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127 sats \ 3 replies \ @k00b 16 May freebie \ on: Cashu: This will allow integrating Ecash into existing KYC/AML infrastructure bitcoin
I'm not sure an ecash mint can comply with the law even if they wanted to. Custodians require KYC because they are obligated to report someone when their activity is suspicious and must attempt to prevent further suspicious activity. I guess you could detect suspicious activity on inramps and outramps to the mint? I'm not sure that's full regulatory cover, but for appearance's sake this could do wonders.
I suspect this is mostly to provide protection to cashu's developers. If a cashu mint gets indicted, the cashu developers can claim they gave them the best compliance tools possible with ecash.
I suppose the mints could require authentication every time you make a transfer outside the mint via Lightning. I am not sure how ecash works, but maybe they could also require authentication every time you transfer ecash to someone else.
But maybe it's just a way for the developers to protect themselves after the Tornado Cash issue. It's also a great reminder that the mint can rugpull or shotgun KYC anytime. Every day I am liking less and less this whole ecash thing. Please change my mind if I am wrong.
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Yeah, @Natalia linked in her comment to this explanation by calle on nostr.
On privacy: this hurts privacy for peg-ins and peg-outs for example. Even if there was full KYC, ecash is still a lot more private than a normal custodian. The provider doesn't have a view into your wallet, can't take your ecash, and can't stop you from transacting with others.
So it sounds like you are correct.
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I keep noticing these half-truths, such as: "...and can't stop you from transacting with others."
A mint can't stop you from transacting with others WITHIN THE SAME MINT.
cashu tokens are only valid on the mint they are minted on. If I take a cashu token from mint A and try to use it on mint B, such as sending it to another user, that token will not work. Some kind of on/off ramp, such as Lightning, is required to transact across mints. Those ramps are the chokepoint.
This can work out in a different way too. User A invites use B to a KYC mint in order to pay for goods/services. User B accepts the invitation to add the mint (to get paid) only to discover that a KYC process is required. User B is from a sanctioned country, so... that's not gonna happen. User B goes home empty-handed.
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