Why isn't money in a Transferwise account insured?

Let us take the united states as an example.

If you put 250K into a bank account then FDIC, which is the Federal Deposit Insurance Corporation, will make you whole if the bank fails. The premiums are paid into the FDIC by the bank, those fees come from the money they make lending your deposits. If you have more than 250K in the bank account then the excess isn't protected.

Now there are ways to get more protection. If you are married each person can put 250K into their account, plus they can have a joint account with another 250K. You can also spread your money across multiple banks.

Transferwise doesn't set up individual accounts for you in these banks. They commingle money from multiple customers in those bank account. But if the bank fails some or all of the money is gone.

Why is it gone? The FDIC protection for a business account is also 250K. But Transferwise has to have millions of dollars stored in the bank. If they had to store $10,000,000 in the United states they would need to put the money into 40 banks. They can't make 40 savings accounts in one bank to get around the limit. To protect more than 250K they would need to spread the money to other banks.

They explain that they aren't a bank and they don't offer the same protection:

Traditional banks are required to put customers' money in a financial protection scheme. This is because they make profit by lending and risking customers' money, and need to insure it up to a certain amount in case something goes wrong.

TransferWise isn't a bank. We don't lend your money or make high-risk investments with it. So, we don't insure it in a financial protection scheme.