Are Cashu mint operators breaking the law? \ stacker news ~bitcoin

pull down to refresh

Are Cashu mint operators breaking the law?

1670 sats \ 101 comments \ @ek 25 Oct bitcoin

@calle seems to think they are not breaking the law, see this note:

I’m pretty sure they are considered MSBs that break money transmission laws without KYC/AML and a license in each state they operate in.

I thought that was clear to everyone using Cashu, especially the one who invented the protocol.

What do you think?

Yes60.0%

No40.0%

35 votes \ poll ended

view all related items

55 sats \ 25 replies \ @optimism 25 Oct

I'm not a judge in the US (or anywhere else) so my vote has no meaning. There's no referendum on interpretation, afaik. Perhaps the poll is a wrong format.

I have a question though: which points from the definition do you count that under? stored value under 3/4?

100 sats \ 24 replies \ @ek OP 25 Oct

Your vote has meaning because I care about what “normal people” think. The poll isn’t about what’s right or wrong. That’s up to how judges will interpret the definition.

which points from the definition do you count that under?

Money transmitter

348 sats \ 19 replies \ @optimism 25 Oct

Oh, I'm not normal. But I'll give you my opinion of the interpretation that I'd want to see, so that you also know the opinion of the insane and can keep track of that in a special column.

Background: I think that any IOU-based bitcoin (cashu, on-exchange, L-BTC, WBTC and many terribly worse association scams that are fully decoupled from BTC like Saylor's stonks, perps and ETFs) cannot be a permanent solution for Bitcoin-as-freedom-money. This means that for me, developing protocols that cannot work without IOU-ness can only be a temporary solution at best and any tech integrating it must be considered throwaway.

Assertions:

Large scale custodial convenience services are a recipe to make people get rekt: The mint is a custodian and you rely on its functioning to get your IOU-sats out. If the IOU isn't honored, the value of your IOU-sats declines. 1 IOU-sat != 1 sat. From this perspective, let it be illegal. Best way to have recourse against scammers other than murder.
Small scale custodial convenience however, where you "Uncle Jim" service your family members, neighbors or social activity groups for example, should be possible, because this allows people to help each other out. From this perspective, let it not be illegal.

Luckily, offering a commercial service is definitely money transmission. Offering a service free of charge, probably shouldn't be, but I'm not sure how that would be interpreted. I hope that it would not be that.

Feel free to apply that to whichever cashu mints you were thinking about.

211 sats \ 18 replies \ @freetx 25 Oct

"Uncle Jim"

I think both of your points are valid, but personally I take issue with the whole encouragement of Bitcoiners to "Uncle Jim". Being a bank, no matter your motives, is not a trivial nor risk-free adventure.

Being someones "Uncle Jim" has a fairly big risk of it ending in disaster - regardless if your were at fault or not. Casually intermingling financial responsibilities with friends/family always has a way to end in the worst possible way for all involved.

If the complexities of using Bitcoin mandate that you need Uncle Jims then its time to either (a) improve that, or (b) acknowledge that professional custodians are a thing for valid reasons.

No rational economic market relies on people providing custodial services for free...thus it makes sense why laws don't make exceptions for "You were a money-transmitter but doing it out of the goodness of your heart"

121 sats \ 9 replies \ @ek OP 25 Oct

Yes, in my experience, involving money in relationships usually ends badly.

Example: I lent my ex €1000—we were in a relationship at the time—and when I started to ask when I would get my money back after a few months (iirc), she started to get defensive.

I fortunately did get my money back at some point, but not my relationship, lol.

100 sats \ 7 replies \ @optimism 25 Oct

she broke up with you because you asked for your money?

100 sats \ 6 replies \ @ek OP 25 Oct

I don't know why she broke up with me, she never told me.

But I assume our communication issues were definitely high on the list.

120 sats \ 5 replies \ @optimism 25 Oct

Yeah, I generally don't lend to people I'm in a relationship/family with. If you see something back, it's awesome. If you don't, also awesome. But then I'm old.

view all 5 replies

100 sats \ 0 replies \ @SwapMarket 25 Oct

there is no lending in a relationship. only gifts from her point of view.

76 sats \ 7 replies \ @optimism 25 Oct

Like I said, IOU-ness can only be temporary; it cannot be a systematic approach. So you shouldn't be "Uncle Jim" forever, unless you're James, then you're that to your sister's kids.

I don't think Bitcoin needs it intrinsically. But humans need to help other humans, preferably not a persistent dependency, but a temporary workaround. These will always be needed, because a planet with 8 billion people on it will always have complexities.

