Nope. You're a bank in this case. A bank is someone who accepts demand deposits, that is, money they give to you which you give them back when they want it.

What you are, is someone who is issuing redeemable notes. Issuing notes will not, _per se_, make you a bank. Or alternatively you are a trustee. If I gave money to my escrow agent, to be paid to me when I want it, she would not be a bank. If the value transferred is liquid, and the payment is made upon demand, then, in fact, you are a bank, regardless of what else you might call yourself. This is the case in the USA. Canada certainly varies, as does the rest of the world. [...] but the key element in all of these matters is jurisdiction. Who regulates all of this? The answer of course is no one. This is a rather hasty conclusion. The real answer is that a country will attempt to regulate this activity if it feels like it can argue jurisdiction and win. The easiest barrier to erect is to get some country to claim jurisdiction; the others will then generally stay away with their courts. If there is no stated location, then a country can simply claim jurisdiction if some of the facts of the situation give it an arguable jurisdiction. If, for example, the computers for a cypherspace bank are known to be in the USA and the bank claims to be outside USA jurisdiction, guess who wins. This would mean that the bank, would be everywhere simultaneously, without being anywhere at all. One can imagine all sorts of things, but architectures that can be built and economically deployed are much more important than vague characteristics. The problem of making a jurisdiction-less bank is a mighty difficult one, and it behooves those who wish to discuss it to ground their comments in economic and political realpolitik. Eric

Eric Hughes says:

If the value transferred is liquid, and the payment is made upon demand, then, in fact, you are a bank, regardless of what else you might call yourself.

Well, there is ONE subtlety -- entities like mutual funds and securities broker/dealers are not considered banks qua banks under American law On the other hand, Fidelity, for example, the largest of the mutual fund providers, does not offer demand deposits, because you can't get back your money "upon demand". They don't have to give it back to you immediately, so it's not "upon demand". Check the agreement or the "checks" you get for your fund account. It seems conceivable to operate a business that took non-demand liquid deposits, but which promptly serviced most demands for withdrawal because of the competitive environment. A "banc" of this form would not survive if the liquid deposits were, practically speaking, liquid. ("Banc" is an avoidance of the regulation which puts companies with the word "bank" in them under banking regulation. It's amazing at the number of companies with names like "Bancshares" or "Banc Holding".) Since no such institution exists now, it would be currently outside the regulatory framework, but one should not expect it to remain that way. Pragmatically speaking, one's best strategy would be to get successful rapidly and then hire lobbyists. Credit card and charge card companies could do this themselves right now, were they to pay interest on positive balances. The contract between card company and customer would have to specify that the positive balance was not available "upon demand", per above. Otherwise most of the relationships could be the same. As an aside, issues of commercial paper, including promissory notes and hypothetically digital "bancnotes", whose term is nine months or less are specifically exempted from SEC regulation. There really seems to be a gap in the regulatory environment. Legal hacking is a lot of fun. Prerequisites are a humility to learn the structure of legal argument and access to legal materials. The study guides for law students are generally excellent introductions to the subject. Access to a law library is also useful for looking up statute and decisions, but not essential, although reading at least a few decisions is necessary for ensuring an understanding of the social process involved in the creation of law. And if what you want to accomplish with your computer hacking requires, for implementation, something outside the computer hardware and networks, legal hacking is almost a necessity. Eric