WEBVTT - ICYMI: The Banks of Tomorrow

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business

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<v Speaker 1>Week with Carol Masser and Tim Steneveek on Bloomberg Radio.

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<v Speaker 2>Well, crypto currency, cryptocurrency companies, We'll try that again, are

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<v Speaker 2>rushing to bridge the gap between mainstream finance and digital

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<v Speaker 2>assets under the Trump administration, from stable coin company Circle

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<v Speaker 2>going public to Emily more and more so called old

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<v Speaker 2>coins being offered in traditional exchange traded funds.

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<v Speaker 1>I know about that.

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<v Speaker 2>That's like your thing, right, that's like my thing? Do

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<v Speaker 2>you write about that? Old coins and ETFs?

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<v Speaker 3>I do you know my we I think he pitched

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<v Speaker 3>this ald coin crypto ETF summer. I'm like, okay, we

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<v Speaker 3>don't need to make these little I.

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<v Speaker 2>Heard of brat summer and the crypt What is it again?

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<v Speaker 3>What did you say, crypto ETF summer.

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<v Speaker 2>It doesn't have the same the time, No, it does

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<v Speaker 2>the color associated with it, Yeah, brat summer.

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<v Speaker 3>There was like the it was a line. I guess

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<v Speaker 3>crypto would maybe be gold. I don't know, because it's

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<v Speaker 3>digital gold in any in any way. In the latest

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<v Speaker 3>moves of this crypto to tradify bridge the gap, closing

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<v Speaker 3>payments and stable coin firm Ripple Labs and also crypto

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<v Speaker 3>custodian Bitco have applied for national bank charters. Paige Smith,

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<v Speaker 3>she's the Bloomberg News consumer finance reporter, joins us now

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<v Speaker 3>in the interactive Bloomberg Interactive Broker Studio. You wrote the story,

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<v Speaker 3>maybe we could just start with what are Ripple Labs

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<v Speaker 3>and bitgo and why do they want bank charters?

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<v Speaker 4>That is a great question, Emily, and I do think

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<v Speaker 4>I agree. Let's not try to make bitcoin or ETF

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<v Speaker 4>summer happen, but it could be the summer I campaign

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<v Speaker 4>for bank charter summer. I think that's better and it's

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<v Speaker 4>just so perfectly nerdy for my kind of beak. But

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<v Speaker 4>it so as you said, Bicco and also Ripple. But

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<v Speaker 4>there are a number of folks who want bank charters

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<v Speaker 4>right now. It's fintech firms, it's cryptocurrency companies, it's automakers,

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<v Speaker 4>it's this is just to step back for a second,

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<v Speaker 4>This is not a new phenomenon. There have been companies

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<v Speaker 4>that have been wanting to be banks that are not

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<v Speaker 4>traditionally banks for a very long time.

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<v Speaker 2>Okay, this is what I don't understand. You've covered fintech companies,

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<v Speaker 2>you do cover fintech companies. Chime, for example, doesn't want

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<v Speaker 2>to be a bank, but they want to offer banking services.

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<v Speaker 2>What's the delta here, what's the difference?

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<v Speaker 4>So Chime is different because they make their money off

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<v Speaker 4>of payments, specifically, so every time you swipe your card,

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<v Speaker 4>they make a fee off of that, and that is

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<v Speaker 4>or tap your card whatever. That is how they make

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<v Speaker 4>their money. But they if you make your money in

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<v Speaker 4>that way, you have to work with a bank, and

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<v Speaker 4>if you lend to anyone, you have to work with

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<v Speaker 4>a bank in order to you you know, Chime cannot

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<v Speaker 4>officially accept deposits yourself. You have to work with a

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<v Speaker 4>bank to accept.

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<v Speaker 2>So I thought the reason that these FinTechs don't want

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<v Speaker 2>to be banks is because then they're regulated under a

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<v Speaker 2>different set of rules.

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<v Speaker 4>Also, that's correct, that's part of it. But if you

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<v Speaker 4>apply to be a bank, you do have, as Emily said,

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<v Speaker 4>you have more stability in the financial system. You can

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<v Speaker 4>do other things that previously you wouldn't have had to

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<v Speaker 4>you would not have been able to do, and you

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<v Speaker 4>don't have to rely on that third party. You just

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<v Speaker 4>have more control over the situation. And it's changing because

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<v Speaker 4>under the Trump administration, there's actually an appetite to essentially

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<v Speaker 4>give these bank charters out. Under the Biden administration, that

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<v Speaker 4>was not the case. There was no forward movement on

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<v Speaker 4>the regulatory and the regulatory landscape. Even if you wanted

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<v Speaker 4>to be a bank, your shots of becoming one were

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<v Speaker 4>slim ton.

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<v Speaker 3>So is this about the Trump administration being looser or

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<v Speaker 3>more friendlier to the crypto industry or is this bigger

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<v Speaker 3>than that, This is the Trump administration just wanting to

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<v Speaker 3>hand out more bank charters at large.