111 sats \ 6 replies \ @freetx 25 Oct

100%

I've always felt that CashU was completely valid for short-term use. Imagine you go to a music festival and you buy CashU tokens using the festivals web app. Then you can go around buying food/drinks and eventually "cash out" back to Bitcoin at end.

This solves many issues with using Bitcoin in such an environment and only introduces a small manageable amount of risk.

Sadly though, this is probably a "money transmitter" service.

77 sats \ 5 replies \ @optimism 25 Oct

Technically, if you're selling tokens at your festival, you're a stored value provider, so you're a money transmitter then too. Festivals are anyway traps where they throw away your bottle of Evian under the excuse that it could be GHB, but somehow the markup inside the gates is 300% - at a minimum.

The incentive of not honoring the IOU afterwards when people want to cash back out is kind of compelling though, so maybe they should just integrate LN straight, without the custodial aspect. Less middlemen, more joy.

222 sats \ 1 reply \ @Scoresby 25 Oct

It feels like cashu exists because lightning is bad at async receive and on boarding with small amounts. People don't want to run an always available node and they don't want to manage liquidity. That is not going to change. Hopefully lightning gets to the point where users aren't aware they are doing these things.

The distinction between mints that operate for profit and not is interesting: if the laws are such that they push mints toward being nonprofit endeavors, I'd say that is bad -- one of the things that might keep a mint honest is if they are making a lot of money.

view all 1 replies

111 sats \ 2 replies \ @freetx 25 Oct

so maybe they should just integrate LN straight

Would be possible but much more complicated. First off you have the dreaded liquidity issues: Is the beer seller going to rebalance his liquidity channels mid-operation to get more inbound liquidity.....

More to the point though, the purpose of "tickets" is that the organizer takes a cut. So you sell beer-for-tickets and at the end of the show the vendor redeems the tickets they earned back to festival organizer for 70% value in cash (or whatever).

Point is, CashU most directly fits that model as Cash Tokens = Tickets pretty directly.

view all 2 replies

100 sats \ 3 replies \ @DarthCoin 25 Oct

Show me in that "law" where it says anything about Bitcoin as money. If they would say something like this their whole fiat system will fall. The whole lie of "legal tender" will fall. That's why they will avoid it and let clueless normies to think that anything can be put under their crap useless so called laws (words on a paper).

THE FEAR is what is driving people to think that gov have any control and/or authority over your money.

Even the term "Money transmitter"is a total bullshit. If money can't be transmitted freely, then it will cease to be money, they became currencies (aka money by decree).

0 sats \ 2 replies \ @optimism 25 Oct

I agree with you that the law shouldn't even exist on this, but I'm unable to change the world like that, right now, at least not for people outside my direct sphere of influence. Maybe in the future.

0 sats \ 1 reply \ @DarthCoin 25 Oct

You don't have to change anything. Just ignore their bullshit.

Reminder:

With the simple fact that you are aware of their bullshit, you won against them. And they know it. The whole power of a government it stays in clueless normies belief in a government. The most dangerous superstition. And when that belief is eroded and destroyed, the whole house of cards will fall down.

0 sats \ 0 replies \ @Solomonsatoshi 25 Oct

How many stackers record calculate and pay the tax due on each and every zap? My guess is zero or close to it. I know I dont. It would make using stacker news unduly burdensome. Just like the fiat debt slavery enabling sponsor-government intended. But realistically most people do not want to break the law because government has trained people to obey and will sometimes make an example of those who do not obey...

105 sats \ 4 replies \ @grayruby 25 Oct

No. Mints in themselves where transaction only occur between the members of the mint aren't money transmitters. They are similar to casinos. They take money in give a representative token that the user can use as they see fit while they are on the premises and then cash them out when they are leaving. SN is essentially a mint and cowboy credits are ecash.

I think it's also a scale issue. If you tried to create a mint with 10M users it would be hard to argue you weren't trying to circumvent money transmission laws.

120 sats \ 0 replies \ @nelom 25 Oct

Probably been rinsed a thousand times as an example but didn't the Japanese outlaw gambling and then these ball bearings shops popped up conveniently next to the casinos, and conveniently the casinos accepted the ball bearings as tokens 🤣🤣 I'm sure you've heard that one before

90 sats \ 1 reply \ @ek OP 25 Oct

You cannot withdraw credits, therefore credits are not ecash.

The casino is an interesting example I haven't thought of yet though. Thanks for bringing it up!

