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0 sats \ 0 replies \ @vindard 31 Jul \ on: Save the Children and Fedi Announce Collaboration for Revolutionizing with BTC lightning
I might be missing a trick here, but how does a system built on chaumian ecash and strong privacy guarantees enable this?
Phoenix is almost there. You don't have access to your channel states though, so they could technically one day kick you off and broadcast an old state to steal funds
They wouldn't, but it is something that's technically possible
Oh interesting, this is the first point on fedimint's own "Trade Offs" page
Custody: The user must trust the Federation Guardians with custody of their funds which introduces custodial risk.
Individual federation members cannot, but the federation (entity) as a whole can. Challenge would be to convince whichever regulator that there isn't such a thing as "a single federation" and the key holders are just a bunch of unco-ordinated randos? If you can pull that off, then sure you're probably all clear
Also even if it isn't "custody", there's probably some other classification they can try to slap you with: e-money issuers, Virtual Asset Service Provider etc.
I think the point here is the user loses control of the original funds, the federation takes control of funds, and it's unclear whether a federation made up of known members will be able to withstand a regulatory attack.
Finer points obviously differ by jurisdiction, but definition generally converges on that when someone is able to unilaterally moves someone else's funds but they haven't taken legal ownership of the funds, then that first person (entity etc.) can be considered a custodian of those funds.
Coincenter has some decent work on the definitions here: https://www.coincenter.org/education/policy-and-regulation/custody/
That's not a bad idea tbh. There's lots of schemes that rely on changing the definition of what's being exchanged and how, to get around different regs. It's kind of like how Bull Bitcoin sticks vouchers between their trades for e.g.
Would be interesting to see if anyone tries that approach instead, and how they'd smooth over the UX of that.
They have the Jamaican Dollar which used to have a USD peg I believe, but they had to change that to a free float back in 1992. It's pretty much been in free fall against the USD since that.
especially if things like fedimint can inhabit a legal gray zone of doing custody without being custodians
I think this is the part that there's some been miscommunication around. There isn't any grey zone, the regs around custody are usually pretty clear. Fedimints are custodial setups where the custodians hold funds via a multisig and then extend services to folks whose funds they are custodying.
If you're going to make the custodians known for trust-building purposes, then those persons/entities become targets for the usual custody requirements, things like complying sanctions, demonstrating you're not banking US citizens etc. which require some form of KYC.
To get around this you can maybe have anonymous custodians, but then how do you build trust and convince users that the custodians won't rug-pull?
So sats can come in via BTCPay and land as stablesats for those newer merchants who aren't used to the volatility as yet... this is bullish for onboarders!
Last way I saw to do this was a convoluted chain of actions with the prism auto forwarder and sideshift for usdt at Baltic Honeybadger
This isn't a problem if you open the channel and never receive on it (only send). There's no "prior state" that's disadvantageous to you.
Your only risk at this point is if your channel partner decides to force-close since you would pay the onchain fee as the opener. Can maybe be mitigated if channel partner provided an "offline channels" service where they open the channel, simultaneously push all funds to your end, and commit to not closing it.