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Does this mean California is just another state in a long line of similar laws? Or is there something unique about California's situation in this aside from it containing Silicon Valley?
I wonder how BankSimple is doing now.
Here in Europe, PayPal (which is acting like a bank) had to get a banking license (like any other bank). As far as I know they didn't go bankrupt yet, so it can't be a wholly bad thing. If I drive a vehicle that acts like a car, I need a drivers license. If I run a service that acts like a bank I need a banking license. I really don't see a problem here.
They are talking innovation; sure Paypal can get licenses like that, but a startup can't. Most (by far) startups don't have 500k to lock away. And most don't have the money to pay the license fees. So yes, it's an issue as far as innovation of payment services goes; now suddenly you NEED to get millions in investment and that all doesn't go into the product but instead into government crap.
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If they wanted companies to be licensed they could just require a license. Instead they require a license and a bond worth millions of dollars in some cases, nominally to protect consumers. Yet if you have a million consumers in a state and a $1,000,000 bond, that means that if the company defaults, each consumer gets back a dollar. This doesn't sound like consumer protection to me. It sounds like an artificial barri…
Yes... but you don't usually have 1 million customers and owe them all money at once. That's just daft.
Same for a bank. Any customer with an account that's greater than zero is owed money by the bank.
It's not a stretch at all to have a million customers owed money.
Here in Europe, PayPal (which is acting like a bank) had to get a banking license (like any other bank). As far as I know they didn't go bankrupt yet, so it can't be a wholly bad thing. If I drive a vehicle that acts like a car, I need a drivers license. If I run a service that acts like a bank I need a banking license. I really don't see a problem here.
I do: it prevents innovation. People should be allowed to run an unlicensed banking service, and customers should be allowed to accept the risks that go with it (by all means, require customers to sign a form saying they understand it's an unlicensed service and they could lose all their money.)
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Im quite sure most of what Bitcoin is used for is already illegal, but that doesn't mean anything. It's just being used for what people have always done, this is the government outlawing perfectly normal things. Thanks to bitcoin (and it's growing network of services that operate from cypherspace) we nolonger have to dance to the governments tune.
I'm sure similar claims can be made for Linden dollars, which have been used for far more transactions over the years than Bitcoin has. Why single out Bitcoin? Because it's new?
> Oh, and if you want to do business nationwide, you'll need 43 more of those licenses from almost every state. Does this mean California is just another state in a long line of similar laws? Or is there something unique about California's situation in this aside from it containing Silicon Valley?
In this case, the government is saying, "make any new innovative money transmission system you want, but keep $100,000 in an account so when you fuck up someone's paycheck, they can sue you and you can pay the damages you owe." Not too unreasonable.
Regulation is bad for businesses individually, but it's good for society in aggregate. Progress may be slowed, but it's still happening and happening with fewer horror stories along the way.
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Yes... but you don't usually have 1 million customers and owe them all money at once. That's just daft.
Anyone that has a balance in PayPal is owed money by PayPal. So, any account that does more than just send out funds to other accounts (that is, purchaser-only accounts) is owed money. Same for a bank. Any customer with an account that's greater than zero is owed money by the bank. It's not a stretch at all to have a million customers owed money.
My spaghetti monster, do they even have to hold a reserve, or can they just spend all your money on the derivatives market?