44 sats \ 0 replies \ @grayruby 25 Oct

That's true the example is not perfect because credits do become sats for withdraw but they have to go through the rewards pool mixer first and it's not like you put 500 credits into the rewards pool you are guaranteed to get 500 out. That's a fair point.

Maybe SN is more like the casino. You buy your chips, use them all day and then find out if you are up or down when it is time to cashout.

Speaking of rewards. I got territory revenue at 12am ct but no rewards today.

20 sats \ 0 replies \ @Fenix 25 Oct

I think is more similar to gift cards for their “law”

100 sats \ 0 replies \ @Norbert 26 Oct

I think it's quite likely they break the law in many jurisdictions. And if not, I think it's very likely that mint operation will be outlawed in the near future. It's not like financial legislation tend towards permissiveness.

Cashu might be wise to adopt the assumption, right or wrong, that mint operation will be cracked down on. If it chooses to exist at the mercy of lawmakers, it is doomed. That's why I think the future of Cashu, should it survive, is pseudonymous mints, possibly running as Tor onion services. This path will be riddled with rug pulls, but over time, trustworthy mints will emerge, not merely by the Lindy effect, but also through relentless user vigilance and by the application of proof-of-liabilities schemes.

150 sats \ 3 replies \ @k00b 25 Oct

All this time I thought he knew. He could also be feigning ignorance which is probably the best thing he can do if he's running one of the mints (or wants to encourage others to run mints).

I can't imagine any lawyer telling him that a centralized mint with any bidirectional convertibility (natively or even on a secondary market) between ecash and bitcoin, advertised or not, is not an MSB/money transmitter.

He must think all other custodians that KYC customers are doing it for fun, because they hate privacy, and any service that's noncustodial when they could use ecash is run by idiots.

Surely the people giving him grants know this.

10 sats \ 0 replies \ @anon 25 Oct

What a sad situation this all is

0 sats \ 1 reply \ @supratic 25 Oct

Is not about thinking others are doing it for fun. There's a huge difference on doing things under compliance after registering a pseudo-bitcoin-fiat-backed "startup" business asking permissions to govt do things with vc versus an anonymous mint-runner that just operate in the private, without asking permissions to anyone, because s/he just knows s/he can do it and is not hurting anyone, nor committing any moral crime.

The people giving him grants must know this.

0 sats \ 0 replies \ @d01abcb3eb 9h

Indeed. Actively striving towards compliance means to willingly participate in that game. Running a mint (pseudo-)anonymously out of spite, or because one thinks it right, and taking the accompanied risk is something else.

121 sats \ 1 reply \ @stack_harder 25 Oct

the secret ingrediant is crime

0 sats \ 0 replies \ @ek OP 25 Oct

lmao

77 sats \ 3 replies \ @jakoyoh629 25 Oct

If transmiting Bitcoin counts as money transmission, and Cashu mints are backed by Bitcoin, then Cashu mints are money transmission.

0 sats \ 2 replies \ @ek OP 25 Oct

it's really that simple

0 sats \ 1 reply \ @jakoyoh629 26 Oct

sarcasm?

21 sats \ 0 replies \ @ek OP 26 Oct

21 sats \ 0 replies \ @standardcrypto 26 Oct

If there are bad laws, breaking the law isn't the only option.

You can also repeal the bad laws.

200 sats \ 2 replies \ @DarthCoin 25 Oct

WHO VOTED YES, IS A FUCKING STATIST MORON THAT DON'T DESERVE BITCOIN

0 sats \ 1 reply \ @ek OP 25 Oct

Fortunately bitcoin doesn’t care

100 sats \ 0 replies \ @DarthCoin 25 Oct

damn it, I have to agree with ek now :)

21 sats \ 0 replies \ @chebibu 25 Oct

chatgpt says yeap. but fuck chatgpt.

21 sats \ 0 replies \ @SwapMarket 25 Oct

Whose laws? I live in Antarctica!

30 sats \ 1 reply \ @OT 25 Oct

What isn't breaking the law these days?

0 sats \ 0 replies \ @DarthCoin 25 Oct

People MUST read: https://cdn.mises.org/thelaw.pdf before saying "breaking the law". I wonder why @ek didn't linked this book in his poll... maybe because he didn't read it?

200 sats \ 8 replies \ @DarthCoin 25 Oct

Are pink shells breaking the "law"?

I think this is a wrong question. Here is the question people should ask:

I've said it many times, but people still ignore the elephant in the room issue:

There's NO LAW that can stop me to trade freely with whatever I want to consider it money. The govs laws refers to their fiat money (aka legal tender), not to Bitcoin or any way of using Bitcoin. And legal tender is totally another story than money and Bitcoin.