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<v Speaker 4>I think think that that is it's a little bit

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<v Speaker 4>early to say we have seen a heck of a

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<v Speaker 4>lot of applications. We haven't seen these applications approved just yet.

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<v Speaker 4>We've seen some approved, But no, there's not enough information

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<v Speaker 4>I would say to say, there's not enough information out

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<v Speaker 4>there to say yes, definitely, the Trump administration is, you know,

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<v Speaker 4>totally okay with giving every crypto company that applies a

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<v Speaker 4>bank charter. That's not the case yet. However, you can

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<v Speaker 4>look at the other indications from the Trump administration's regulatory

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<v Speaker 4>agenda to surmise that there are certainly there's certainly a

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<v Speaker 4>lighter regulatory touch or a more welcoming approach, if you will,

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<v Speaker 4>to cryptocurrency firms.

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<v Speaker 2>Generally, in the United States, when you have money in

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<v Speaker 2>a bank, you have an understanding that this money is

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<v Speaker 2>protected by the Federal Deposit Insurance Corporation the fdiice, could

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<v Speaker 2>we start to see some sort of guarantees on digital

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<v Speaker 2>assets as a result of these banks charters.

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<v Speaker 4>So it depends on the kind of bank charter that

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<v Speaker 4>they're applying for. It not to be super nerdy, but

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<v Speaker 4>I forget exactly which company was, but one of the

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<v Speaker 4>firms that have recently applied applied for a national bank charter,

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<v Speaker 4>in which case you would also need to apply with

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<v Speaker 4>the FDIC to get that kind of insurance. That is

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<v Speaker 4>not the case for all kinds of bank charters. So

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<v Speaker 4>you know, some folks may apply for a sort of

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<v Speaker 4>more narrow bank charter, sort of like an industrial loan charter,

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<v Speaker 4>as Nissan, for example, as applying for. So it would

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<v Speaker 4>be an automaker. From an automaker's perspective, it would more

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<v Speaker 4>easily allow them to lend or hand out auto loans

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<v Speaker 4>for their customers. They wouldn't have to work with a

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<v Speaker 4>you know, we'll pick on ally for a second, an

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<v Speaker 4>auto lender, but in terms of the to go back

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<v Speaker 4>to your original question for digital assets being essentially guaranteed

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<v Speaker 4>by the FDIC, I think it's a little bit early

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<v Speaker 4>to see on that.

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<v Speaker 3>What about I mean, I know it's very early in

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<v Speaker 3>the stages of this potentially getting approved. But for Ripple

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<v Speaker 3>and Bitco, for these crypto companies, have they said anything

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<v Speaker 3>about like ideally what they would want to be able

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<v Speaker 3>to do with the bank charter.

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<v Speaker 4>Yes, there's extensive, there's extensive. There are extensive filings that

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<v Speaker 4>sort of clarify exactly what they want. But again, I

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<v Speaker 4>think it really is it's sort of this sense of inertia,

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<v Speaker 4>right like, if they want to do this and this

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<v Speaker 4>is on their strategy roadmap, now is the time to

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<v Speaker 4>do it. This process takes time.

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<v Speaker 2>What you wrote about and what you've been writing about.

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<v Speaker 2>Are these not necessarily digital upstarts at this point, but

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<v Speaker 2>they're not the incumbents by any means when it comes

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<v Speaker 2>to digital asset companies or asset managers. We see these

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<v Speaker 2>companies trying to become more traditional. Are we going to

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<v Speaker 2>start seeing the big banks become holders of digital assets

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<v Speaker 2>or start to serve in service this group of clients.

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<v Speaker 2>We know what Jamie Diamond has said for years about bitcoin,

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<v Speaker 2>he's not a fan.

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<v Speaker 4>I think that it is early in the stage, and

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<v Speaker 4>it's early in the game, and I wouldn't rule anything

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<v Speaker 4>out at this moment in time. I mean, if you

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<v Speaker 4>look at folks expressing interest in stable coins, for example,

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<v Speaker 4>you've seen big banks express interest, You've seen big retailers.

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<v Speaker 4>There have been reports of retailers expressing interest. I think

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<v Speaker 4>there is a lot of runway here of sort of

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<v Speaker 4>decentralized finance wanting to be more traditional, but also traditional

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<v Speaker 4>finance wanting to be more decentralized and a little more

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<v Speaker 4>hip and modern.

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<v Speaker 3>That's very nerdy, sorry, hip and modern banking summer.

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<v Speaker 1>There it is.

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<v Speaker 2>I was waiting for that. Thank you, Emily, Thank you

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<v Speaker 2>Page Page Smith, Bloomberg News consumer finance reporter. Check out

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<v Speaker 2>her story and more on the Bloomberg Terminal, also at

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<v Speaker 2>Bloomberg dot com.