I propose the “opportunity to steal”, two-question test:
1. Does the service provider have the opportunity to steal from the users?
2. Do the users have the opportunity to steal from the provider?
If the answer to both is “no”, then the provider cannot be a money transmitter.
By this test, ISPs, nodes and CoinJoin services would NOT be transmitters. But existing MSBs like banks and exchanges still would be.
This would be a very rational test if the spirit of the law, ie consumer protection, was still at play
It would mean ecash mints are MSB. AND actually if “inbound liquidity” is the service you paid an LSP for, they *could* rug you by closing the channel prematurely, so there’s an argument they would need to be regulated too
I do agree that the more trust is required, the more regulation is reasonable
I wish we had better solutions for trust minimization, though
If L2 becomes highly regulated, then it’s no use if we run a Fedimint - regulated nodes will reject our channels 😔
To be clear, I oppose all government regulation because it is involuntary. My two question test is how I might recommend Samurai approach their defense.
I’m not a lawyer. But by my reading of the FinCEN guidance, eCash issuers and federated chains (Liquid) are probably engaging in transmission.
I’m less sure about Lightning liquidity providers. I’m guessing they’re not. Once the channel is established, neither party can steal.
Yes, a provider could fail to deliver the service. For example, my cable company could fail to deliver my bandwidth. But failure to provide service isn’t, IMO, proof of money transmission.
The purpose of my test was as a negative. If there’s NO opportunity to steal, then there’s NO transmission. But the inverse does not necessarily follow. That is, the statement “if there IS opportunity, then there IS transmission” is false.
