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The debate about stablecoin regulation is at bottom part of a broader debate about regulatory classification of fintech payment service providers (PSPs). But it is, IMHO, wrong to reduce this debate to the question, "Is it a 'bank' or not?"
Posing the question that way implies that there are only two options: (1) Fintech PSPs aren't banks, and therefore shouldn't have to get stnd. bank charters or abide by the reg's that go w/ such to gain access to public settlement facilities. That's what many stablecoin fans say.
(2) fintech PSPs are banks; and therefore must be get bank charters and be subject to the same regulations ordinary banks must abide by. That's the answer offered by the STABLE Act
The second answer relies, not unreasonably, on the standard regulatory definition of a bank as a "deposit taking" institution. But IMHO it's that definition that's problematic, and that renders the conventional bank-nonbank dichotomy so.
For conventional banks aren't just "deposit taking institutions." They combine deposit taking with lending. It's this combined set of activities, not deposit taking per se, that (rightly or wrongly) supplies the rationale for many bank regulations, including deposit insurance.
This thread is as predictable as you\u2019d expect: lots of replies handwaving about \u201cinnovation\u201d and \u201cblockchain\u201d, while ignoring that \u2018stablecoin\u2019 is just another word for payments infra.
— Angus Champion de Crespigny (@anguschampion) December 4, 2020
People get so caught up in the tech they don\u2019t realise the ultimate result is the same. https://t.co/OC2auSh0uX
Posing the question that way implies that there are only two options: (1) Fintech PSPs aren't banks, and therefore shouldn't have to get stnd. bank charters or abide by the reg's that go w/ such to gain access to public settlement facilities. That's what many stablecoin fans say.
(2) fintech PSPs are banks; and therefore must be get bank charters and be subject to the same regulations ordinary banks must abide by. That's the answer offered by the STABLE Act
The second answer relies, not unreasonably, on the standard regulatory definition of a bank as a "deposit taking" institution. But IMHO it's that definition that's problematic, and that renders the conventional bank-nonbank dichotomy so.
For conventional banks aren't just "deposit taking institutions." They combine deposit taking with lending. It's this combined set of activities, not deposit taking per se, that (rightly or wrongly) supplies the rationale for many bank regulations, including deposit insurance.
