First, no Tangible Cryptography is not looking to start a Bitcoin Credit Union (well at least not in 2012
).
In the US a large portion of the regulatory costs comes from state regulation. So what happens if tomorrow FinCEN states that Bitcoin exchanges are money transmitters? Simply register with FinCEN as a money transmitter, a type of MSB (Money Service Business). Easy right? Well no. Registration as a MT under FinCEN MSB program would be a defacto admission to the states the entity is engaging in money transmission. This is an activity that most (32 IIRC) states regulate. Even worse there are at least nine state which regulate this activity even if the business is not in the state. As an example if your service is available to NJ residents you must register as a MT in NJ even if your business is not located in NJ. So for example if you wanted to comply with MT requirements it would mean filing, approval, reporting and compliance to 11 different entities (FinCEN + your home state + 9 states which require outside entities to register). Wow your regulatory burden just exploded. Now it gets even more fun. Each of those 32+ states is continually changing requirements all the time. In any particular year the odds are at least one state makes a material change. So throw on top the need to continual legal counsel and some quarterly research costs just to remain you don't accidentally become non-compliant due to a rule change in any of the individual states. Most MT simply register with all states (even ones they don't need to) in order to ensure they aren't caught in some future legal entanglement. A hypothetical example would be NV considers your company affiliate program to be a nexus in Nevada and thus your non-registration as a MT is a violation of NV law despite your business not being in Nevada and Nevada not regulating outside Money Transmitters.
So why a Bitcoin credit union? Credit Union's are federal charters. There is significant case law which puts they outside the reach of state regulators. For the record so are national banks but it is much "easier" (but still difficult) to get a CU charter then it is to get a bank charter. Deposit entities (like CU) aren't required to have more than one branch and with online banking it is possible to establish a national footprint. Bitcoin supporters could even have their paychecks deposited into a Bitcoin credit union (and thus gain the ability to instantly convert some or all of that into Bitcoins). Funds would be FDIC insured just like any other CU/Bank.
Granted this isn't something which could be done easily or cheaply but it isn't beyond the realm of possibility. Startup costs are in the tens of thousands. Charter application requires 3,000 signatures (technically as low as 500 but that requires additional evidence of support). The entity would need to maintain a couple million in deposits (say 2,000 depositors depositing an average of $1,500 each with a couple of major contributors putting in the
FDIC NCUSIF max of $250K ea). An option to ensure minimum deposit requirements would be to have initial deposits held as an interest bearing 5 year CDs giving the new entity some time to build up a membership and deposit base. The minimal ongoing costs would be maybe half a million to a million (total back of napkin estimate, say $400K in salaries, $100K in outside auditing, $50K building/rent/etc, $120K in interest, $10K in
FDIC NCUSIF insurance premiums, etc). Obviously a full featured financial institution would have much higher costs but it also would likely have much larger deposit base and revenue.
The entity wouldn't need to engage in fractional reserve or even offer loans. If it did the profit from those loans (assuming loans are profitable) would lower the costs of members. CU are allowed to charge a membership fee (most don't in order to attract depositors). If the CU became a very large exchange then exchange fees could cover a large portion of the operating costs ($100M @ 1% = $1M revenue).
Anyways just wondering if anyone has looked into this.
