Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2: Well, crypto currency, cryptocurrency companies, We'll try that again, are
Speaker 2: rushing to bridge the gap between mainstream finance and digital
Speaker 2: assets under the Trump administration, from stable coin company Circle
Speaker 2: going public to Emily more and more so called old
Speaker 2: coins being offered in traditional exchange traded funds.
Speaker 1: I know about that.
Speaker 2: That's like your thing, right, that's like my thing? Do
Speaker 2: you write about that? Old coins and ETFs?
Speaker 3: I do you know my we I think he pitched
Speaker 3: this ald coin crypto ETF summer. I'm like, okay, we
Speaker 3: don't need to make these little I.
Speaker 2: Heard of brat summer and the crypt What is it again?
Speaker 3: What did you say, crypto ETF summer.
Speaker 2: It doesn't have the same the time, No, it does
Speaker 2: the color associated with it, Yeah, brat summer.
Speaker 3: There was like the it was a line. I guess
Speaker 3: crypto would maybe be gold. I don't know, because it's
Speaker 3: digital gold in any in any way. In the latest
Speaker 3: moves of this crypto to tradify bridge the gap, closing
Speaker 3: payments and stable coin firm Ripple Labs and also crypto
Speaker 3: custodian Bitco have applied for national bank charters. Paige Smith,
Speaker 3: she's the Bloomberg News consumer finance reporter, joins us now
Speaker 3: in the interactive Bloomberg Interactive Broker Studio. You wrote the story,
Speaker 3: maybe we could just start with what are Ripple Labs
Speaker 3: and bitgo and why do they want bank charters?
Speaker 4: That is a great question, Emily, and I do think
Speaker 4: I agree. Let's not try to make bitcoin or ETF
Speaker 4: summer happen, but it could be the summer I campaign
Speaker 4: for bank charter summer. I think that's better and it's
Speaker 4: just so perfectly nerdy for my kind of beak. But
Speaker 4: it so as you said, Bicco and also Ripple. But
Speaker 4: there are a number of folks who want bank charters
Speaker 4: right now. It's fintech firms, it's cryptocurrency companies, it's automakers,
Speaker 4: it's this is just to step back for a second,
Speaker 4: This is not a new phenomenon. There have been companies
Speaker 4: that have been wanting to be banks that are not
Speaker 4: traditionally banks for a very long time.
Speaker 2: Okay, this is what I don't understand. You've covered fintech companies,
Speaker 2: you do cover fintech companies. Chime, for example, doesn't want
Speaker 2: to be a bank, but they want to offer banking services.
Speaker 2: What's the delta here, what's the difference?
Speaker 4: So Chime is different because they make their money off
Speaker 4: of payments, specifically, so every time you swipe your card,
Speaker 4: they make a fee off of that, and that is
Speaker 4: or tap your card whatever. That is how they make
Speaker 4: their money. But they if you make your money in
Speaker 4: that way, you have to work with a bank, and
Speaker 4: if you lend to anyone, you have to work with
Speaker 4: a bank in order to you you know, Chime cannot
Speaker 4: officially accept deposits yourself. You have to work with a
Speaker 4: bank to accept.
Speaker 2: So I thought the reason that these FinTechs don't want
Speaker 2: to be banks is because then they're regulated under a
Speaker 2: different set of rules.
Speaker 4: Also, that's correct, that's part of it. But if you
Speaker 4: apply to be a bank, you do have, as Emily said,
Speaker 4: you have more stability in the financial system. You can
Speaker 4: do other things that previously you wouldn't have had to
Speaker 4: you would not have been able to do, and you
Speaker 4: don't have to rely on that third party. You just
Speaker 4: have more control over the situation. And it's changing because
Speaker 4: under the Trump administration, there's actually an appetite to essentially
Speaker 4: give these bank charters out. Under the Biden administration, that
Speaker 4: was not the case. There was no forward movement on
Speaker 4: the regulatory and the regulatory landscape. Even if you wanted
Speaker 4: to be a bank, your shots of becoming one were
Speaker 4: slim ton.
Speaker 3: So is this about the Trump administration being looser or
Speaker 3: more friendlier to the crypto industry or is this bigger
Speaker 3: than that, This is the Trump administration just wanting to
Speaker 3: hand out more bank charters at large.
