However though cost and custody providers are essential banking capabilities, they’re peripheral to the enterprise mannequin of a conventional financial institution. The enterprise mannequin of a conventional financial institution is to borrow at a low rate of interest, lend at the next rate of interest and pocket the distinction. Conventional banks are essential liquidity creators and distributors, not solely in monetary markets however within the wider financial system. Because the U.S. found after the failure of Lehman Brothers in 2008, when banks cease lending the financial system grinds to a halt. Crypto initially eschewed lending, however rapidly found that with out it the ecosystem was about as liquid because the floor of Mars. When there may be a lot HODLing and little lending, liquidity is gold.