Thanks. I guess there could be many reasons for registering these new companies?
Certainly.
Epik has a habit of getting into regulated businesses and then complaining about the regulations. In a previous discussion of Masterbucks, their hatchet man suggested that Epik Masterbucks worked essentially like store gift cards, and they made a mock-up of a store gift card display, as if that was something they were actually rolling out.
As I mentioned back at the time:
https://www.namepros.com/threads/discuss-your-epik-experience.1146613/page-81#post-8006758
There is an exception to many money-transmitter license regulations involving stored-value cards which can be used as store credit only (i.e. gift cards).
However, as the Epik crew is going to discover later in their adventure, there is a huge difference between a store "gift card" which has a stored value that can be spent on goods at the store, and a medium of exchange - in which CUSTOMERS of the store may transfer balances to one another. That's where the problem arises. Trying to camoflauge a medium of exchange among multiple parties as a store gift card is not going to work out well in the long run.
If I had to guess, the "long run" may have arrived. Epik stopped Masterbucks payouts, formed a WY LLC, and then registered that WY LLC in the State of Washington in what looks like, if I had to guess, an attempt to avoid yet another state regulator.
There's a history of this sort of thing. When various state regulators inquired about Epik's unlicensed escrow services, it was dealt with like this:
It's not available in those states, because those states apparently inquired about Epik's lack of a license to provide that service.
Likewise, when Rob was thinking about some sort of domain insurance, he posted about acquiring a licensed insurance entity here on Namepros:
https://www.namepros.com/threads/wh...for-dnprotect-com.1156889/page-3#post-7454960
As for insurance expertise, part of the logic for seeking to acquire an existing insurance agency in property and casualty is to be able to fast-track the learning curve, and compliance.
He ended up not doing that, and so...
Because, again, Washington is probably the only state whose regulator inquired.
Are things like financial and insurance regulation a barrier to entry? Yep. Are they often outdated? Yep. Do they protect entrenched interests over innovative service providers? Yep, yep and yep.
All of those things are true about regulation. The truth of those things does not make the regulations go away. The thing that those regulations are intended to imperfectly accomplish is to provide at least some protections against customers showing up at their bank one day to find the money missing and the building turned into a Taco Bell. And here we are.
But, getting back to "Masterbucks as an in-store stored-value gift card..." That sort of thing is going to work fine relative to money transmission regulations, so long as you have people storing value on their cards and buying things from that vendor. But where you then start using it as a medium
for transferring money among buyers and sellers, it is no longer operating as a stored-value gift card, but it is operating as a medium of exchange - i.e. as a money transmission vehicle. Becoming among the providers of choice in situations where, for example, people found the KYC requirements at escrow.com to be too onerous, is also not a funnel that is going to lead to a good place.
That's just one guess, among many possibilities. No doubt, at some point, someone will jump in to pick at some minor detail in that hypothesis and go on some sort of personal rant directed at me. Whatever. But this is not the first time that there's been trouble on the good ship Masterbucks, nor is it surprising that the Masterbucks operation would suddenly halt while some interstate game of corporate musical chairs was being conducted. Maybe they will be able to say, "We stopped doing this in Washington and now it is being done in Wyoming" where the fintech regulators are less energetic. That may kick the can down the road until the next unsurprising episode of "we don't like banking and insurance regulations" comes around.
