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Consumer Finance Q. OK to hold consumer's money before transferring to 3rd party
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Date: September 19th, 2018 12:27 PM Author: Nubile Awkward Theater Stage Service would work like this.
Party A (a consumer) wants to transfer money to Party B on a certain set date in the future (eg. in 9 months) but wants a third party to hold this money in the meantime. The twist is that Party A and Party B both want Party A to have the ability to withdraw some or all the money from the third-party at any time for any reason such that some or all of it may never end up being transferred to Party B.
Service X lets Party A deposit the money with Service X to be passed on to Party B nine months in the future. Party A can take back some or all of that money at any time before the nine months is up, any any money remaining after nine months is sent to Party B. Party B is on board with this arrangement. This need to scale to thousands of Party As and dozens of Party Bs.
I know it could be structured as an escrow, but escrow regulations are such that the fees would need to be too high to scale properly. Also, structuring as an escrow would not allow Service X to use the money as "float" in the meantime. So that's not an option.
It could be structured like a bank depository account, but that would require a bank charter, following bank regulations, etc.
It could be done with Ethereum smart contracts, but this needs to use normal fiat money so that's not an option.
Could Service X just offer this service, hold the money combined with many such transactions, in its bank accounts -- all without running afoul of banking / escrow regulations? Or would the government insist on stiffling this innovation?
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Date: September 19th, 2018 12:33 PM Author: Nubile Awkward Theater Stage Also -- I'm already aware that the OCC has begun accepting applications for special purpose national bank charters to innovative things, but that's not idea because it would likewise involve too much regulation and it's not clear that will carry on indefinitely even if accepted. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840558) |
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Date: September 19th, 2018 12:37 PM Author: chestnut big piazza circlehead Just obtain consent to convert it all to crypto and then manage it yourself outside the banking system. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840598) |
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Date: September 19th, 2018 12:39 PM Author: Nubile Awkward Theater Stage That wouldnt work. Smart contracts would work, but Crypto is too volitile. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840625) |
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Date: September 19th, 2018 12:48 PM Author: chestnut big piazza circlehead just use derivatives to hedge out the volatility (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840701) |
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Date: September 19th, 2018 12:53 PM Author: Nubile Awkward Theater Stage Not a viable solution -- too complex and also still ends up running afoul of regulations.
Smart contracts only work for these purposes if they're being used to set up the structure such that Service X is never actually holding onto the money. In that case the derivative contracts used to hedge out the volatility would need to be integrated into each of the many thousands of smart contracts, and which are with normal consumers and so we could never find anyone willing to enter into that arrangement. Or, Service X could enter the necessary derivative contracts and basically guarantee a certain amount of dollar value would eventually be transferred, but that's too risky and to complex. |
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Date: September 19th, 2018 12:41 PM Author: translucent roast beef windowlicker why would anyone want this service ever (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840641) |
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Date: September 19th, 2018 12:45 PM Author: Nubile Awkward Theater Stage This is a functionality is a much broader service that I can't disclose here. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840664) |
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Date: September 19th, 2018 12:46 PM Author: translucent roast beef windowlicker oh ok that's fine because the application of different financial and banking regulations doesn't depends on what you're actually doing or anything (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840680) |
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Date: September 19th, 2018 12:47 PM Author: Nubile Awkward Theater Stage There are no other services or products connected with these transactions such that that would matter. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840692) |
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Date: September 19th, 2018 12:44 PM Author: Thriller Out-of-control Gunner Generalized Bond I don’t understand why service x is any different from party a just keeping the money in his checking account and writing party b a check in 9 months. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840659) |
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Date: September 19th, 2018 12:45 PM Author: translucent roast beef windowlicker if party A did that then unregulated service X wouldn't have the opportunity to lose the money, though (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840666) |
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Date: September 19th, 2018 12:46 PM Author: Thriller Out-of-control Gunner Generalized Bond Lmao. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840678) |
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Date: September 19th, 2018 12:46 PM Author: Nubile Awkward Theater Stage It makes perfect sense in the scheme of the broader service which I can't disclose here. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840674) |
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Date: September 19th, 2018 12:46 PM Author: Thriller Out-of-control Gunner Generalized Bond Lol. Okay. (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840684) |
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Date: September 19th, 2018 12:53 PM Author: Boyish unholy roommate Is RSF’s trust about to vest? (http://www.autoadmit.com/thread.php?thread_id=4081318&forum_id=2#36840732) |