I completely get this. The only downside I would see from this is the regulatory uncertainty with regards to holding (even miniscule) funds in custody.

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fuck it

This is probably the best possible way to do custody. Temporarily until the user’s app comes online. Would be surprised if there would be legal concerns around this approach.

I wouldn’t be surprised, money is ridiculously regulated.

I completely agree with you, but depending on the jurisdiction it could still pose challenges. This is why most of the LSP’s are very adamant about never being in custody of any funds.