Phoenix and Wasabi Wallets Halt Services for US Clients Amid Regulatory Uncertainty
Summary:
In reaction to a recent crackdown on self-custodial crypto wallet providers, ACINQ's Phoenix Wallet and zkSNACKs’ Wasabi Wallet are ceasing services for US clients. Their decisions come amid uncertainties over regulation of self-custodial wallet providers as legitimate money service businesses. Phoenix Wallet users have been given until May 2nd to adapt, while Wasabi Wallet implemented their policy immediately. These changes coincide with mounting concerns regarding the role of self-custody crypto wallets in facilitating illicit activities. Conversely, European regulators have recently relaxed regulations around self-custody wallets.
In response to the recent clampdown on two leading self-custodial crypto wallet providers, Bitcoin wallet Phoenix Wallet of ACINQ, and Wasabi Wallet of zkSNACKs, have decided to discontinue their services to clients in the United States. Both companies expressed apprehension over the potential perception of self-custodial wallet providers being considered valid money service businesses, in light of the action taken by U.S. regulatory bodies against Consensys, the creators of Metamask, and Samourai Wallet, a crypto mixer. “ZkSNACKs will now strictly prohibit U.S. users due to recent declarations by U.S. authorities," a statement released by zkSNACKs on April 27 said. ACINQ, in a post on April 26, expressed similar concerns, questioning if self-custodial wallet providers and Lightning service providers could be regulated as Money Services Businesses. Phoenix Wallet users have until May 2 to adapt to these changes while Wasabi Wallet instituted their new policy immediately. ACINQ guided Phoenix Wallet users to empty their wallets without forcefully closing them due to potential high on-chain fees.
It's important to note that regulators globally have voiced that self-custody crypto wallets may enable illicit activities like money laundering. Consensys got a 'Wells notice' from SEC on April 10 as reported by Cointelegraph on April 25, flagging potential enforcement actions concerning its MetaMask Swaps and MetaMask Staking products. The SEC purportedly stated during a teleconference that Consensys was operating as an unrecognized broker-dealer.
In related news, Cointelegraph stated on April 24 that Samourai Wallet’s co-founders got arrested on money laundering charges by DOJ and other agencies. Both Keonne Rodriguez, Samourai Wallet’s CEO, and CTO William Hill, are charged with conspiracy to commit money laundering and could receive a maximum 20-year sentence. Furthermore, they face charges for conspiracy to operate an unregistered money transmitting business that can land them in prison for five years.
Conversely, European regulators have recently eased potential proposed laws concerning self-custody wallets. On March 23, Cointelegraph reported that the majority of the European Parliament’s leading committees discarded the 1,000 euro ($1,080) cap on crypto payments from self-hosted crypto wallets as part of the new money laundering laws. However, crypto exchanges must perform due diligence on users who undertake business transactions of 1,000 euros or more.
Published At
4/28/2024 3:46:05 AM
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