The Fintech companies are getting closer and closer to the banks in everything but in the name


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There was a time when well-funded fintech companies talked about how they were non-slender.

This has never really been at the height of the reality of what was happening. "SoFi uses its balance sheet as a bank to generate loans," noted the Financial Times in 2015.

So SoFi went ahead and applied for an industrial loan card, which he later pulled. But he continued to do things very similar to banks, including hiring a former Goldman Sachs banker as CEO.

Other fintechs-Square, Lending Club and Coinbase continued to push for national bank cards. And now, they could have them. At the beginning of this week, the Treasury Department published a major report on how to promote financial innovation. One recommendation was for "the Office of the Currency Controller to further develop its special status for national banks". Of course, a few hours later, OCC announced that it would create exactly that.

The advantage of a national card is that you do not need to get into state weeds for state approval, which means you can compete with big banks and do things like make loans in any state of the United States, rather than be limited only to the states in which you obtained the green light of the state regulators.

But a national charter also means that the way you compete with big banks will have to be closer to how they do business than a freewheeling lender initiated by a hedge funder who just wants to refinance the student loans of each Stanford Business School graduate because obviously they are good credits could do business.

The New York Times headline put it well when he said the move would mean that "Online lenders and payment companies get a way to act more like banks."

The card is not a sure thing – almost certainly will be challenged with a lawsuit by a regulator of the state bank – but the general trajectory of the sector is clear. Fintech companies want to be more like banks or at least enjoy the regulatory benefits of being one.

More links!

Fidelity is launching the first free index funds. "Fidelity has launched the first funds on no-cost indices in the United States". FT Robin Wigglesworth has this amusing quote from Ben Johnson of Morningstar: "[Vanguard’s] Minimum taxes and investment thresholds are starting to look a little dated now." Earlier this month, Vanguard said it would eliminate almost all ETF trading commissions. Part of this is clearly about marketing: something that costs 0.04% per year is so extremely cheap that it could even be free. But it's not cheap enough to say "this is free!"

If you are worried about Fidelity earning, remember that the Contrafund has $ 130 billion of assets and a spending percentage of 0.74%

I joked on the fact that the negative taxes are definitely behind the corner, but it is not so crazy: after all, the banks actually do paying interest.

The parent company of the NYSE is planning to "launch a digital asset platform and a bitcoin futures product". Starbucks is working on a project to help understand how people could "convert their digital assets into US dollars for use at Starbucks." Bloomberg & # 39; s Joe Weisenthal points out that "unless you are fleeing from the law and try to avoid leaving a trail of payments that can help policy to nail down your position, c & # 39 It is literally zero reason to buy a cup of coffee using a cryptocurrency No one. "

This is, of course, totally right. But just because there's no reason to do something, it does not mean people will not do it. If you offer bitcoin enthusiasts the opportunity to show up in public and proclaim aloud that they are buying something in bitcoins, my impression is that they will. It will not serve any real purpose, but bitcoin is a brand and brands are part of people's identities and cause people to do all sorts of things. Of course, Starbucks is a company with nearly 30,000 stores and $ 22 billion in revenue a year, so the bitcoin believers market is largely meaningless for the company's business.

Correctly, this is a great piece to the limits of the blockchain and the waning enthusiasm for this: "In 2017 and just before, blockchain was a brand new hammer." People have been looking everywhere for their nails to beat them and spend a lot of money in the effort But they are finding that many transactional problems are not nails, there are other hammers who could do the job better, and there are other problems that require many parties to agree on how the hammer should be used and from whom. "

A savage story about a conservative parliamentarian who would have to pay hundreds of thousands of dollars to recommend a blockchain start-up on his ICO.

A bad exchange of bitcoin whales leaves the counterparts who hold the bag.

Write to Ben Walsh to [email protected]

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