conception [#sonnet37](https://claude.ai/chat/d13fa5d6-8be1-459c-8ccb-33045f56d63f) implementation [#sonnet37 ](https://claude.ai/chat/b1c69c2b-36df-4712-9830-81a8c9edf3f6) Fully reserved closed currency system based on labor contribution with full public transparency of transactions and balances #### Design Decision - who holds the external currencies - micro society would need financial licensing.. - transparency of community currency ledger #### Central Bank Digital Currency (CBDC) - each USD is a liability on the US Federal Reserve to ensure the dollar functions as legal tender. To maintain the currency system - central bank is the final guarantor of the currency's value in the system ##### How This Changes Things - could bypass commercial banks for transactions -> no credit cards - commercial banks would absorb credit risks through lending and offer financial expertise - ##### Programmability - conditions attached to money - Automatic tax collection or disbursements - Smart contracts with triggered execution ##### Direct Monetary Policy Implementation - immediate money supply adjustments - targeted economic interventions #### Fintech Company Functions - money transmitter license for each jurisdiction(country) 1. Currency conversion (external to microsociety currency) 2. Regulatory compliance (KYC/AML) 3. Connection to global banking systems 4. Security for digital transactions #### Regulations ##### Bank Secrecy Act: - must report transactions over $10,000 - keep records of cash purchases of negotiable instruments over $3,000??? ##### Internal Tokens vs. Payment Systems - Internal tokens: Limited to use within a closed ecosystem, not easily converted to external value - Payment systems: Can be used to transfer value broadly or be exchanged for other currencies ##### Money Transmitter - facilitate transfer of value between parties - exchange one currency for another - issue stored value that can be exchanged for goods or services - Exchange with external currencies - Transfer of value outside your community - Use by people who aren't community members #### retail banking functions #### Definitions - Fully backed currencies: The issuer holds 100% reserves against all currency issued (stable coins) - Fractional reserve: Only a portion of deposits are held as reserves (traditional banking) ### Community Labor-Value Currency System: Implementation Framework #### Legal Structure - Entity Type: Community-based non-profit corporation - Purpose: Facilitate internal exchange of value based on labor contributions - Jurisdiction: United States #### Core Principles - Fully Reserved: All labor-value currency is 100% backed by contributed labor - Closed System: Currency circulates only among verified members - Member-Only Transactions: No exchange with external currencies - Labor Contribution: Value created through work performed within the community #### Membership Structure - Qualification: Any person who contributes labor to the community - Documentation Required: - Government-issued photo ID - Verified phone number - Signed membership agreement - Membership Duration: Permanent once established (no minimum ongoing contribution required) - Membership Records: Maintained in secure database with backup systems #### Essential Retail Banking Functionality for Labor-Value System ##### Core Account Functions - Single Member Account: One person, one account principle - Labor Value Storage: Digital tracking of all earned and unspent labor value - Transparent Ledger: All members have real-time access to their complete transaction history - Account Categorization: Optional internal "buckets" for members to organize their funds (e.g., savings, projects, donations) ##### Transaction Capabilities - Peer-to-Peer Transfers: Direct transfers between member accounts - Recurring Payments: Scheduled automatic transfers on specified intervals - Vendor Payments: Ability for approved community businesses to receive labor value - Transaction Notifications: Real-time alerts for account activity - Optional Transaction Limits: User-configurable daily/weekly transaction caps for security ##### Security & Recovery - Account Recovery Procedures: In-person verification process for lost device or credentials - Multi-factor Authentication: Optional additional security layers - Customizable Security Settings: Members choose their own security level - Fraud Detection: System monitoring for unusual patterns - Dispute Resolution Process: Clear path for contesting transactions ##### Member Services - Support System: Help desk or support channel for account issues - Self-Service Portal: Digital interface for managing account settings - Educational Resources: Guidance on system usage and features - Transaction Search: Ability to locate and review past transactions ##### Administrative Functions - System Monitoring: Oversight of overall system health - Backup Systems: Regular backups of all account data - Reporting Tools: Generation of system-wide anonymized statistics - Audit Capability: Tools for verifying system integrity ##### Not Included (Intentionally) - Interest-bearing accounts (would trigger banking regulations) - Loans or credit (violates fully-reserved principle) - Joint accounts (simplicity of one-person, one-account) - Investment products (avoided for regulatory reasons) - Currency exchange (would trigger money transmitter regulations) #### Transaction System - Primary: Smartphone-based with NFC capability - Alternative `Venmo`-like payment request : - Vendor lookup via membership ID - IOU system with confirmation requirement #### Regulatory Compliance - Not a Money Transmitter: No exchange between internal and external currencies. Avoids FinCEN registration. - Not a Securities Issuer: No investment returns or interest offered. Avoids SEC oversight. - Not a Lending Institution: No fractional reserve or credit creation. Avoid banking license requirements. - Maintains: Records of all transactions for audit purposes ##### Specific Compliance Requirements - Business Registration: File Articles of Incorporation as a non-profit - 501(c) Status: Apply for appropriate tax-exempt status (likely 501(c)(7) social club or 501(c)(3)) - Bylaws: Create governing documents that clearly define the internal currency system - Banking Relationship: Establish conventional bank account for external transactions - Payment Processing: Contract with regulated payment processor (e.g., Stripe) for external transactions - Record-keeping: Maintain transaction records for 7 years - Information Security: Implement data protection measures for member information - Annual Reporting: File required annual reports with: - State Secretary of State - IRS (Form 990 for non-profits) - Any state tax authorities - Membership Documentation: Maintain clear records of all member agreements - Terms of Service: Develop clear policies on currency use restrictions - Privacy Policy: Create GDPR/CCPA-compliant privacy practices #### Similar Case Examples 1. Time Banks: Exchange of services based on time contributed - Example: Hour Exchange Portland (Maine) - Regulatory status: Non-monetary mutual credit system 2. Community Script Systems: Local currencies accepted by community businesses - Example: BerkShares (Massachusetts) [[local currency]] - Regulatory status: Non-profit managed local currency, not legal tender 3. Mutual Credit Systems: Accounting systems for tracking member exchanges - Example: Local Exchange Trading Systems (LETS) - Regulatory status: Non-monetary credit tracking systems 4. Cooperative Resource Sharing: Member-based systems for resource allocation - Example: Recreational Equipment Inc. (REI) member dividend system - Regulatory status: Cooperative membership benefits, not currency #### How Others Engage With Economy ##### Bringing in a Professional - Community contracts external professional (e.g., professor) for specialized services - Professional receives labor value in exchange for work - This labor value can be used for community amenities (housing, meals, facilities) ##### Hosting Family Visitors - Options for accommodating non-member visitors: - Direct payment: Visitors pay for specific services with external currency - Sponsorship: A member pays for visitor amenities using their labor value - No conversion between external and internal currencies - Clear separation between member and non-member transactions ##### Voluntary Pooling for Projects - Members can propose community projects or initiatives [[proposal engagement process - consensus system]] - Other members can voluntarily contribute labor value to fund these proposals - No forced participation or mandatory pooling - Transparent tracking of contributed funds and project outcomes