Has anyone done a deep dive into the laws that would presumably apply to being an ecash mint? I feel like a lot is being overlooked and people might expose themselves to liability without knowing it. My assumption is you would, at minimum, owe certain fiduciary duties to your “depositors”.
If no one has done this I may write something up when done with finals.
What is an ecash mint?
Cashu, linked below, is one implementation of ecash. Fedimint is another, in development.
Someone please correct me if anything below is wrong:
Essentially, a person, or a group using multisig, starts a mint. Others who wish to use ecash send their bitcoin to the mint, and the mint issues them ecash tokens in exchange. The ecash tokens allow for complete privacy, as the mint does not know who you are, what your balance is, or who you’re transacting with. From my understanding the ecash tokens are just files stored on your local device, and can be transacted with anyone willing to accept them. No one is made aware of the transaction except parties involved, because you’re just sending a file. If you want your bitcoin back, you send the tokens back to the mint and the bitcoin equivalent is sent back to you.
That sounds like a business. If the minters are printing tokens and you expect those tokens to increase in value, in order to exchange for bitcoin or anything else, then you are a security. They have laws on the books for securities.
Yeah, that’s why I want to do a write up on laws that may apply. I’ve seen no one talk about legal implications and I think it’s important for those thinking about starting a mint to know what they may be getting themselves into. I didn’t even think of the securities issues, but you’re absolutely correct, thank you for pointing that out.
What if the mint issues more tokens than they really hold (in sats)?
Can I verify it somehow myself?
But is there an expectation that tokens from an ecash mint increase in value? In cashu and fedimint the tokens just represent abstractions of sats that have been deposited in the mint. Their value isn’t expected/intended to move independent of bitcoin.
If they did, maybe the best analog for cashu tokens would be an in-game currency or something like that?
Until they change the howey test, if the asset/token is expected to increase in value and is issued by a central party, group, or individual it is probably a security.
Bitcoin's issuance is determined by miners, randomly, and value is not guaranteed by any central authority, group, or individual. Then you exchange bitcoin for a token that someone says should keep it's value or increase seems like a business to me.
The processes sounds like putting a hat on a hat. Just my 2 bits.
Eewwwww!!! Ecash... 🤮🤮🤮
Yeah I’m not a huge fan either but it seems inevitable with the developments of cashu and fedimint.
Ya my wallet doesn't accept this ecash or cashu stuff so I'm good.. just trying to spread awareness to the new comers that their is no second best.. 🤣🤣🤣
I mean I don’t consider it a shitcoin, since it’s basically just a file redeemable for bitcoin. I just don’t think it’s viable in certain regulatory environments. It could be helpful in places with little banking (the idea behind fedimint in Africa), but outside of that I don’t see much purpose.
Also seems susceptible to rug pulls by the mint which is my biggest gripe.
#[1] do you know of anything like this?
It's the same as any other custodial Bitcoin service (there are thousands out there) plus incredible privacy.
Yeah but there’s the added factor of being an “issuer” of the ecash tokens, which makes me think there would be different laws than there are for just a custodial service.
You may be right. I’m just curious, going to do some research on it at some point soon.
