If our good friend @denlillaapan was the go-to source for crusty Bitcoin Treasury analysis, perhaps I will to attempt to do something as useful (if not as enjoyable to read) for stablecoins.

The headline story in Matt Levine's newsletter today is about stablecoins. Levine compares them to narrow banks -- that is, banks that don't loan out customer deposits, but rather buy short-term government bonds or park the deposits in central bank reserves).

As we all know, this is not what most banks do. Instead, most banks take your deposits and loan them out (and rely on socialized losses to cover their butts when risky bets go south).

Apparently, there was a bank that tried to do this (not risk their customer's money) -- Levine mentions something called The Narrow Bank. But the Fed refused to let it happen...a lot like the fully reserved Custodia Bank -- which seems to be on its last breaths.

Levine feels optimistic that regulators will look on stablecoins as narrow banks with a more kindly eye.