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Author Topic: Discussion, establishment of a Bitcoin Credit Union  (Read 2312 times)
moni3z
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September 12, 2012, 12:54:07 AM
 #21

People trust credit unions because of federal deposit insurance. You can't ever get that for bitcoin unless you can lobby parliament or congress to change the wording in the insurance regulations to something besides USD or CAD.

You can still insure your digital items. Canada post has somehow managed to do it with their 'vault' software. Lot's of record companies do it. Though pretty hard to insure something that changes in value every few seconds and there's no recognized authority you can go to and judge what the value is like they can for Gold. Can't go to the TSE/NYSE and get the value of bitcoin, which was traded in a regulated environment and not just some guy who runs a service in Japan with no oversight.

Of course many of the thefts and bitcoin hacks were due to complete incompetence. If you're encrypting everything and storing it properly won't matter if it's stolen instead of just leaving it around your desktop in plain text (bitfloor)
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Ilikeham
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September 12, 2012, 12:56:13 AM
 #22

People trust credit unions because of federal deposit insurance, so if a hacker somehow cleans out every account you can get it back. You can't ever get that for bitcoin unless you can lobby parliament or congress to change the wording in the insurance regulations to something besides USD or CAD.

You can still insure your digital items. Canada post has somehow managed to do it with their 'vault' software. Lot's of record companies do it. Though pretty hard to insure something that changes in value every few seconds and there's no recognized authority you can go to and judge what the value is like they can for Gold. Can't go to the TSE/NYSE and get the value of bitcoin, which was traded in a regulated environment and not just some guy who runs a service in Japan with no oversight.

Of course many of the thefts and bitcoin hacks were due to complete incompetence. If you're encrypting everything and storing it properly won't matter if it's stolen instead of just leaving it around your desktop in plain text (bitfloor)

You're getting way ahead of the process.

You can insure the fiat deposits.

You can insure assets like BTC. Congress is not needed.

Edit: for the scope of my research BTC has been called "digital bearer bonds"

moni3z
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September 12, 2012, 02:24:44 AM
 #23

So you want to start a regular credit union, adhering to all regulations. Ok. Will take up to 5 years for approval and require at least a few million in capital but can be done. Will also require substantial investment into secure banking software, ATM hardware and software, transport security, or payment into an existing ATM network you can use. You can only do transactions in fiat, so you're just another credit union competing for business amoung the already established CUs.

Then you want to issue insured bitcoin bearer bonds as some sort of deposit scheme, since no regulations will allow you to directly accept BTC and call it a currency. (If you do, immediately lose credit union licence, unless you get fed and local governments, and regulatory organizations to change the wording of CU charters)

Maybe you want to accept BTC, then convert it instantly into fiat and use that for deposits. Then convert it to BTC when people withdraw. Violates regulations, again no CU license.

You want to do this internationally which is illegal, credit unions can only take local deposits.

You don't want to start a regular corporation with voting shares, and issue insured bonds which would cost a fraction of the price and time to set up, and basically be the same thing. You could still offer full financial services like lending, mortgages and reloadable payment cards though this would all have to be in fiat to comply with regulations of whatever country you set up shop in, and that market is already flooded, especially the mortgage broker market.

What you could do is start a secure non regulated internet credit union doing whatever you wanted, host it on Tor because they will come after you, and makes it cheaper to avoid DDOS and haxx attacks, then provide 100k in bitcoins as deposit insurance to some trusted 3rd party so if anything happens, 100k bitcoins are there to cover the losses.
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September 12, 2012, 02:45:12 AM
 #24

So you want to start a regular credit union, adhering to all regulations. Ok. Will take up to 5 years for approval and require at least a few million in capital but can be done. Will also require substantial investment into secure banking software, ATM hardware and software, transport security, or payment into an existing ATM network you can use. You can only do transactions in fiat, so you're just another credit union competing for business amoung the already established CUs.

Then you want to issue insured bitcoin bearer bonds as some sort of deposit scheme, since no regulations will allow you to directly accept BTC and call it a currency. (If you do, immediately lose credit union licence, unless you get fed and local governments, and regulatory organizations to change the wording of CU charters)

Maybe you want to accept BTC, then convert it instantly into fiat and use that for deposits. Then convert it to BTC when people withdraw. Violates regulations, again no CU license.

