The Coinbase Wells letter was in reference to their interest bearing offerings
Non-Security Deposits are interest-bearing products that are not securities.
Non-Security Deposits: CD Certificates of Deposit, MMA Money Market Accounts, Treasury Bills, Savings accounts, Checking Accounts
Do banks require SEC registration to offer interest-bearing Non-Security Deposit products?
Have banks ever been required to qualify interest-bearing products as securities contracts, after qualifying each product for list in each US State of operation?
This also is about unregistered securities and not interest bearing accounts although that too is an issue because they're not banks.
edit: They're Money Services Businesses and that's it. They might have some state-level lending licenses but I'm fuzzy on that.
> The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks.
https://www.sifma.org/resources/general/firms-guide-to-the-c.... :
> Any broker-dealer that is a member of a national securities exchange or Financial Industry Regulatory Authority (FINRA) and handles orders must report to CAT. Eligible securities include NMS stocks, listed options, and over-the-counter (OTC) equity securities.
Interledger Protocol works with any type of ledger, has a defined messaging spec, and has multi-hop audit trails: https://westurner.github.io/hnlog/#comment-36503888
> Do banks require SEC registration to offer interest-bearing Non-Security Deposit products?
No, because they are registered and regulated as banks.
[1] https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...
In 1999, GLBA [2] changed the 1933 Glass-Steagall rule [3] that had prevented banks from investing Savings deposits in order to ensure that they would have enough to prevent another run. (As depicted in "It's a Wonderful Life" (1946); Clarence the angel or Mr. Potter's Potterville)
I'm not sure that it's anywhere explicitly stated that the banks' socialist FDIC corporation justified allowing investing of savings deposits. They created a large shared prepaid credit line for themselves in order to operate safely.
Banks invest in non-securities; without any agreement for future performance.
Banks invest in treasuries, which are tokenizable non-security deposits.
(Some time later, the dotcom boom busted and the US went to war/oil/defense instead of clean energy (like the solar panels that were on the roof until 1980 (due to the oil crisis CPI hostage situation, when it became necessary to defensively meddle in the ME with blowback left for Obama to handle, and not pay for)))
[2] https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bl...
[3] https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...
https://help.coinbase.com/en/coinbase/other-topics/other/cli... :
> How is client cash stored at Coinbase? The vast majority of Coinbase client cash is stored in FDIC-insured bank accounts and U.S. government money market funds to keep it safe and liquid. Like all assets on Coinbase, we hold client cash 1:1 and your assets are your assets.
https://support.kraken.com/hc/en-us/articles/360001372126-Ar... :
> Are balances stored on Kraken insured? Cryptocurrency exchanges do not qualify for deposit insurance programs because exchanges are not savings institutions. Exchanges are not even meant to be cryptocurrency wallets.
https://www.investopedia.com/kraken-vs-coinbase-5120700 says that Kraken ended staking services in the US in February 2023.
There is yet no FDIC protection for any stablecoin, and yet no CBDC (just FedNow), but US banks are specifically allowed to provide crypto custody services.