Phoenix Wallet and Wasabi Wallet are discontinuing service to customers in the United States (US). Companies offering both services have expressed concerns about the legitimacy of self-custodial wallet service providers as financial services businesses.
The move follows regulatory action by US authorities against MetaMask’s parent company, Consensys, and Bitcoin mixer Samourai Wallet.
Last Friday, Phoenix developer ACINQ express Concerns about recent actions by US authorities. The move has raised questions about whether self-custodial wallet providers, Bitcoin Lightning Network (LN) service providers, and even Lightning nodes could be classified as money services businesses and therefore subject to regulation.
ACINQ acknowledged that it would evaluate other potential impacts to its operations. Remove Phoenix Wallet in the US Application Store. It is scheduled for demolition on May 3rd.
Read more: What is a non-custodial wallet?
zkSNACKs followed suit on Saturday (April 27) by blocking US residents and citizens from using all of its services.
“zkSNACKs now strictly prohibits users in the United States from using its services. Blocking IP addresses for US residents is effective for wasabiwallet.io, api.wasabiwallet.io, and zksnacks.com. If you are a US citizen or resident of the US, you can visit the aforementioned site, download Wasabi Wallet, or use the Wasabi Wallet CoinJoin feature. This includes if you are a U.S. permanent resident or an individual holding a U.S. passport,” the zkSNACKs team wrote.
U.S. regulators have recently taken aim at self-custodial wallets. Authorities have expressed concern that these tools could be used for unauthorized or illegal activities, including money laundering.
On April 24, U.S. authorities arrested the founder of Samourai Wallet on charges of laundering $100 million on the Silk Road and other black markets. They have been responsible for the development, marketing and operations of Samourai Wallet since 2015.
Samourai’s web servers and domains have been confiscated, and its apps are no longer available for download from the US Google Play Store.
A day later, on April 25, ConsenSys announced that it had filed a lawsuit against the U.S. Securities and Exchange Commission (SEC). The company called the SEC’s action an “unlawful abuse of power” related to Ethereum.
In its lawsuit, Consensys countered the SEC’s position. This highlights that Ethereum does not meet traditional security standards and that the SEC has pointed out as much before.
In fact, the SEC’s current views on Ethereum have sparked controversy. Especially after Ethereum clearly stated in 2018 that it does not meet security standards.
Read more: 13 Best MetaMask Alternatives of 2024
“As Director Hinman pointed out in 2018, there is no difference between now and 2018. Today, in terms of theory and openness, the number of people developing, working on, and adopting Ethereum is much higher. A Consensys spokesperson told BeInCrypto:
Moreover, the lawsuit accuses the SEC of attempting to regulate through ad hoc enforcement rather than clear guidance.
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