[alexmccain6]

That’s a fair point, and I agree with the core issue you’re raising. Anything that takes custody of funds or acts as an intermediary in the US quickly runs into BSA, AML/KYC, and money transmitter requirements, and those exist for good reasons.

The angle I’m exploring isn’t to bypass regulation, but whether a non-custodial, self-hosted orchestration layer can exist that never holds funds and only works on rails that already support direct settlement. The model is closer to paying a shop directly than paying through an intermediary....the software is never a counterparty, never pools funds, and the regulated entities remain the banks or processors on both ends.

In a US scenario, the idea would be that the merchant runs the software themselves, and onboarding doesn’t abstract compliance away but explicitly guides them through what they need in place to legally accept payments, linking out to the appropriate providers and only working once those are set up. My question is whether, in your view, that meaningfully changes the regulatory posture, or if simply being part of the payment initiation path still makes MSB treatment unavoidable.

Appreciate you calling this out....it’s exactly the constraint I’m trying to understand.

[salawat]

The issue is there is no non-custodial option by definition. You are either doing what a financial institution has to do by law (Full compliance system), or you're outsourcing to someone else who does, in which case you haven't negated the non-cooperative custodian risk that you set out to mitigate in the first place.

The only real choice left is to accept a minimalized compliance system that just squeaks by mister to be accepted by the big guys, (which still leaves the risks of the rest of the system eventually locking you out), and places a significant burden on you, the business owner to learn a lot of financial minutiae that has nada to do with your business other than integrating into the financial system), or just stick with a payment processor who already exists (not solving your problem).

Absolutely sucks, but that's what our system has evolved to.