You want to do this internationally which is illegal, credit unions can only take local deposits.

You don't want to start a regular corporation with voting shares, and issue insured bonds which would cost a fraction of the price and time to set up, and basically be the same thing. You could still offer full financial services like lending, mortgages and reloadable payment cards though this would all have to be in fiat to comply with regulations of whatever country you set up shop in, and that market is already flooded, especially the mortgage broker market.


Seriously you are drawing a picture here I don't actually follow. Credit Unions will have to be established in the country that wants them -I never suggested International. Five years is wrong, I can get approvals in nine months. Banking software isn't all that complicated, I deployed Van City back in the day when I was with IBM long before they merged with the one in Alberta. Fees to attach to ATM aren't really that big a deal (look around at all the private ATM brokers) , neither are cheque clearing services/scanning etc. CC's are based on volume deals and so on. Mortgage booking would be a pass through service to Laurentian or other small small mortgage book handler in Canada, US has more choices.

BTC aren't a deposit scheme, it's like having your stock portfolio attached to your account, exercising a sale and having the fiat deposited in your account. This is legal and currently done, I do it. how it's handled and accounted for within the software framework is as an additional currency, how it's termed for the sake of accounting to the public is as an asset, or bond of sort.

I get what you're driving at even if some of what you've said is not quite accurate. I think national markets will decide if they want BTC CU's. I seriously think it may be worth the effort to flush out how it might look and work even if it's not time yet.
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September 12, 2012, 02:58:08 AM
 #25

Good luck it sounds like something  that would be useful particularly if you can offer insurance on bitcoin deposits. That alone is worth the effort.

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September 12, 2012, 03:06:40 AM
 #26

Good luck it sounds like something  that would be useful particularly if you can offer insurance on bitcoin deposits. That alone is worth the effort.

Thanks but the important thing here is that it's not *me* who needs to drive this, it's the *yous* . I'm here to offer some support and scheduling, access to contacts and some governments, but at the end of the day I sure as hell don't want to run it. I want to fish off the dock and sell a few old pennies.

The scope of this is just to build out how it might work in a couple common legal systems, taking it to an actual build would be up to the national BTC community in any specific country. By publishing a knowledge base that can be adapted for local legal and banking systems, people may truly have a choice of how they hold their wealth whether in fiat, metals or crypto. I can see in some countries with rampant inflation and bank runs where BTC could easily stabilize some local incomes and so on.


moni3z
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September 12, 2012, 03:21:39 AM
 #27

Ahh, ok see what you are trying to do.

Also, what about starting a NYSE/TSE traded ETF commodity fund for bitcoin? They're trading pretty much everything these days, why not a bitcoin ETF. Keep the coins in an insured/encrypted location like silver and gold ETFs.

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September 12, 2012, 04:24:28 AM
 #28

I'm interested in helping out. I've got years of director level experience in technology start-ups on the business side of things. I can wear many different hats, depending on what needs to be done. Let me know how I can help

Thanks

Bro, do you even blockchain?
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September 12, 2012, 06:11:10 AM
 #29

I think the community has changed a bit recently and while many are still attracted to the wild west ways of BTC finances I think it's gotten to the point where some people would give up their "total quasi anonymity" (yeah I know) for a safe, secure suite of BTC related financial services issued under one roof...

Do u have necessary software for front- and back-office? More concrete info about the project (what is done, what is in progress now, milestones) would be useful.
Ilikeham
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September 12, 2012, 03:14:20 PM
 #30

I think the community has changed a bit recently and while many are still attracted to the wild west ways of BTC finances I think it's gotten to the point where some people would give up their "total quasi anonymity" (yeah I know) for a safe, secure suite of BTC related financial services issued under one roof...

Do u have necessary software for front- and back-office? More concrete info about the project (what is done, what is in progress now, milestones) would be useful.

Why would we need banking software to write a document? You've missed the point here I fear.
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September 12, 2012, 03:22:58 PM
 #31

Why would we need banking software to write a document? You've missed the point here I fear.

Hm... Perhaps... Ok, I'll re-read it again.
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