Deposit insurance is a scheme that protects people's deposits if a bank goes bankrupt. In Iceland it is run by the Depositors' and Investors' Guarantee Fund, now called Tryggingarsjóður vegna fjármálafyrirtækja, under Act No. 98/1999. Deposits are covered up to the equivalent of EUR 100,000 in krónur per depositor per bank. Every EEA country has a similar scheme.
Why does it exist?
A bank doesn't keep all its deposits in a vault. It lends a large part of them out. If many people want to withdraw at once, the bank can get into trouble, and fear of that can make everyone try to withdraw at the same time, which is called a bank run. Deposit insurance reduces that risk, because savers know their money is safe up to a limit. The banks themselves pay into the fund.
What is covered, and what isn't?
The guarantee covers deposits in bank accounts. The law also covers investors: if a securities firm can't return clients' money or securities, claims are paid in full up to ISK 1.7 million. The guarantee does not cover:
- The value of shares, bonds or funds. If prices fall, that is the investor's risk.
- Crypto. Crypto-assetsCrypto-assetThe legal term for cryptocurrencies and tokens, meaning a digital representation of value or rights that can be transferred and stored on a blockchain. are not protected by deposit insurance, and under MiCA crypto-asset service providers must tell their clients so.
Deposit insurance and crypto
The difference matters when crypto is held by a CustodianCustodianA company that holds crypto and the keys to it on behalf of customers, such as a licensed crypto exchange.. If a bank fails, a saver is compensated up to the limit. If a crypto platform fails, there is no such guarantee.
Instead, MiCA requires segregation of client assetsSegregation of client assetsWhen clients' assets are kept separate from a company's own, so its creditors can't claim them if it goes bankrupt.: clients' crypto must be kept apart from the company's own assets, so its creditors can't claim it. That is a different kind of protection. It doesn't guarantee the value, but it is meant to ensure that the assets are there and that their owners get them back. See also counterparty riskCounterparty riskThe risk that whoever you deal with, or trust with your assets, fails to keep their side of the deal, for example because of bankruptcy or fraud..
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 2 November 2026.