[badatnames]

I've looked at doing this in Europe before, interest-bearing completely changes the classification of the prepayment. I didn't dig too deeply, but the general gist was that regulation-wise it really wasn't worth doing for a relatively gimmick-level feature

[bko]

I've heard about similar regulatory barriers especially in finance so this does not surprise me.

A long time ago I remember reading about banks that want to provide incentives for saving that amount to basically lottery tickets. The idea is that people aren't thrilled about a savings account that pays 2%, but if instead they offered a monthly 1 in 50 chance to get 100% return (same expected value, ignore compounding), people would like that a lot more. But this amounted to essentially a lottery and that's a state monopoly.

[dmurray]

Ireland, like the UK, has a system of Prize Bonds that work exactly like this, administered by the state. The expected return on them is actually quite competitive, depending on your tax situation.

Everyone here seems to have got a present of €20 Prize Bonds for a 10th birthday from an aunt or grandmother, yet people from outside are always surprised that such a product can exist.

[mnahkies]

My return on premium bonds this year (so far) is roughly 3.2% annualised - it's not bad considering that it's tax free, and secured by the government

[lurkshark]

In the US they call those Prize-Linked Savings Accounts. They’re actually legalized in a majority of states but aren’t marketed particularly heavily (especially when compared to lotteries, sportsbooks, prediction markets, …)

https://en.wikipedia.org/wiki/Prize-linked_savings_account

[jancsika]

What's the difference between a regulatory barrier and a Chesterton's fence?

[mynegation]

I think that is why Carolina Cloud pays the interest in credits (redeemable for their services), as opposed to cash. It is not much different how some business give you a discount if you pay the amount upfront or in a more convenient form of payment.

[dannyw]

At scale, a decent number of commercial/business agreements have Net Discount provisions (or provisions to that effect); basically get a % discount if you pay within X days; or pay the full amount with no discount in Y days, so the general arrangement is far from unorthodox.

Opening it up to everyone is nice.

[jwrallie]

In some regulations you can also be expected to declare and pay tax on the money you earned from the interest, which can be annoying to do for such small values.

[dannyw]

Definitely annoying, and YMMV, but a lot of jurisdictions don't treat credits (that cannot be redeemed back to cash) as income.

In the same way signing up for $App and getting $100 in API credits isn't income; paying a bill early for a 3% discount isn't income; and frequent flyer points or cash back you get on our credit card isn't income.

[Imustaskforhelp]

Very interesting I am curious how this is the case, could you share some more details/information about it?

Also, how does it compare to say, accepting gold or treating a gold based ledger instead treating gold as a currency and similar ideas?

Also could this re-classification be ever useful too? For examples bonds being treated in such way?

[bojangleslover]

It's the case because once you buy cloud credits you are in an entirely unregulated space. At Carolina Cloud, that means your cloud credits are nothing more than an audited and backed up DB entry. Therefore, we can do whatever we want with them. We could double them every 6mo if we wanted. We settled on something more reasonable (SOFR).

Not unlike the hyperscalers giving $100k+ to startups and it not counting as income for C-corp tax purposes. Totally unregulated space!

[infecto]

What is surprising? Paying interest on cash is effectively a financial instrument. Not sure what gold has to do with it. If you pay a business cash and they turn it into credits that pay interest that would not pass a smell test.

No customer would truly care about this and in most jurisdictions you would probably go through a lot more paperwork because of the interest payments.

[bojangleslover]

This is interest on credits, not on cash. Once you start paying interest on cash you need a banking license. I think you'd be fine even in Europe paying interest on credits.

[infecto]

Why would you think credits and cash would be treated differently? I am not a EU tax expert but it would be shocking if that’s the case because you could create some pretty interesting schemes if by turning cash into a “credit” meant it was treated entirely different.

Maybe that’s the case for the EU but it would be surprising.

[linohh]

Even with credits or tokens or whatever, it's not completely trivial to find the spot where you can accept customers payments in advance and not be subject to financial regulatory frameworks.

[infecto]

Absolutely agree. I imagine it almost all scenarios it gets tricky and at the very least puts a good bit of burden on the company to define that with regulatory frameworks.

[addandsubtract]

Probably because you can't turn credits back into cash.

[infecto]

Is that a law?

[kachnuv_ocasek]

I'd guess that's a part of the TOS.

[infecto]

TOS is not the point.

The root of this thread was surprise over rules around interest. I am saying it’s not surprising because companies could then easily create weird schemes.

[bux93]

A "banking license" is typically for "taking deposits or other repayable funds". (There's other kinds of banking licenses, too.) That can be for 0% interest too, or even negative interest (e.g. taking fees into account).

[linohh]

Which is a good thing. While it may seem strange to regulate these things for good faith actors, it's obvious why it's a great when thinking about bad faith actors.

[arcfour]

Yes, I love maximally restricting rights of others for unclear reasons.