ICYMI: The Banks of Tomorrow

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Well, crypto currency, cryptocurrency companies, We'll try that again, are rushing to bridge the gap between mainstream finance and digital assets under the Trump administration, from stable coin company Circle going public to Emily more and more so called old coins being offered in traditional exchange traded funds.

I know about that.

That's like your thing, right, that's like my thing? Do you write about that? Old coins and ETFs?

I do you know my we I think he pitched this ald coin crypto ETF summer. I'm like, okay, we don't need to make these little I.

Heard of brat summer and the crypt What is it again?

What did you say, crypto ETF summer.

It doesn't have the same the time, No, it does the color associated with it, Yeah, brat summer.

There was like the it was a line. I guess crypto would maybe be gold. I don't know, because it's digital gold in any in any way. In the latest moves of this crypto to tradify bridge the gap, closing payments and stable coin firm Ripple Labs and also crypto custodian Bitco have applied for national bank charters. Paige Smith, she's the Bloomberg News consumer finance reporter, joins us now

That is a great question, Emily, and I do think I agree. Let's not try to make bitcoin or ETF summer happen, but it could be the summer I campaign for bank charter summer. I think that's better and it's just so perfectly nerdy for my kind of beak. But it so as you said, Bicco and also Ripple. But there are a number of folks who want bank charters right now. It's fintech firms, it's cryptocurrency companies, it's automakers, it's this is just to step back for a second,

Okay, this is what I don't understand. You've covered fintech companies, you do cover fintech companies. Chime, for example, doesn't want to be a bank, but they want to offer banking services. What's the delta here, what's the difference?

So Chime is different because they make their money off of payments, specifically, so every time you swipe your card, they make a fee off of that, and that is or tap your card whatever. That is how they make their money. But they if you make your money in that way, you have to work with a bank, and if you lend to anyone, you have to work with a bank in order to you you know, Chime cannot officially accept deposits yourself. You have to work with a bank to accept.

So I thought the reason that these FinTechs don't want to be banks is because then they're regulated under a different set of rules.

Also, that's correct, that's part of it. But if you apply to be a bank, you do have, as Emily said, you have more stability in the financial system. You can do other things that previously you wouldn't have had to you would not have been able to do, and you don't have to rely on that third party. You just have more control over the situation. And it's changing because under the Trump administration, there's actually an appetite to essentially

So is this about the Trump administration being looser or more friendlier to the crypto industry or is this bigger than that, This is the Trump administration just wanting to hand out more bank charters at large.

I think think that that is it's a little bit early to say we have seen a heck of a lot of applications. We haven't seen these applications approved just yet. We've seen some approved, But no, there's not enough information I would say to say, there's not enough information out there to say yes, definitely, the Trump administration is, you know, totally okay with giving every crypto company that applies a

Generally, in the United States, when you have money in a bank, you have an understanding that this money is protected by the Federal Deposit Insurance Corporation the fdiice, could we start to see some sort of guarantees on digital assets as a result of these banks charters.

So it depends on the kind of bank charter that they're applying for. It not to be super nerdy, but I forget exactly which company was, but one of the firms that have recently applied applied for a national bank charter, in which case you would also need to apply with the FDIC to get that kind of insurance. That is not the case for all kinds of bank charters. So you know, some folks may apply for a sort of more narrow bank charter, sort of like an industrial loan charter,

What about I mean, I know it's very early in the stages of this potentially getting approved. But for Ripple and Bitco, for these crypto companies, have they said anything about like ideally what they would want to be able to do with the bank charter.

Yes, there's extensive, there's extensive. There are extensive filings that sort of clarify exactly what they want. But again, I think it really is it's sort of this sense of inertia, right like, if they want to do this and this is on their strategy roadmap, now is the time to do it. This process takes time.

What you wrote about and what you've been writing about. Are these not necessarily digital upstarts at this point, but they're not the incumbents by any means when it comes to digital asset companies or asset managers. We see these companies trying to become more traditional. Are we going to start seeing the big banks become holders of digital assets or start to serve in service this group of clients. We know what Jamie Diamond has said for years about bitcoin, he's not a fan.

I think that it is early in the stage, and it's early in the game, and I wouldn't rule anything out at this moment in time. I mean, if you look at folks expressing interest in stable coins, for example, you've seen big banks express interest, You've seen big retailers.

That's very nerdy, sorry, hip and modern banking summer.

There it is.

I was waiting for that. Thank you, Emily, Thank you Page Page Smith, Bloomberg News consumer finance reporter. Check out her story and more on the Bloomberg Terminal, also at Bloomberg dot com.