Phoenix and Wasabi exit US market amid self-custody wallet crackdown

    28 Apr 2024
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    ACINQ’s Bitcoin wallet, Phoenix Wallet, and zkSNACKs’ Wasabi Wallet are both discontinuing services for United States customers in response to the recent crackdown on two major self-custodial cryptocurrency wallet providers.

    Both ACINQ and zkSNACKs raised concerns about whether self-custodial wallet providers can be seen as legitimate money service businesses following the recent action taken by the U.S. regulatory agencies against Metamask creator Consensys and crypto mixer Samourai Wallet.

    “In light of recent announcements by U.S. authorities, zkSNACKs is now strictly prohibiting U.S. users from using its services,” zkSNACKs wrote in an April 27 statement.

    “Recent announcements from US authorities cast a doubt on whether self-custodial wallet providers, Lightning service providers, or even Lightning nodes could be considered Money Services Businesses and be regulated as such,” ACINQ explained in an April 26 post on X.

    ACINQ has given Phoenix Wallet users until May 2 to adjust to the upcoming changes, while the new policy at Wasabi Wallet was implemented “effective immediately.”

    ACINQ explained that Phoenix Wallet users should drain their wallets, but avoid “force-closing” their wallets, as “on-chain fees could be significant.”

    Recently, regulators worldwide have argued that self-custody crypto wallets may assist in facilitating illicit activities such as money laundering.

    On April 25, Cointelegraph reported that Consensys received a Wells notice from the SEC on April 10, warning of potential enforcement actions related to its MetaMask Swaps and MetaMask Staking products.

    The SEC allegedly said in a phone conference that Consensys was operating as an unregistered broker-dealer.

    Meanwhile, just a day earlier, on April 24, Cointelegraph reported that the co-founders of cryptocurrency mixer Samourai Wallet were arrested on charges of money laundering brought by the U.S. Justice Department (DOJ) and other agencies.

    Samourai Wallet CEO Keonne Rodriguez and chief technology officer William Hill are each facing one count of conspiracy to commit money laundering, with a maximum sentence of 20 years in prison, and one count of conspiracy to operate an unlicensed money transmitting business, with a maximum sentence of five years in prison.

    In the meantime, European regulators have recently relaxed potential proposed regulations concerning self-custody wallets.

    On March 23, Cointelegraph reported that a majority of the European Parliament’s lead committees scrapped a 1,000 euro ($1,080) limit on crypto payments from self-hosted crypto wallets as part of new anti-money laundering laws.

    However, crypto exchanges, must perform due diligence, such as identity verification checks, on users who carry out business transactions of at least 1,000 euros.

    Source: https://cointelegraph.com/news/phoenix-wallet-acinq-zksnacks-wasabi-wallet-united-states-crackdown

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