zkSNACKs Prohibits U.S. Users from Accessing Wasabi Wallet and Additional Services After Recent Events

ACINQ’s Phoenix Wallet and zkSNACKs’ Wasabi Wallet have opted to cease their services for clients in the United States.

This decision is a reaction to the recent intensification of scrutiny on self-custodial cryptocurrency wallet providers by regulatory bodies.

Both firms have voiced apprehensions regarding the designation of self-custodial wallet providers as legitimate money service businesses, following actions taken against Consensys, the developer of Metamask, and the crypto mixer Samourai Wallet.

zkSNACKs Prohibits U.S. Users

In an official announcement on April 27, zkSNACKs revealed that it would restrict U.S. users from accessing its services due to recent statements from U.S. authorities.

In a similar vein, ACINQ clarified in a post on X on April 26 that recent regulatory changes have raised uncertainties about whether self-custodial wallet providers, Lightning service providers, or even Lightning nodes could be classified as Money Services Businesses and thus subject to regulation.

Recent statements from US authorities have raised questions about whether self-custodial wallet providers, Lightning service providers, or even Lightning nodes could be classified as Money Services Businesses and be regulated accordingly.

— ACINQ (@acinq_co) April 26, 2024

ACINQ has allowed Phoenix Wallet users until May 2 to prepare for the forthcoming changes, while Wasabi Wallet’s new policy took effect immediately.

ACINQ recommended that Phoenix Wallet users withdraw their funds without force-closing their wallets to prevent incurring high on-chain fees.

The recent regulatory emphasis on self-custodial wallets arises from concerns that they might be used to facilitate illegal activities such as money laundering.

Consensys, the creator of MetaMask, received a Wells notice from the SEC on April 10, warning of potential enforcement actions regarding its MetaMask Swaps and MetaMask Staking offerings.

The SEC claimed that Consensys was functioning as an unregistered broker-dealer.

Samourai Wallet Co-Founders Detained

In a separate case, the co-founders of Samourai Wallet, a cryptocurrency mixer, were apprehended on money laundering charges filed by the U.S. Justice Department and other agencies.

Samourai Wallet CEO Keonne Rodriguez and chief technology officer William Hill are facing allegations of conspiracy to commit money laundering and conspiracy to run an unlicensed money transmitting business.

The U.S. government has also intensified its crackdown on crypto-mixing services.

Reports indicate that the U.S. Treasury has placed Tornado Cash, a well-known crypto mixer, on its Specially Designated Nationals list, effectively prohibiting Americans from utilizing this mixer.

In September 2023, Roman Storm, co-founder of the cryptocurrency mixer Tornado Cash, pleaded not guilty to all charges and was released on a $2 million bond shortly after his arrest.

He currently faces travel restrictions, limiting him to specific areas within New York, New Jersey, Washington, and California.

Similarly, the founder of Bitcoin Fog, a $400 million crypto-mixing service, was found guilty of money laundering.

While the U.S. regulatory environment has tightened, European regulators have adopted a somewhat different stance.

The lead committees of the European Parliament recently eliminated a proposed 1,000 euro cap on crypto payments from self-hosted wallets as part of new anti-money laundering legislation.

Nonetheless, crypto exchanges are still obligated to conduct due diligence, including identity verification checks, on users engaging in business transactions of at least 1,000 euros.

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