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It's almost impossible to create a bank. When businesses decide they need to start a bank, they go and buy a shell that already has a banking license. The sever

It's almost impossible to create a bank. When businesses decide they need to start a bank, they go and buy a shell that already has a banking license. The several million dollars to buy the shell is far cheaper than trying to start one from scratch. Existing banks could, I suppose, go into this business. But the experience of the IAFCU--being given an excessively hard time by regulators when they started working with BTC businesses--is why they don't. Banks exist because goverment regulators allow them to. Unless they are extremely large (and then the government regulators exist because the large banks say they can, evidently.) I am a BTC skeptic. I don't think it solves a burning problem for most people. But the government, in trying to keep BTC from succeeding, seems to be creating the very raison d etre, solvable only by crypto-currency, that BTC was lacking.

gaadd33 13y ago
It only costs around 5-10M to create a bank in the US. If BTC is that profitable, why hasn't anyone done that?
- greendata 13y ago
  B/c the US Gov would shut it down, seize your accounts and you'd be out at least 5 million USD As long as the US Gov is against bitcoin, and they should be for their own sake, they will make it impossible to comply with the regulations. Anyone involved in creating the bank would probably face criminal sanctions for some crime. Crypto currencies may eventually threaten the USD's status as a reserve currency. The US Gov will do anything possible to stop bitcoin from growing to that level.
  - gaadd33 13y ago
    Are there explicit laws against bitcoin? It seems unlikely that the OCC is going to just seize a bank when its following all applicable laws and compliance mechanisms. Some banks (depending on the location and size) keep foreign currency on their books so you would just need to account for it by the same manner unless there is some definition as to what constitutes a foreign currency for accounting purposes.
- PeterisP 13y ago
  I don't see any serious advantages to bitcoin whatsoever if you have to follow the requirements of a banking licence. Anonymity? Nope, KYC (know your customer) rules would require ID of all wallets. Untraceability? Nope, AML (anti money laundering) regulations would anyway require you to identify the source and 'final beneficiary' of each transaction; and deny/freeze a bunch of transations matching some criteria. Oh, and you'll be financially liable if you're too soft on verifying which of your users lie. Finality of transactions? Nope, payers can contest payments for all kinds of reasons, and you'll have to return money to them; But you'll not being able to get fraudulent payments back due to properties of Bitcoin. Doesn't look like a good business to me; you can be profitable as an unregulated exchange, but doing it "properly" will make you completely uncompetitive.

gaadd33 13y ago

It only costs around 5-10M to create a bank in the US. If BTC is that profitable, why hasn't anyone done that?

greendata 13y ago
B/c the US Gov would shut it down, seize your accounts and you'd be out at least 5 million USD As long as the US Gov is against bitcoin, and they should be for their own sake, they will make it impossible to comply with the regulations. Anyone involved in creating the bank would probably face criminal sanctions for some crime. Crypto currencies may eventually threaten the USD's status as a reserve currency. The US Gov will do anything possible to stop bitcoin from growing to that level.
- gaadd33 13y ago
  Are there explicit laws against bitcoin? It seems unlikely that the OCC is going to just seize a bank when its following all applicable laws and compliance mechanisms. Some banks (depending on the location and size) keep foreign currency on their books so you would just need to account for it by the same manner unless there is some definition as to what constitutes a foreign currency for accounting purposes.
PeterisP 13y ago
I don't see any serious advantages to bitcoin whatsoever if you have to follow the requirements of a banking licence. Anonymity? Nope, KYC (know your customer) rules would require ID of all wallets. Untraceability? Nope, AML (anti money laundering) regulations would anyway require you to identify the source and 'final beneficiary' of each transaction; and deny/freeze a bunch of transations matching some criteria. Oh, and you'll be financially liable if you're too soft on verifying which of your users lie. Finality of transactions? Nope, payers can contest payments for all kinds of reasons, and you'll have to return money to them; But you'll not being able to get fraudulent payments back due to properties of Bitcoin. Doesn't look like a good business to me; you can be profitable as an unregulated exchange, but doing it "properly" will make you completely uncompetitive.