Or let's put it more simple:

112 sats \ 7 replies \ @ek OP 25 Oct

Have you told Ross Ulbricht that he could have saved 12 years of his life in prison if he just told the judges they have no authority over him?

0 sats \ 6 replies \ @DarthCoin 25 Oct

His biggest mistake was to trust the lawyers and the "judicial" system. He was railroaded and he didn't know how to defend himself.

0 sats \ 5 replies \ @ek OP 25 Oct

So you didn’t? Why not?

I would love to see his reply.

0 sats \ 2 replies \ @DarthCoin 25 Oct

We are deviating from the subject now, but anyway. I've said it multiple times: Ross was used as a patsy from day 1, even that he didn't know it. They wanted to make an example of him to hit hard on Bitcoin.

And now, being a "presidential" puppy, he could not say anything about the real story. He's silenced for life, but "free".

0 sats \ 1 reply \ @ek OP 25 Oct

So if I’m a patsy, I can’t claim they have no authority over me even though I don’t even know about it? 🤔

21 sats \ 0 replies \ @DarthCoin 25 Oct

Practically yes, if you are railroaded and cornered, your only option is to defend:

0 sats \ 1 reply \ @DarthCoin 25 Oct

if he just sent the judges your blog

That's stupid. You have to learn by yourself and study about how to defend yourself, not just copy pasta and/or pointing to others words.

One thing is to talk about this stuff online and another thing is to prepare yourself, in private.

2 sats \ 0 replies \ @ek OP 25 Oct

I edited my reply before you replied and changed it to this:

if he just told the judges they have no authority over him

But I guess you didn’t see it before you replied

0 sats \ 24 replies \ @DarthCoin 25 Oct

OMG SN stackers are really retarded...

The level of statism on SN is really disturbing...

100 sats \ 21 replies \ @Norbert 26 Oct

Thinking mints break the law doesn't mean you think they should shut down or that you agree with the law.

100 sats \ 6 replies \ @d01abcb3eb 9h

This. I think the question of whether running a mint is breaking the law is interesting and relevant. Not because I'd shut mine down (if I were running one) if it were, but because it's better to be informed about what you are doing rather than being mistaken. If it is likely that running a mint is indeed illegal, telling plebs that it isn't can only backfire.

0 sats \ 1 reply \ @DarthCoin 6h

It all goes to this but statists will never WANT to see the truth.

55 sats \ 0 replies \ @d01abcb3eb 3h

While the meme might have a point I cannot take arguments such as these seriously. I interpret them as calls for ignorance or disinformation, both of which are pretty high up on my evil-scale. A lot of things are seemingly arbitrarily set, but not knowing about how they are set is seldom to your advantage. Perhaps you mean well, but I just don't see it...

0 sats \ 3 replies \ @ek OP 9h

Exactly, which is why I have a major issue with @calle pretending it's definitely not illegal.

If he can't talk openly about it, he should just keep his mouth shut and not pretend the opposite is true.

0 sats \ 2 replies \ @DarthCoin 6h

first you need to define what means the word ILLEGAL

0 sats \ 1 reply \ @ek OP 3h

No I don’t because most people understand what I mean, except you

0 sats \ 0 replies \ @DarthCoin 3h

most of the people are clueless statists slaves that have no idea in what world they live in... so is totally useless their "opinion".

0 sats \ 9 replies \ @DarthCoin 26 Oct

This quite dumb, is like accusing the US Mint as money transmitter...

In fact the user of the mint is the only one "transmitting" something, not the mint. The mint is the one that create the token, is not transmitting it. The only part when the mint is involved, is when the user wants to convert the tokens in sats and send them over LN to a LN node, in that moment, yes, the mint act as intermediary, but is not transmitting anything, only convert, melting the token.

now is ok this explanation @ek ?

0 sats \ 8 replies \ @ek OP 26 Oct

The mint is involved in every transaction, even if you're just exchanging cashu tokens, because these cashu tokens need to be swapped for new ones to avoid double-spends.

0 sats \ 6 replies \ @DarthCoin 26 Oct

The mint is involved in every transaction,

As far as I know, the app you use with the mint is doing that locally and not pinging the mint. The mint is maybe only confirming the token when the receiver comes online. But that is not transmitting. Example: I send a token offline....

0 sats \ 5 replies \ @ek OP 26 Oct

There are no true offline payments in Cashu.

