"Phoenix and Wasabi Exit U.S. Market Amid Tightening Regulations on Self-Custody Wallets"
Bitcoin wallet providers ACINQ, with its Phoenix Wallet, and zkSNACKs, the company behind Wasabi Wallet, have announced their exit from the U.S. market in response to the recent crackdown on two major self-custody cryptocurrency wallet providers.
Both ACINQ and zkSNACKs have raised concerns about whether self-custody wallet providers can still be treated as legitimate money service businesses (MSBs) following actions taken by U.S. regulatory bodies against Metamask creator Consensys and cryptocurrency mixer Samourai Wallet.
"In light of recent statements by U.S. authorities, zkSNACKs now strictly prohibits U.S. users from utilizing its services," stated a press release from zkSNACKs dated April 27.
"Recent U.S. regulatory statements put into question whether self-custody wallet providers, Lightning service providers, or even Lightning nodes can be considered as money service businesses and regulated as such," explained ACINQ in a message on X, formerly known as Twitter, dated April 26.
ACINQ has given users of the Phoenix Wallet until May 2 to adapt to upcoming changes, while the new policy at Wasabi Wallet took effect "immediately."
ACINQ further explained that users of Phoenix Wallet should empty their wallets but avoid "forced closure" as "on-chain fees can be significant."
This move comes in the wake of global regulators' statements that self-custody cryptocurrency wallets could facilitate illegal 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 products MetaMask Swaps and MetaMask Stakes.
During a telephone conference, the Securities and Exchange Commission (SEC) allegedly stated that Consensys acts as an unregistered broker-dealer.
Related: Wallet providers still divided over integration of BRC-20, despite its popularity
Meanwhile, just a day earlier on April 24, Cointelegraph reported that the co-founders of cryptocurrency mixer Samourai Wallet were arrested on money laundering charges brought by the U.S. Department of Justice (DOJ) and other agencies.
Samourai Wallet's CEO Keonn Rodriguez and CTO William Hill face charges of conspiracy to commit money laundering with a maximum sentence of 20 years in prison, and conspiracy to conduct an unlicensed money transmitting business, with a penalty of up to five years.
Meanwhile, European regulators have recently eased potential rules regarding self-custody wallets.
On March 23, Cointelegraph reported that most of the leading committees of the European Parliament had abolished the 1,000 euro (USD 1,080) limit on cryptocurrency payments from personal crypto wallets under new anti-money laundering laws.
However, cryptocurrency exchanges must conduct comprehensive checks, such as identity verification, for users conducting business transactions worth at least 1,000 euros.
