Lending
PROBLEM
Low cost local small business loans come from local customer deposits. "Relationship bankers" fund local loans with local deposits using soft information more than large banks. ie JPM wont lend to SME. XFT kills the community bank and everything is now a stablecoin. No redeem.
SOLUTION
XFT IDN sweeps. Programmatically routes stablecoin deposits to placement network banks.
soft info = "i know this guy wont screw me"
hard info = "this guy finances dominos and pays klarna back on time"
MMF = wholesale
Bank deposit = retail
deposit-funded v investor-funded
loan = cash flow = income
bdc = sme decentralized protocol lending vehicle
cef = deposit, no redeem.
xft cef = deposit, no redeem, but can use to buy groceries at walmart.
mmf = seek return / "yield" ie it is more of investment product.
Blockchain enables net-new all-to-all third layer of liquidity. ie in return for a consumer deposit, they get "token". if token can be used as collateral, cool. Traditional bank deposits do not give customers collateral for $$$. tokenized deposits.
Loan
Deposit
Token
Stablecoin reserves or the underlying bonds held at JPM can be lent.
MMFs put lending further behind banks.
Retail is not accustomed to gain a return on funds deposited at bank like wholesale investors + MMF.
Retail funding refers to the various types of deposits that households and small companies keep with a bank. This type of funding is ‘unsecured’, since depositors do not ask the bank to give them collateral as a guarantee for keeping hold of their money.
In many instances, deposits provide a relatively cheap source of funding for banks because, unlike wholesale investors, households and companies do not just hold deposits at banks to gain a return on these funds.
bank deposit = cheap retail funding, better for stress
MMF = wholesale funding
RESOURCES
https://www.icmagroup.org/market-practice-and-regulatory-policy/repo-and-collateral-markets/icma-ercc-publications/frequently-asked-questions-on-repo/5-who-are-the-main-users-of-the-repo-market/
https://www.fdic.gov/news/press-releases/2026/fdic-approves-proposal-implement-genius-act-requirements-and-standards
https://www.federalreserve.gov/econres/notes/feds-notes/what-drives-the-substitution-between-bank-deposits-and-money-market-funds-20251106.html
https://www.ici.org/viewpoints/23-view-mmf-myths-facts
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/bank-funding-costs-what-are-they-what-determines-them-and-why-do-they-matter.pdf
A savings account
An investment vehicle
Insured by the FDIC
Not federally insured
Opened at a bank or credit union
Opened with a brokerage firm
May or may not have account fees
Probably have maintenance fees
HMmMMM they thought stables were like etfs in 2019 too. create redeem
Facebook Libra's ETF-Like Characteristics
Facebook is among the technology companies that have expressed interest in entering financial services. In June 2019, the social media company announced its intention to develop a new cryptocurrency called Libra—a revelation that has attracted congressional interest. At a hearing addressing the issue, several Members of Congress questioned Facebook officials about how Libra should be regulated and whether it meets the existing regulatory definition of an ETF, among other issues.194 Some commentators have argued that because Libra will be backed by reserve assets that certain authorized sellers can exchange for units of the cryptocurrency, its operational structure is similar to that of ETFs, which rely on a roughly comparable creation and redemption process.195 Although Facebook officials acknowledged that Libra uses operational mechanisms that are similar to ETFs, the company maintained that the cryptocurrency should not be considered an ETF because it is intended to operate as a payment tool rather than an investment vehicle.196 If Libra did qualify as an ETF, it would fall under the SEC's oversight and require regulatory approval. The SEC is reportedly evaluating whether the cryptocurrency will fall within that category.197
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