Type of financial entity that should exist:

- Consumers and businesses can easily sign up
- Federally regulated
- Only function is to custody USD
- No fractional reserve
- Ability to opt-in to yield via US Treasuries
- Revenue model: cut of Treasury yield or $9.99/m subscription

The insurance Co's could just offer insurance for deposits that are not covered by FDIC. But I suspect that people wouldn't buy it since it lowers the rate that they are earning on deposits. You don't need to create new entities that are not profitable. I don't think there is incentive to do that. 

“The future is here — it’s just not evenly distributed.”  - William Gibson
https://nf.td/fblauer

You don’t need insurance if you change the model.

That’s a hassle and not desirable from a consumer perceptive. Consumers want a digital safety deposit box for dollars.

If you spread your investment in 250k chunks over several banks than all your deposits will be covered by FDIC insurance. Easier than changing laws and regulations. 

Which is better. Seems to me that changing the model is more difficult, more unknowns. All systems have risks if they need to make a profit. They need risk management and hedging. If they don't have insurance they are self insured.