[Klathmon]

You could call them that if you want, but they are significantly different than traditional banks.

These services won't actually hold your money, just a transaction that sends all the money to you if someone tries to cheat. It's more of an escrow service than a bank, but the escrow service again doesn't actually hold anything valuable.

[r3demon]

Not exactly banks, but there's a huge chance they will be big corps with a money transmitter license, KYC, AML. What if they refuse your channel or transaction?

[Klathmon]

I think we are talking about different things. This thread is about services that will watch the blockchain for "cheaters" and will punish them on your behalf so you don't need to be always online.

You are talking about LN nodes, which work a bit differently than you seem to think it does.

For starters, anyone can "refuse" to open a channel with you, but they can't "refuse" to pass along a transaction (well they can, but because of the routing system used, you don't know where a transaction came from, or where it's going to, so they have no reason to refuse it). So if coinbase refuses to open a channel with me, I can still send money using coinbase as a middle "hop", and they would never know.

And KYC/AML laws aren't really applicable at this level in the stack. KYC laws apply regardless of what i'm buying/selling (in most cases). If I'm buying from best buy, they need to know who I am. That has nothing to do with how I'm paying, and the "middle hops" are like routers more than banks. Even if an internet router is sending a financial transaction, that doesn't mean they need to follow KYC laws. It's the same with LN, if your node is acting as a "hop" for a transaction, you don't know who or where the tx is coming from, or who or where it's going to, and it's counterparty risk free. It's more like an internet router than any kind of financial institution, so KYC laws don't apply.