[JumpCrisscross]

> hold a bunch of cash from people it is effectively theirs

In the U.S., I don’t think money transmitters are allowed to do this. (They can keep the interest earned on it.)

Financing from deposits is more a crypto thing.

[jjallen]

They can make stuff up, right? They are allowed to say "we are keeping your money for 120 days because of some security ...". Who is ever going to know this is valid/true or not, unless it goes to trial somehow and there is a lot of discovery done.

They are literally funding themselves out of deposits, in a small way if they keep any persons money for any period of time. If they start doing it to lots of people for months at a time then they are at least partially funding themselves from their customers.

Lots of businesses do this incidentally. A good one is businesses selling gift cards. It's not the same; but this set of conditions is not super uncommon.

[JumpCrisscross]

> are literally funding themselves out of deposits

No, they probably are not. It’s illegal and money transmitters are regulated.

What they are doing is collecting interest. One tends to see less scrupulous transmitters hold funds longer when rates rise. I didn’t think Stripe fell in this category, but it’s becoming difficult to say.

> good one is business selling gift cards

You’re right. (Also customer deposits.) This doesn’t apply to money transmitters, however.

[inetknght]

> It’s illegal and money transmitters are regulated.

It's only illegal if the regulator enforces action. Good luck getting regulators to enforce action on something like this.