Regulators strongly prefer that deposits stay within the regulated banking sector. The single largest reason is that they’re worried that households’ immediately accessible stored funds stay safe and accessible. A major follow-up reason, less understood by non-specialists, is that regulated banks are bound to a long list of consumer protection items on the transaction level, not the institution level. A lot of the abuse in the economy happens in $50 and $5,000 increments, rather than multi-billion dollar increments. Regulators sleep happier knowing that this abuse happens at companies with teams of operators standing. Those operators will groan and chalk a disputed transaction, instance of fraud, or glitch in the matrix up to the operational losses budget rather than sticking a user with it.
