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have any MURICAN🇺🇸🏈🦅 bitcoin bros thought about the following:

is it conceivable that an extremely bitcoin-friendly state legislature (Wyoming? Texas? Florida?) could create a regulatory environment to allow for USD-based fully reserved banking that simply has no connection to the federal reserve system or any federal regulatory agencies?

so Custodia or The Narrow Bank, but presumably needing to keep business in-state?

if so, could it work mechanically? you’d obviously be cut off from FedWire but what about ACH? it could conceivably issue and acquire for card networks too via whatever clearinghouse options work mechanically, unless political pressure cuts this off? but then, if the starting point is friendly regulation, surely part of that could be: “listen up, VISA, either you let AllenBancorpOfWyoming in or you GTFO our state”?

this can go in a bajillion directions, so any and every thought entirely welcome. please also tag whoever you think would have interesting thoughts. I’ll start with #[0], #[1], and #[2] … what do you all think?

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Discussion

Bobby 2y ago

I think it is extremely conceivable. I’ve heard #[5] talk about this in a podcast before I believe.

Once the Fed govt starts to push some sort of CBDC or even get more intentional about shutting down on/off ramps to Bitcoin, pro-Bitcoin and pro-crypto politicians will find a voting populace looking for politicians that back their interest.

I think it’s very likely that this could eventually lead to a divide in our country that could possibly split the country in a more permanent way.

allen 2y ago

HOLY SHIT HOW DID I NOT KNOW CAITLIN WAS HERE.

Caitlin, I am so sorry. please forgive me … and then answer my question in detail 🤣

Bobby 2y ago

🤣

Peter Todd 2y ago

What are the regulators going to do if the bank is just a few vaults filled with insured physical cash, and the bank does full AML/KYC?

You might be able to find funding to start such a bank purely to show how ridiculous the regulators are being. Doesn't necessarily need to make a profit to be worth doing.

allen 2y ago

well the regulators have men with guns, so I’d prefer if we believed on balance that this was unlikely to lead to a shootout 😂

Peter Todd 2y ago

I'm pretty confident it won't lead to a shootout. At least from the regulators... 😂

Actually, come to think of it one way to start this bank profitably might be to make it an add on to an existing cash management business.

HashTrash4Cash 2y ago

This is not a bank by US law. It just a storage house with good security and insurance. The moment they offer interest on the dollar holdings, they go to jail.

allen 2y ago

there’s no interest in such a model, so it seems we are getting somewhere!

Micah541 2y ago

I’m guessing there’s an assumption, here that such an institution would be *more* responsible thenother banks that are connected to the Fed, but from the feds perspective, or my perspective, or anybody else’s perspective, we don’t know this. So while you think obviously they wouldn’t be diluting the shit out of the dollar if they’re allowed to issue their own loans and make their own rules etc. etc. nothing really stops them and us Americans have the dollars brand to uphold.

allen 2y ago

if you are fully reserved then you can’t make loans at longer than zero duration so there is precisely nothing to worry about from the perspective of the brand of the dollar. the biggest danger is you confuse people into thinking this is how all banks work and then they are disappointed when their own fractionally reserved bank goes bust.

J 2y ago

That confusion already exists. The disappointment is an inevitability for those that don’t seek a haven. A fully reserved system sounds like the very hope of any new standard. It’ll act as a beacon, casting light on both the dangers of the current fractionally reserved and safeties of the fully reserved, no?

Micah541 2y ago

But like what does fully reserved mean if you don’t actually have dollars at the Fed? Do you have a stack of twenty dollar bills? Do you have tethers? Do you have treasurys?

Will Cole 2y ago

This was essentially the point of the SPDI in Wyoming. The problem with State Bank charters as I understand is that you still have one of the Fed or FDIC as your regulator in addition to your state regulator. The SPDI was specifically architected to get around the FDIC, be largely regulated in state, but still get the benefits of Fed membership. It’s a tricky needle to thread and I don’t believe any state charters would achieve what you’re saying, other than the SPDI in Wyoming which is getting challenged by the Fed currently.

allen 2y ago

bummer

HashTrash4Cash 2y ago

This is basically not possible in the US system. Even offering interest on dollars is only legal two ways. You offering a registered security, you are a licensed bank.

This is largely why all the shitcoin people claiming their things are not securities are going to lose if they even make it to court.

allen 2y ago

well yeah but obviously there is no interest in such a model. interest is muy fiat.