Feels like a lot of startups are being built on AA and MPC tech assuming that they will be treated as Non-Custodial wallets just like mnemonic wallets Are their any no action letters or guidance that says this is true? If so, awesome If not, lots of companies are squarely in the flow of funds
Founders
not all MPC tech is the same there are certainly configurations of MPC + AA that are without a doubt noncustodial i agree many products in market today are not truly noncustodial tho
Founders
there's nothing custodial about AA, but you make a good point about MPC signers
Founders
As long as the customer controls the keys and their recovery then they’re self custody/non custodial Are you asking if there’s any legal precedence formalizing that?
FoundersI’ve been wondering this a lot too. In 2019 I started a company where we built a similar experience but we were told by many lawyers that we would be considered custodial and would need a money transmitter license. 🤷
Founders
Would love to have a live, public chat with a lawyer about this 👀
Founders
If you squint, with social login AA you're kinda sorta forcing some custody on the social login provider.
Founders
MPC: If all key shards are held by the startup, it's custodial, regardless of what they're saying (and a lot are outright lying). If some key shards, but not all are held by the startup, it's effectively non-custodial provided the authorization and interactions are controlled by the majority shard holder.
FoundersNot a lawyer but I think the following questions are clarifying . Regardless of tech details, 1. Can the user transact without company permission? 2. Can the company transact (user funds) without user permission?
Founders