It looks like a new checking account that pays 3% interest is not going to fly. Broker-dealer Robinhood announced the product with great fanfare on Thursday, saying that money deposited in its new checking and savings accounts would be protected up to $250,000 by the SIPC, which guarantees cash in brokerage accounts.
The bottom line: Robinhood is trying to game the system. It's a brokerage masquerading as a bank. It wants to get the advantages of being a bank, like deposit insurance and maturity transformation, without the concomitant regulatory oversight. That's very unlikely to fly.