Thanks – that is sort of what I expected. We also have the added hellscape of the OAM registry here in italy which is financial surveillance at it's most badly conceived.
My uninformed take......As a custodial wallet provider you will be considered as a crypto asset service provider and therefore subject to regulation under Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets (MiCA).
Full text is here but it's very long and I'm truly sorry not to be able to highlight any specific requirement for your question. Another guess from me would be that there are a few different ways that the travel rule, AML/KYC regulations and wider financial regulations etc, that are being applied to crypto through this legislation, would be relevant to any custodial lightning wallet provider wanting to operate legally in Europe. 🫡
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1114
Discussion
Well if it's of any use, my opinion, I think fairly widely shared, is that FATF is the body that pushes it's strategies onto regulators. Below a much more big picture and shorter outline of what and how FATF are "recommending" that countries follow the goals of FATF's proposals.