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A stablecoin is a stablecoin, very similar to a cigar might be only a cigar. However which non-crypto factor does it most intently resemble? A financial institution deposit? A money-market fund? A money ETF?
Over on Unhedged, the query has been inflicting Robert Armstrong a little trouble during the last couple of days. On one hand, stablecoins actually look and act like they’re doing issues that banks do, like issuing runnable liabilities and facilitating funds. Then again, it might be extraordinarily inconvenient for lots of people in the event that they have been to be regulated as banks, and numerous these persons are mad on-line.
Maybe the factor to do is to take inspiration from a equally insoluble query: “Is a hot dog a sandwich?”
The definition of a financial institution, whether or not you look in Lombard Street or the Capital Requirements Regulations, appears to be primarily based on two traits: it takes deposits from the general public, and it makes loans. So the whole lot actually depends upon how strict you’re going to be about these two standards.
We due to this fact current the “Financial institution Alignment Chart”, which not solely solutions the query of whether or not stablecoins are banks (sure, so long as you’re ready to offer a little bit on either side), but additionally gives helpful solutions to numerous different questions in regards to the perimeter of what could be referred to as a financial institution:
