If we are advised to get our coins of of custodial wallets like Binance, Kucoin and the rest of then, how then does a developer of an open-source and non-custodial software become a crime facilitator?
It kind of confusing. Isn't this supposed to be the reverse?
Because to the government, you are providing an online "money transmitting business" to other people and are thus required to get a business license [somewhat hard] and introduce checks for fraud. [impossible]
Going to have to disagree with the 1st part. It's not that difficult to get a Money Transmitter License in some locations. Expensive perhaps depending on if you are actually making any money. Time consuming definitely in some areas. But even in NYS it not hard. It's just forms you have to fill out and records you have to keep. AND if you are actually making money running it as a business these are records you would have to keep anyway.
But, to the OP, yeah you should never have any real funds in a custodial wallet. This is not even new with regulations being tightened. Custodial wallets have always been a risk because they could just vanish with no notice.
-Dave