This would only apply for United States citizens.
SIPC insurance covers United States investors in the event that their brokerage firm fails.
This covers you against the loss of securities such as stocks and bonds as well as cash held within the account for the purpose of investing. It is important to understand, however, that the SIPC does not insure you against any losses experienced from investing in stocks/bonds. It covers you in the event that these assets disappear.
Since digital assets are not federally regulated and are not considered securities or cash, they are not covered by SIPC insurance.
Gemini offers Digital Asset Insurance on crypto assets held within the platform.
This is a separate commercial policy that Gemini has, which is not tied to any government institution.
According to their user agreement, here's how this coverage works:
Our policy insures against the theft of Digital Assets from our Hot Wallet that results from a security breach or hack, a fraudulent transfer, or employee theft.
Our policy does not cover any losses resulting from any unauthorized access to your User Account. You agree and understand that you are solely responsible (and you will not hold us responsible) for managing and maintaining the security of your User Account login credentials and any other required forms of authentication, including your API keys. You further agree and understand that we are not responsible (and you will not hold us responsible) for any unauthorized access to or use of your User Account and/or your Gemini Account.
It's important to note here that this commercial crime insurance policy only covers losses resulting from theft from security breach, hacking, fraudulent transfers or employee theft.
If someone gains unauthorized access to your Gemini account using your credentials, you are not covered by this insurance policy.
That is why it is highly recommended to use a strong password as well as 2 factor authentication.