Yes - Commercium is a state-chartered bank under Wyoming's special purpose depository institution ("SPDI") law. As a depository institution, Commercium meets the definition of a bank under state and federal law.
A Wyoming-chartered SPDI is a full reserve bank that receives deposits and conducts other activity related to the business of banking, including custody, asset servicing, and fiduciary asset management. SPDIs can handle digital assets, such as virtual currencies, digital securities, and digital consumer assets. SPDIs may deal in traditional assets as well, by serving as a vehicle for business cash management, operational accounts, and any other purpose permitted under applicable law.
A TC is a separate corporate entity owned by a bank or other financial institution, law firm, or independent partnership. Its function is to manage trusts, trust funds, and estates for individuals, businesses, and other entities. A trust is an arrangement that allows a third party or trustee to hold assets or property for a beneficiary or beneficiaries. TCs get their title from the fact that they act in a fiduciary capacity for their clients—as trustees.
SPDIs and TCs are different in multiple ways. Important differences include:
No, deposits with Commercium are not FDIC-insured. However, Commercium must comply with all SPDI reserve requirements, which ensures the safety of customer deposits. Please see the question - "how are customer deposits protected without FDIC insurance?"
Commercium, unlike many banks, does not engage in lending or fractional reserve banking, instead, 100% of customer deposits are held in reserve with additional protective measures. Here is how deposits are safeguarded in the event of bankruptcy:
Fractional reserve banking is a banking system where only a fraction of their depositors' balances are available for withdrawals, with the rest used to lend out to other customers. For example: if a customer deposits $100 in their bank with a reserve requirement of 10%, $10 is cash and $90 is lent out to other customers. If depositors simultaneously lose confidence, especially if the bank's investments underperform or lose money, and try to withdraw their funds, the bank runs the possibility of not having enough liquid cash on hand to cover all withdrawals, leading to a bank run.
Historically, the choice whether states would require their banks to be insured or federally regulated rested solely with the states, not with Washington, D.C, and until approximately 1990 most state laws were silent on the topic. Banks simply chose to be FDIC insured and federally regulated, and the Fed and FDIC routinely granted them access. But five U.S. states held back, keeping flexibility for themselves and a check on potential overreach by federal bank regulators. The five states - Connecticut, Maine, Nebraska, Vermont and Wyoming - enacted bank charters that neither require insurance nor federal regulation. Such uninsured state banks are prohibited from lending (either explicitly by law or functionally), and therefore hold 100% cash to back customer deposits plus up to 8% of deposits as an additional capital requirement.
As part of CFI's core banking implementation, CFI will test and have approval to launch products and services for commercial and retail customers. CFI's plan for day 1 is commercial, but by testing retail products this means CFI can launch at a much quicker pace later on.
The Wyoming Division of Banking has expressed no objections to allowing SPDI's to accept non-US citizen customers or deposits. However, for the initial opening of the Bank we will only be focusing on accounts for US residents.
As part of our core banking implementation (checking accounts, savings accounts, bank services) with NYMBUS, we have secured alongside a back-office capability and a call center capability. These two areas from NYMBUS who already serve many banks, will be linked with the proposed Commercium back-office capabilities.
Commercium is a state-chartered U.S. bank, regulated by the Wyoming Division of Banking, and is subject to the same standards that govern all banks, including bank-level capital requirements and bank-level compliance requirements (including the higher standard that applies to banks called the "Customer Due Diligence Rule"). Additionally, as a regulated bank, Commercium will be subject to frequent supervisory examinations that may not apply to non-banks.
We will leverage vendor-provided blockchain technology. As with any software vendor, the security measures will be proven through their documentation and will first demonstrate software compliance through initial testing before being accepted and integrated. User acceptance testing, penetration testing, and deployment testing procedures, etc. will be developed for system approval through both internal and third-party evaluations before we are certified by the Wyoming Division of Banking.
Commercium will ensure the safety and security of customer digital assets through a multi-faceted approach. We will partner with a reputable wallet custody provider known for its robust rules-based security measures, designed to prevent unauthorized actions, even internally. Additionally, Commercium will partner with Chainalysis, a renowned blockchain analytics and Know-Your-Transaction vendor to ensure that all transactions comply with stringent US regulations and anti-money laundering (AML) laws. Furthermore, to enhance security, private keys will be broken up in such a way that no single location or individual can gain full access to them.
With the recent decisions from the Federal Reserve as it pertains to banking, it has become apparent that public blockchains, such as Ethereum, may not be favored or allowed in banking. With this recent development, we are considering a permissioned or private blockchain for our use, just as was presented in our business case to the Wyoming Division of Banking to receive our charter.
Part of our software vendor selection will include the ability to support the integration of multiple blockchain types. This is designed to ensure we can adapt to any regulatory-approved developments. While no one can yet guarantee support of any future US-backed digital currency, we are following the development of the Central Bank Digital Currency (CBDC) to ensure we have the maximum opportunity to complement these developments.
Deposits with Commercium and investment products and services of Commercium are not FDIC insured. Your funds are subject to loss of value, including the amount deposit and the principal amount invested.
About Commercium: Commercium Financial, Inc. is a Wyoming SPDI Bank formed to serve as a custodian of digital assets and securities that can bridge to the US federal reserve system. Commercium is required to comply with Wyoming law pertaining to digital assets and special purpose depository institutions as amended. Commercium is required to always maintain 100% of its dollar deposits in reserve. Neither this site nor any press releases or statement made by an officer or director of Commercium contained herein, constitute an offer to sell or a solicitation of an offer to purchase any securities, although they may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current beliefs, assumptions, expectations, estimates, regulatory frameworks, and business projections and should not be relied upon, and/or may change without notice, as actual results may differ materially from these expectations due to certain risks, uncertainties, and other important factors. You are cautioned future circumstances, events, or results may differ materially from those projected in the forward-looking statements.