Banks and their strict, highly regulated regime have an advantage here, Bloomberg columnist Matt Levine pointed out recently. Coinbase wants to launch a lending program with customer stablecoins, which is something similar to what banks do with customer deposits.
“A bank account is not a security because the securities laws, ever since they were written in the 1930s, exempt bank accounts,” Levine wrote on Sept. 8. “And the basic reason for that is that banks are subject to banking regulation, which is generally much stricter than securities regulation. You don’t have to file a prospectus, but you do have to meet capital requirements and have bank examiners and all the rest. A bank account is regulated as a bank account, so you don’t have to regulate it as a security.”
It’s no secret that more and more companies think they can do what banks do, only better. They’re coming for customers’ deposits and loans via rates or faster decisions or attractive digital interfaces. But the simple truth is that not every company can function as a bank, and few companies want to be regulated as one — and that is to banks’ advantage.
• Kiah Lau Haslett, managing editor of Bank Director
