ACINQ and zkSNACKs Discontinue Services for U.S. Customers Amid Regulatory Crackdown on Self-Custodial Wallet Providers

ACINQ’s Bitcoin wallet, Phoenix Wallet, and zkSNACKs’ Wasabi Wallet have announced that they will be discontinuing services for United States customers in response to the recent crackdown on self-custodial cryptocurrency wallet providers. This decision comes after regulatory actions taken against major players in the industry, including Metamask creator Consensys and crypto mixer Samourai Wallet.

Both ACINQ and zkSNACKs have expressed concerns about the legitimacy of self-custodial wallet providers as money service businesses in light of recent regulatory scrutiny. zkSNACKs stated in a statement on April 27 that they are now strictly prohibiting U.S. users from using their services. ACINQ also addressed the issue in a post on X on April 26, questioning whether self-custodial wallet providers and Lightning service providers could be considered Money Services Businesses and regulated as such.

ACINQ has given Phoenix Wallet users until May 2 to adjust to the upcoming changes, while Wasabi Wallet’s new policy was implemented immediately. Phoenix Wallet users are advised to drain their wallets without force-closing them to avoid significant on-chain fees.

The crackdown on self-custodial wallet providers comes as regulators worldwide raise concerns about the potential for these wallets to facilitate illicit activities such as money laundering. Consensys received a Wells notice from the SEC on April 10, warning of potential enforcement actions related to its MetaMask products. The SEC alleged that Consensys was operating as an unregistered broker-dealer. Similarly, the co-founders of Samourai Wallet were arrested on charges of money laundering by the U.S. Justice Department and other agencies.

In contrast, European regulators have recently relaxed proposed regulations concerning self-custody wallets. The European Parliament’s lead committees 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 still required to perform due diligence, such as identity verification checks, on users conducting transactions of at least 1,000 euros.

The decision by ACINQ and zkSNACKs to discontinue services for U.S. customers reflects the growing regulatory challenges facing self-custodial wallet providers in the cryptocurrency industry. As the regulatory landscape continues to evolve, it remains to be seen how these providers will navigate the complex web of regulations to ensure compliance while maintaining user privacy and security.