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Paypal is not a licensed bank. Square, whose IPO was 11/19/2015, only got their bank license in 2020. Why should cryptocurrency be under the purveyance of banki

by jyu 5y ago

Paypal is not a licensed bank. Square, whose IPO was 11/19/2015, only got their bank license in 2020. Why should cryptocurrency be under the purveyance of banking regulations? Cryptocurrency is pulling back the iron curtain and revealing the real Wizard of Oz when you consider unequal regulatory treatment and unequal enforcement efforts. Remember BOA robosigning fake mortgages and commiting widespread fraud? Remember HSBC getting slaps on the wrist for multibillion dollar drug laundering? Let's see how far this political doublethink and perverse incentive onion goes.

dcminter 5y ago
Paypal within the EU is indeed a bank.
- ogogmad 5y ago
  Who uses it? Aren't debit cards and online bank transfers more common there?
  - xyzzy123 5y ago
    You can always punch in your digits but Paypal have some great merchant integrations on a wide variety of ecommerce platforms (including ebay...). They're worth studying to this day if you're a startup in the "ecosystem" space. Everyone hates them but the stickiness is real.
  - spiralx 5y ago
    It made it easy to pay for things from sites that didn't support debit cards and other European-only payment methods. And while bank transfers have been free for years, doing so online or on your phone hasn't necessarily been easy - or even possible - if you're talking about a few years back.
  - dcminter 5y ago
    Paypal is often the method with the lowest barrier to entry for making payments online. One clicks the paypal button and then approves the transaction, done. Versus (often) needing to enter all card details, billing address, delivery address, and so on. It's often a good choice for making informal payments between friends because you just need the paypal address - versus, for example, sort code, account number, and bank name. You might also need the bank address and to pay a fee for an international transfer. Depending on the country you're in various other payment services may be available and/or common. For example I see services like Klarna's eating into this a bit, but they're certainly not ubiquitous. I don't really follow how Paypal have managed to avoid becoming a bank in the US given that they offer what is, to my eye, clearly a suite of banking services!
dangerlibrary 5y ago
It is extremely unclear what, if anything, you are arguing for or against, other than that banks have recently done some bad things. It seems like you might be against regulating stablecoins as banks, but you also appear to be arguing for harsher punishments for banks that misbehave? Or something?
- colordrops 5y ago
  It's pretty clear that the argument is that the government is hypocritical and unequal in treatment of establishment players vs cryptocurrency.
  - emn13 5y ago
    But that argument (not yours, I know) is really weak: If we have problems with banks behaving in ways that are harmful to others in society, and problems with emergent phenomena that banks don't care to avoid because most of the losses from any collapses won't be on their balance sheets... why would we exactly want to have a bank-equivalent organization that isn't under at least as stringent regulations as the banks? If the argument were that more regulation is needed, then surely up and coming actors with less to lose are even more important to catch with that regulation?
    - colordrops 5y ago
      Because without proper regulation of establishment players, the alternative, which is competition from upstarts, is the only way to keep them in check, so stunting them only serves the establishment.
- onlyrealcuzzo 5y ago
  It's interesting that people think crypto markets have little-to-no fraud or misbehavior when they AREN'T regulated, but banks (and all things financial) are regulated exactly to prevent this. It's almost like these people must think that regulating banks is what causes the misbehavior, not the other way around.
user-the-name 5y ago
PayPal should also be a licensed bank. Problem solved.
xyzzy123 5y ago
Crypto, right now, is to finance as fantasy football is to football Paypal and Square aren't banks... but they are regulated under securities law and the things they do are not nearly as crazy as the things that the "real" banks do with money behind the scenes. I think that's cool; the regulations are there for a reason. The regulations are there because they underpin the promises made by society. Like, you put stuff in your 401k and you get to retire one day. That's a big promise and the paperwork is justified. Regulation is a sort of "guard labour" which society puts in place to ensure the system is legible, or comprehensible on some level. It doesn't work too well, but it's the best we've got. I'd be OK with a world where there is "regulated" crypto and "unregulated" crypto, and on the unregulated sort you can lose all your money and that's fine and maybe nobody goes to jail. But the regulated money can't cross over into that place (e.g. GME can't make huge bets on it, you know your retirement funds won't end up there by stealth).
deleted 5y ago
[deleted]
JumpCrisscross 5y ago
> Why should cryptocurrency be under the purveyance of banking regulations? This is a straw man [1]. The article calls for regulators "to subject stablecoins to bank-like rules for transparency, liquidity and capital." The title of the article calls for them to be treated "like banks" (emphasis mine). Not as banks. PayPal and Square are absolutely regulated like banks, as are money market funds, stablecoins' most obvious analog. [1] https://en.wikipedia.org/wiki/Straw_man https://en.wikipedia.org/wiki/Straw_man
Aunche 5y ago
The difference is that PayPal actually lets you exchange your PayPal balance for real US dollars

by jyu 5y ago

dcminter 5y ago

Paypal within the EU is indeed a bank.

