Is this like Uber and AirBnB all over? They don't want to be a bank just like Uber doesn't want to be Taxi (means following regulations about insurance, accessibility etc) and AirBnB doesn't want to be a hotel nor a landlord?
In some countries, regulators simply point to these companies and say "Ok, so you're driving people around for money thus you are a taxi? How would we not regulate you as a taxi?".
And this should apply for a bank or financial institution that tries to avoid banking regulations through technical means, no?
Sure, but they wouldn't get all the legal and regulatory bypass benefits of using cryptocurrency.