why can’t trad banks offer the same rewards on deposits that coinbase/robinhood offer?

0.1% vs 4%+

Is it purely regulations? FDIC? seems so off

Interest arb is a major revenue source for trad banks.  Coinbase makes money off trades, not lending, so it makes sense for them to pass any interest they get to consumers to further position against tradFi

cuz actual banks need to maximize spread of their cost of funds (interest to depositors) and use of funds (interest bearing loans)

coinbase and fintechs arent banks and can’t lend deposits, they make their money elsewhere, and can take slimmer/no profit on net interest margin

they can but don’t because it’s one of the main ways they currently make money.

take deposits, put a significant chunk into short-dated bonds for ~4%, and only pass along 0.1%. just need to keep enough cash around to keep things running.