[bdcravens]

Aren't most of those institutions bound by certain laws and insurance requirements?

[rootsudo]

Not for investments. For regular banking, checking and savings, yes. That's FDIC.

It does not protect if the asset invested in goes down in value.

FDIC is protection against the bank being insolvent.

SIPC does not protect customers against losses from the rise and fall in the market value of investments.

https://www.sipc.org/for-investors/what-sipc-protects