Berns said his ambitions are incompatible with the current financial system and he feared that the banking complex would cut off his supply of capital. The 56-year-old attorney previously announced plans to construct a Reno-sized, blockchain-focused smart city and e-sports arena in the Nevada desert.
His $28 million acquisition of the Kirkwood Bank of Nevada “is a small but critical step in helping the nascent company achieve its wildly ambitious goals,” reported The Nevada Independent. In addition to financing his own projects, Berns hopes Kirkwood Bank of Nevada will become a leading bank for the blockchain industry.
“It’s to create an environment where the blockchain ecosystem, the legitimate businesses out there who are trying to build projects that are going to empower the individual and better the world… have a bank that understands what they’re doing and isn’t fearful,” he said.
“Banks are hesitant, because if this takes off, you don’t need banks anymore. They become obsolete,” Berns said.
Berns purchased the bank through a separate holding company to mitigate the reporting and ownership responsibilities. Additionally, he said he planned to decentralize his companies in the future, turning power over to users of the system.
“I don’t think the regulators would have ever been comfortable with that,” he said, adding he may attempt limited integration of Blockchains with the bank to create a sandbox to test his financial technology and blockchain ideas.
“I needed a playground,” he said. “I needed a place to do proof-of-concept with regulators to show that loans can be done in such a way that if I have $1,000, I could invest 10 cents in 10,000 loans and, it would all be done on the blockchain and micro payments would be made, and there’s no funny business.”
Berns’ negotiation with Kirkwood began in February 2018, after he spent a year searching for a banking partner. He paid $25 million for the entity, and invested an additional $3 million.
According to the FDIC the bank has more than $86.6 million in assets and has had a 9.14 percent return on equity in 2019. It has never changed ownership since its founding in 2008.
Bank President John Dru said were no immediate planned changes for banking operations except for the name and a branch opening in Northern Nevada. It is unconfirmed what the bank's new name will be.
“I know for sure that the customers won’t see any changes,” Dru said. “All executive management is staying on board. The directors, there’s no change there, they’re all going to stay on. And even the account numbers won’t change.”
Berns also said he plans to buy or create a 3D printing company to print a portion of his blockchain city. He’s considering using an undervalued building material – hemp – during the process and may cultivate the resource on 67,000 acres of land owned by Blockchains.
“It’s environmentally friendly, it sucks carbon out of the air, it rehabilitates soil and it’s all around an amazing product,” Berns said. “And we had planned to do it on a smaller scale and after hemp was legalized, we intend to go much bigger.”
Blockchains recently partnered with slock.it to further its integration within the Internet of Things.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.