Speaker 4: I think think that that is it's a little bit
Speaker 4: early to say we have seen a heck of a
Speaker 4: lot of applications. We haven't seen these applications approved just yet.
Speaker 4: We've seen some approved, But no, there's not enough information
Speaker 4: I would say to say, there's not enough information out
Speaker 4: there to say yes, definitely, the Trump administration is, you know,
Speaker 4: totally okay with giving every crypto company that applies a
Speaker 4: bank charter. That's not the case yet. However, you can
Speaker 4: look at the other indications from the Trump administration's regulatory
Speaker 4: agenda to surmise that there are certainly there's certainly a
Speaker 4: lighter regulatory touch or a more welcoming approach, if you will,
Speaker 4: to cryptocurrency firms.
Speaker 2: Generally, in the United States, when you have money in
Speaker 2: a bank, you have an understanding that this money is
Speaker 2: protected by the Federal Deposit Insurance Corporation the fdiice, could
Speaker 2: we start to see some sort of guarantees on digital
Speaker 2: assets as a result of these banks charters.
Speaker 4: So it depends on the kind of bank charter that
Speaker 4: they're applying for. It not to be super nerdy, but
Speaker 4: I forget exactly which company was, but one of the
Speaker 4: firms that have recently applied applied for a national bank charter,
Speaker 4: in which case you would also need to apply with
Speaker 4: the FDIC to get that kind of insurance. That is
Speaker 4: not the case for all kinds of bank charters. So
Speaker 4: you know, some folks may apply for a sort of
Speaker 4: more narrow bank charter, sort of like an industrial loan charter,
Speaker 4: as Nissan, for example, as applying for. So it would
Speaker 4: be an automaker. From an automaker's perspective, it would more
Speaker 4: easily allow them to lend or hand out auto loans
Speaker 4: for their customers. They wouldn't have to work with a
Speaker 4: you know, we'll pick on ally for a second, an
Speaker 4: auto lender, but in terms of the to go back
Speaker 4: to your original question for digital assets being essentially guaranteed
Speaker 4: by the FDIC, I think it's a little bit early
Speaker 4: to see on that.
Speaker 3: What about I mean, I know it's very early in
Speaker 3: the stages of this potentially getting approved. But for Ripple
Speaker 3: and Bitco, for these crypto companies, have they said anything
Speaker 3: about like ideally what they would want to be able
Speaker 3: to do with the bank charter.
Speaker 4: Yes, there's extensive, there's extensive. There are extensive filings that
Speaker 4: sort of clarify exactly what they want. But again, I
Speaker 4: think it really is it's sort of this sense of inertia,
Speaker 4: right like, if they want to do this and this
Speaker 4: is on their strategy roadmap, now is the time to
Speaker 4: do it. This process takes time.
Speaker 2: What you wrote about and what you've been writing about.
Speaker 2: Are these not necessarily digital upstarts at this point, but
Speaker 2: they're not the incumbents by any means when it comes
Speaker 2: to digital asset companies or asset managers. We see these
Speaker 2: companies trying to become more traditional. Are we going to
Speaker 2: start seeing the big banks become holders of digital assets
Speaker 2: or start to serve in service this group of clients.
Speaker 2: We know what Jamie Diamond has said for years about bitcoin,
Speaker 2: he's not a fan.
Speaker 4: I think that it is early in the stage, and
Speaker 4: it's early in the game, and I wouldn't rule anything
Speaker 4: out at this moment in time. I mean, if you
Speaker 4: look at folks expressing interest in stable coins, for example,
Speaker 4: you've seen big banks express interest, You've seen big retailers.
Speaker 4: There have been reports of retailers expressing interest. I think
Speaker 4: there is a lot of runway here of sort of
Speaker 4: decentralized finance wanting to be more traditional, but also traditional
Speaker 4: finance wanting to be more decentralized and a little more
Speaker 4: hip and modern.
Speaker 3: That's very nerdy, sorry, hip and modern banking summer.
Speaker 1: There it is.
Speaker 2: I was waiting for that. Thank you, Emily, Thank you
Speaker 2: Page Page Smith, Bloomberg News consumer finance reporter. Check out
Speaker 2: her story and more on the Bloomberg Terminal, also at
Speaker 2: Bloomberg dot com.