In response to rigorous regulatory measures, Phoenix Wallet, crafted by ACINQ, and Wasabi Wallet, developed by zkSNACKs, have halted their services for customers in the United States. This decision highlights growing anxieties among self-custodial wallet providers concerning their ability to operate within the U.S. market.
Regulatory Pressures Escalate
ACINQ and zkSNACKs, the innovators behind Phoenix and Wasabi wallets, respectively, have voiced their concerns following aggressive regulatory actions against other entities in the crypto space, such as Consensys and Samourai Wallet. These measures cast doubt on the legal standing of self-custodial wallets in the U.S., painting a bleak future for such services under current laws.
On April 27, zkSNACKs explicitly banned U.S. users from accessing its services. Similarly, ACINQ has given Phoenix Wallet users a deadline of May 2 to arrange their affairs, advising them to withdraw their funds. Importantly, they are not forcing wallet closures, which helps users avoid hefty on-chain fees.
The Ripple Effect of Regulatory Scrutiny
The catalyst for these exits was the SEC’s issuance of a Wells notice to Consensys on April 10, which signaled potential enforcement actions for operating MetaMask’s Swaps and Staking products without proper registration. Furthermore, on April 24, the U.S. Justice Department arrested the co-founders of Samourai Wallet, accusing them of money laundering and running an unlicensed money transmitting business.
Also Read: EU Introduces DeFi Regulations: Opportunities for Banks
These developments have had a profound impact on the decisions of companies like ACINQ and zkSNACKs, driving them to withdraw from the U.S. market to sidestep potential legal entanglements.
A Broader View of Global Regulations
Meanwhile, European regulators have taken a somewhat lighter approach recently, rolling back some stringent proposals on self-custody crypto wallets. Although the European Parliament’s key committees removed a proposed transaction limit of 1,000 euros for self-hosted wallets, crypto exchanges in Europe are still required to conduct identity verifications for transactions that exceed this threshold.
This contrasting approach in regulatory landscapes underscores the challenges and variances that crypto businesses face globally, affecting their operations and strategic decisions.
