As mentioned, the regulations are the biggest problem. Rather than scheming, just make secure webapps from a new country. Having thought it through a bit, I'm pretty confident micro nation building is easier than taking on banking regulations.

If you want to do something like this in a non US/European country a micro nation unfortunately is not the solution. I believe a large country like China, Russia or Brazil who isn't too worried about the OECD sanctioning them are the only options.

I worked on a payment startup in Panama for a couple of years and know people who have attempted the same in various other offshore jurisdictions. The problem with financial innovation in these places is that you their own regulators are really scared of international sanctions.

Unfortunately in the end I think the best thing to do is to innovate from a grassroots level in the US or Europe. I would never have said so 10 years ago. But the OECD have been very effective in their campaign to scare previously innovative regimes.

Biggest red flag No regulators == no means to protect depositors, and no means to punish bad actors. History has repeatedly proven that the market itself is not sufficient to regulate bad behavior because it depends on the participants choosing to remain in the market, rather than amassing an ill-gotten fortune and then pulling out.

2ND biggest red flag: There is significant risk, but absolutely no incentive for bearing that risk (i.e., interest). Interest exists, and indeed, is based upon incentivizing people to take risks with their money. That's why higher-risk investments have higher interest rates and returns.

It doesn't provide any means for the bank to make profit, ergo, no incentive for banks.

It doesn't provide sufficient security measures to protect money/ecurrency/whatever that's held in these accounts. Even worse, b/c it's electronically based, it's dependent on power supply. This won't work in most of Africa, and large/undeveloped portions of India or the Middle East.

It doesn't provide any means for "trust", which is the foundation for the entire banking system. Example: I don't care what Joe Flo says about you on Facebook; I don't care if a million of your virtual friends say you are trustworthy: I want actual data, or I won't lend you squat.

Final Red Flag (Possibly the biggest) -- Where does the money come from? It states that the amount of money in circulation is the money deposited by people, but where does the deposited money come from? What about people born after the system is created? Do they get starting cash to deposit, or are they screwed?