1994-08-21 - Re: e$: e-cash underwriting

Header Data

From: rah@shipwright.com (Robert Hettinga)
To: Hal <cypherpunks@toad.com
Message Hash: 6ec44ca4038a396de7d69b1a86c8366e85bc00861ed639ed22e0e7431cbe1bf2
Message ID: <199408211919.PAA21623@zork.tiac.net>
Reply To: N/A
UTC Datetime: 1994-08-21 19:23:26 UTC
Raw Date: Sun, 21 Aug 94 12:23:26 PDT

Raw message

From: rah@shipwright.com (Robert Hettinga)
Date: Sun, 21 Aug 94 12:23:26 PDT
To: Hal <cypherpunks@toad.com
Subject: Re: e$: e-cash underwriting
Message-ID: <199408211919.PAA21623@zork.tiac.net>
MIME-Version: 1.0
Content-Type: text/plain

At 10:25 AM 8/21/94 -0700, Hal wrote:

>Come on, Bob, we've talked about a lot of problems in the last few weeks: the
>prohibitions on most forms of bearer bonds; the prohibitions on banks
>issuing their own currency; the stringent regulations for private scrip
>circulation.  Our people who know securities law can probably list a few

I have have been paying attention, I was not trolling. I would like to see
a formal, concrete analysis of the legal issues if there is one out there.
Or at least someone's best efforts at it.  If it isn't there, then it may
be time to commission one. For money. (Anyone out there want to e-mail me a
quote?) Because I expect that it can be done and should be tried, and
probably isn't going to send *anyone* to jail.

I don't think that e-cash is a bearer bond. Its portfolio management from
the underwriter's side is like that of a callable bond (more like managing
the cashflows of a mutual fund while keeping the income), but to the holder
it behaves just like cash (perticularly if it doesn't bear interest ;-)).
If an underwriter is not a bank anymore than the underwriter of an
traveller's check, or a mutual fund is not a bank, then a bank isn't
issuing currency.  I've heard arguments on both sides of the question of
whether or not e-cash is scrip (it has an explicit value in dollars, and is
redeemable in cash), and I think until the secret service bangs on
someone's door, or more to the point, a real lawyer says it's expressly not
legal, than it's at least possible.  That which is not forbidden is
permitted, the last time I looked.

Legal hacking is not a bad thing to try to do at this point. No great green
monster is going to shit on my head if I try, or anyone else tries, to
start an ecash underwriting business. :-).  The most that can happen is
that the business fails, and most likely on economic, not legal, merits.

>>The only way to find out about the *market* for the product is to test it.
>OK, but also one way to find out whether it is legal or not is to test it.
>If you end up in jail, I guess it wasn't legal.  Maybe that's not the
>best strategy, though?

Bill McGowan of MCI did not go to jail. He died in his bed of a massive
coronary after a triple-bypass and a heart-lung transplant. Cigarettes
killed him. He fought the law and the system, and he won on the economic
and legal merits of his case.  I don't expect the legal entry cost of a
business like ecash underwriting to be nearly as complex.

>Send mail to netbank-info@agents.com for info on their non-anonymous (I
>think) cash-like system.  I wonder whether they have worried about these
>issues or whether they are trying out the strategy above.

They're asking forgiveness, not permission.  They're "sooners". They're not
quite the starting gun on the land rush, but they're close.

I have seen their stuff. I expect that a lawyer has told them that the
worst thing that can happen is that they'll get a nasty letter from the
feds and have to shut down, and they might win if they decide to fight it.
I expect that with a little reading, a legal mind might say the same thing
about a legitimate digital cash system like Digicash(tm), for instance.

Please note that I am not trying to make anyone angry here, or in the
previous post, and I hope that my tone in the above doesn't appear angry,
because it isn't.  I just think that the concept of digital cash is farther
along than most people think it is, and for the life of me, I can't see any
reason for not doing it, except fear, or frustration from previous efforts,
maybe. It's not FUD, because it's not deliberate, but it has the same

Robert Hettinga

Robert Hettinga  (rah@shipwright.com) "There is no difference between someone
Shipwright Development Corporation     who eats too little and sees Heaven and
44 Farquhar Street                       someone who drinks too much and sees
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