In Search of Genuine DigiCash

[Pierre Uszynski]

Linn Stanton <lstanton at sten.lehman.com> writes:
> 
> hughes at ah.com (Eric Hughes) writes:
>   > [I read somewhere] ~"The cost of compliance in a typical USA
>   > bank is 14% of operating costs."~
> 
> The real figure we need is not the US cost of compliance,
> but the difference between US costs and costs in other major banking
> markets.

Well... not if we compare to an unregulated cypherbank.

What WE (cypherpunks) need to know is also how much of our taxes go
to the government side of this regulatory activity.

I'm not sure cypherpunks are ready to wait for deregulation to happen :-)

>From the customer's point of view, if not the bank's point of view, there
is the cost of creating and maintaining all these laws, agencies, and
regulations. So not only the bank customers end up somehow paying the
bank's cost of compliance (as typically the individual customers may be
less susceptible to foreign bank competition than the shareholders who
may be more easily convinced to invest in foreign banks), but the tax
payers (be they customers or shareholders) end up paying the government
side of this regulatory activity. Complete the picture by figuring in
there the taxes paid by the bank to maintain the regulations ;-).

Perpetual Travellers who bank in cypherspace and run cypherbusinesses
for fun and profit end up winning several ways. Their banks can afford to
pay better interest and charge less per transaction. They are not taxed
to fund regulatory efforts, and they have a competitive advantage over
regulated businesses. (In the short term, though, they have a major
reputation (or lack thereof) or tradition problem to overcome.) They
also take risks (testing unproven markets, trusting unproven business
and crypto protocols, losing money to penultimate transaction cheaters...)

Pierre.
pierre at shell.portal.com