The Lightning Network seems to be getting closer to production. This is a promising scaling solution that could greatly reduce the cost, latency, and energy use of Bitcoin transactions.

We have received some questions about the regulatory obligations that participants in the Lightning Network may face. While this is still a gray area, Coin Center has been working for years to ensure that non-custodial roles in cryptocurrency networks, such as Lightning nodes, do not need money transmission licenses.

The reasoning is simple: A Lightning node cannot lose or run away with a user’s money. As a result, Lighting nodes present little to no risk to consumers and so should not require licensing.