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Originally Posted by stocktrader23
Link to it. Also, Paypal could be run under banking laws. I am way too lazy to go look but if so they are doing something within the law by being setup correctly.
You use this idea that an 'unregulated' epassporte must be doing the same thing. Being unregulated (in USA) is what makes it to where you CAN'T use fractional reserve. You must keep your customers money at all times.
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Link provided in above post.
You are missing an important fact here. Paypal is NOT required by law to keep 100% of account holders funds in a seperate account, in fact it does not. It operates a risk model completely unique to any bank and maintains US dollar balances with several major banks and through this model also operates a monetary fund which is loosely based on a fractional reserve model however with various unique attributes given the nature of the Paypal business.
Non US Dollar balances are held almost entirely within Paypal operated monetary funds through various instruments of investment and they disclose quite clearly in their mandatory public disclosure statements that these funds are not guaranteed.
ePassporte was not subject to any of the regulation imposed on Paypal and thus is less likely to have managed funds on a pure 100% reserve model as even the regulated Paypal is not required to do so.