Any MiCA loophole? Since this is custodial, the mint will be considered a payment processor (AFAIK).
Then the mint will need to do a joyful KYC.
Not quite. MiCA applies specifically to third-party intermediaries (CASPs) managing client funds/keys. If a merchant or business deploys and operates their own self-hosted mint to settle their own balance sheets, they are holding their own funds—completely exempt from CASP licensing. Sovereignty is the loophole.