SIPC protects cash in a brokerage firm account from the sale of or for the purchase of securities. Cash held in connection with a commodities trade is not protected by SIPC. Money market mutual funds, often thought of as cash, are protected as securities by SIPC. SIPC protects cash held by the broker for customers in connection with the customers’ purchase or sale of securities whether the cash is in U.S. dollars or denominated in non-U.S. dollar currency.
Please note, whether foreign currency held in a customer account at a SIPC-member brokerage firm is eligible for SIPC protection depends on the account-holder’s intent concerning that currency. If the foreign currency is held in the account as an investment, then SIPC protection is not available with respect to that currency because foreign currency does not qualify as a “security” under the Securities Investor Protection Act (SIPA). If, however, the purpose of the foreign currency is to pay for investments that qualify as “securities” under SIPA, then the currency is viewed as “cash” and the customer is protected against its loss up to $250,000. The liquidation trustee will evaluate account-holder intent with respect to foreign currency based upon all of the facts and circumstances, including the pattern of activity, if any, in the account containing that currency.
Account holders seeking further information should refer such inquiries to their own legal counsel or SIPC.