ogogmad 5y ago
Who uses it? Aren't debit cards and online bank transfers more common there?
- xyzzy123 5y ago
  You can always punch in your digits but Paypal have some great merchant integrations on a wide variety of ecommerce platforms (including ebay...). They're worth studying to this day if you're a startup in the "ecosystem" space. Everyone hates them but the stickiness is real.
- spiralx 5y ago
  It made it easy to pay for things from sites that didn't support debit cards and other European-only payment methods. And while bank transfers have been free for years, doing so online or on your phone hasn't necessarily been easy - or even possible - if you're talking about a few years back.
- dcminter 5y ago
  Paypal is often the method with the lowest barrier to entry for making payments online. One clicks the paypal button and then approves the transaction, done. Versus (often) needing to enter all card details, billing address, delivery address, and so on. It's often a good choice for making informal payments between friends because you just need the paypal address - versus, for example, sort code, account number, and bank name. You might also need the bank address and to pay a fee for an international transfer. Depending on the country you're in various other payment services may be available and/or common. For example I see services like Klarna's eating into this a bit, but they're certainly not ubiquitous. I don't really follow how Paypal have managed to avoid becoming a bank in the US given that they offer what is, to my eye, clearly a suite of banking services!

dangerlibrary 5y ago

It is extremely unclear what, if anything, you are arguing for or against, other than that banks have recently done some bad things. It seems like you might be against regulating stablecoins as banks, but you also appear to be arguing for harsher punishments for banks that misbehave? Or something?

colordrops 5y ago
It's pretty clear that the argument is that the government is hypocritical and unequal in treatment of establishment players vs cryptocurrency.
- emn13 5y ago
  But that argument (not yours, I know) is really weak: If we have problems with banks behaving in ways that are harmful to others in society, and problems with emergent phenomena that banks don't care to avoid because most of the losses from any collapses won't be on their balance sheets... why would we exactly want to have a bank-equivalent organization that isn't under at least as stringent regulations as the banks? If the argument were that more regulation is needed, then surely up and coming actors with less to lose are even more important to catch with that regulation?
  - colordrops 5y ago
    Because without proper regulation of establishment players, the alternative, which is competition from upstarts, is the only way to keep them in check, so stunting them only serves the establishment.
onlyrealcuzzo 5y ago
It's interesting that people think crypto markets have little-to-no fraud or misbehavior when they AREN'T regulated, but banks (and all things financial) are regulated exactly to prevent this. It's almost like these people must think that regulating banks is what causes the misbehavior, not the other way around.

user-the-name 5y ago

PayPal should also be a licensed bank. Problem solved.

xyzzy123 5y ago

Crypto, right now, is to finance as fantasy football is to football Paypal and Square aren't banks... but they are regulated under securities law and the things they do are not nearly as crazy as the things that the "real" banks do with money behind the scenes. I think that's cool; the regulations are there for a reason. The regulations are there because they underpin the promises made by society. Like, you put stuff in your 401k and you get to retire one day. That's a big promise and the paperwork is justified. Regulation is a sort of "guard labour" which society puts in place to ensure the system is legible, or comprehensible on some level. It doesn't work too well, but it's the best we've got. I'd be OK with a world where there is "regulated" crypto and "unregulated" crypto, and on the unregulated sort you can lose all your money and that's fine and maybe nobody goes to jail. But the regulated money can't cross over into that place (e.g. GME can't make huge bets on it, you know your retirement funds won't end up there by stealth).

deleted 5y ago

[deleted]

JumpCrisscross 5y ago

> Why should cryptocurrency be under the purveyance of banking regulations? This is a straw man [1]. The article calls for regulators "to subject stablecoins to bank-like rules for transparency, liquidity and capital." The title of the article calls for them to be treated "like banks" (emphasis mine). Not as banks. PayPal and Square are absolutely regulated like banks, as are money market funds, stablecoins' most obvious analog. [1] https://en.wikipedia.org/wiki/Straw_man https://en.wikipedia.org/wiki/Straw_man

Aunche 5y ago

The difference is that PayPal actually lets you exchange your PayPal balance for real US dollars