Phoenix and Wasabi Wallets End Operations in the US

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Following a recent crackdown on major self-custodial cryptocurrency wallet providers by US regulatory agencies, Acinq’s Phoenix Wallet and zkSNACKs’ Wasabi Wallet are discontinuing services for United States customers.

Both Acinq and zkSNACKs raised concerns about the legitimacy of self-custodial wallet providers as money service businesses (MSBs) in light of actions taken against Metamask creator Consensys and crypto mixer Samourai Wallet.

Phoenix and Wasabi End Operations

zkSNACKs stated in an April 27 statement that it is strictly prohibiting US users from using its services.

“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.

Users Suffer Due to the Phoenix and Wasabi Shutdown

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

Users are advised to drain their wallets without “force-closing” them to avoid significant on-chain fees. Regulators worldwide have expressed concerns that self-custody crypto wallets may facilitate illicit activities such as money laundering.

US Regulators Targeting the Crypto Sector

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 accused Consensys of operating as an unregistered broker-dealer.

Similarly, the co-founders of Samourai Wallet were arrested on charges of money laundering brought by the US Justice Department and other agencies.

In response to these developments, European regulators have relaxed proposed regulations concerning self-custody wallets. 

The European Parliament scrapped a 1,000 euro limit on crypto payments from self-hosted wallets as part of new anti-money laundering laws. However, crypto exchanges are required to perform due diligence, such as identity verification checks, on users conducting transactions of at least 1,000 euros.

Crackdown on Operations

Along with Phoenix and Wasabi, other crypto firms have suffered similar fates at the hands of regulators in the United States. Recently, the US authorities initiated crackdowns on crypto exchanges operating in the country. 

Meanwhile, decentralized exchanges’ (DEX) median trading volume skyrocketed and broke records following the decision from the authorities. 

Ripple Labs General Counsel Stu Alderoty took a shot at the SEC, stating that the regulator’s crackdowns on the cryptocurrency industry aren’t protecting consumers.

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