They keep saying "offline payments", but it's not true. One of sender or receiver has to be online and contact the mint. All they mean with "offline" is that not both have to be online at the same time.

Keywords are here P2PK and DLEQ proofs.

0 sats \ 4 replies \ @DarthCoin 26 Oct

even then, that doesn't make them "transmitters", but only "validators". As I said: did you consider the US Mint as money transmitter?

0 sats \ 3 replies \ @ek OP 26 Oct

The transaction cannot happen without the mint. That’s not just validating.

view all 3 replies

0 sats \ 0 replies \ @DarthCoin 26 Oct

If I play with you a game of exchanging football players cards, are we considered money transmitters?

0 sats \ 2 replies \ @ek OP 26 Oct

Exactly, but unfortunately, your intellect is wasted on DarthCoin

0 sats \ 0 replies \ @DarthCoin 26 Oct

0 sats \ 0 replies \ @DarthCoin 26 Oct

0 sats \ 0 replies \ @DarthCoin 26 Oct

What is "the law" ?

100 sats \ 1 reply \ @ek OP 25 Oct

@DarthCoin right now:

0 sats \ 0 replies \ @DarthCoin 25 Oct

You just opened the can of worms statists with this post. But is OK, now I can see who is what.

0 sats \ 8 replies \ @standard_sats 25 Oct

Below holy FATF limit 200USD is not really, but then come various new regulations regarding sanctions.

10 sats \ 7 replies \ @ek OP 25 Oct

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

-- https://www.fincen.gov/money-services-business-definition

0 sats \ 2 replies \ @standard_sats 25 Oct

Nice find. I believe US laws are somewhat stricter in that regard.

0 sats \ 1 reply \ @ek OP 25 Oct

Unfortunately, we had to become very familiar with these laws, lol

77 sats \ 0 replies \ @standard_sats 25 Oct

Yes. This is a cursed place to build a business. Very unfortunate, however people in DeFi figured out some ways.

0 sats \ 3 replies \ @DarthCoin 25 Oct

why do you always lower your status to a slave and put yourself under their "laws" ? Slavery by self-slavery LOL

0 sats \ 2 replies \ @ek OP 25 Oct

because I love messing with you

0 sats \ 1 reply \ @DarthCoin 25 Oct

0 sats \ 0 replies \ @ek OP 25 Oct

0 sats \ 0 replies \ @wow 16h

It's all so tiring.

Can't we just go back to being punks and breaking the law?

0 sats \ 0 replies \ @kepford 26 Oct

Honestly it seems like BS to me. The "laws" seem very arbitrary and ciprocious to me. But I am very ignorant about this topic.

0 sats \ 0 replies \ @DarthCoin 26 Oct

A required reminder for this poll

0 sats \ 1 reply \ @_bilthon_ 26 Oct

You said "the law" and then proceeded to talk about each state, presumably referring to US states. That just reminded me of the pirate bay's response to legal threats from DreamWorks back in the day. Here's a refresh on that:

As you may or may not be aware, Sweden is not a state in the United States of America. Sweden is a country in northern Europe. Unless you figured it out by now, US law does not apply here. For your information, no Swedish law is being violated. Please be assured that any further contact with us, regardless of medium, will result in a) a suit being filed for harassment b) a formal complaint lodged with the bar of your legal counsel, for sending frivolous legal threats. It is the opinion of us and our lawyers that you are ……. morons, and that you should please go sodomize yourself with retractable batons. Please also note that your e-mail and letter will be published in full on https://www.thepiratebay.org. Go

0 sats \ 0 replies \ @ek OP 26 Oct

Good point, but I am not sure if you can compare IP laws with money transmission laws just like that.

For example, in the case you mentioned, DreamWorks is a company and they were trying to protect their IP by suing Pirate Bay. But in the case of money, it's not a company that will go after you, but the executive branch of the US government. I think that's a big difference.

However, I am pretty sure anyway the US does not care where you server is when it comes to money. If you're serving US customers, you're subject to US law. Else you need to geofence the US.

0 sats \ 0 replies \ @sirstackalot 25 Oct

Who cares? People should be able to freely issue their own tokens without having to ask permission from men in suits and robes. "The Law" is an artificial construct created and exploited by politicians and bureaucrats for their own personal gain. The only law that should be considered is Natural Law (which is sourced in divine law), and issuing your own ecash doesn't violate that.

0 sats \ 0 replies \ @cointastical 25 Oct

Three felonies a day

So I guess with an ecash mint, that makes four

169 sats \ 0 replies \ @janetyellen 25 Oct outlawed

stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.