Matt Levine’s Money Stuff: Crypto Might Get Some Banks

Crypto bank charters

A theme that I have written about a lot around here is that US banking seems to be getting narrower. Traditionally, banks are in the business of (1) taking deposits and (2) making loans, and that is a famously risky combination: If all the depositors want their money back, the bank doesn’t have it, and there can be a destructive bank run. There are various ways to mitigate this problem — liquidity regulation, deposit insurance, the central bank as a lender of last resort — but it keeps popping up.

There is one theoretical way to get rid of the ...