Phoenix Wallet To Disable Services In the US – Here’s Why

Phoenix Wallet, a Bitcoin wallet provider for Lightning Network payments, has announced its impending removal from US application stores. This development comes as the wallet’s founding company, ACINQ, criticizes the regulation of self-custodial wallets in the US.

Phoenix Wallet Terminates US Services Over Regulatory Discrimination

On April 26, ACINQ, developers of Phoenix Wallet, expressed disappointment on the non-inclusion of self-custodial wallet providers, Lightning service providers, and Lightning nodes as money services businesses. ACINQ’s statement was driven by a recent announcement by the US Federal Bureau of Investigation, which cautioned users against engaging in unregistered crypto money-transmitting businesses.

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 (@acinq_co) April 26, 2024

The US authorities specifically highlighted self-custodial wallets, which require no know-your-customer procedure, as the primary type of such money-transmitting services. Following the initial message, ACIQN has now announced the removal of the Phoenix wallet app from all US application stores on May 3rd, 2024. 

In preparation. Phoenix Wallet has advised US-based users to empty their wallets. They also advised not to “force-close” channels to avoid significant on-chain fees. Through an  X post,  Phoenix released specific instructions for users: should empty their wallets by going to ‘Settings’ and selecting ‘Close Channels’ on Android devices or ‘Drain Wallet’ on iOS devices.

Alongside ACIQN, zkSNACKs has also banned US citizens from accessing its Wasabi crypto wallet and all associated products and services. While the crypto company didn’t give a specific reason for such action, they highlighted “recent announcements by US authorities” to be a contributing factor to their decision. 

However, it remains to see if these recent voluntary exits could trigger a massive exodus of crypto businesses from the US which is continuously criticized for lacking a clear regulatory framework for the nascent industry.

With the Securities and Exchange Commission’s (SEC) constant crackdown on crypto exchanges and the Department of Justice now going after developers over the misuse of their platforms by sanctioned entities, crypto enthusiasts can only seek the immediate legislative intervention of the US Congress.

Crypto Market Overview

In other news, the cryptocurrency market has performed well in the last day, gaining by 2.70% to attain a market cap of $2.38 trillion. Notably, Ethereum (ETH) and Solana (SOL) lead the way among the top 10 largest tokens, with daily gains of 6.20% and 5.34%, respectively.  Meanwhile, Bitcoin, which ranks as the world’s most valuable digital asset, now trades at $63,855 having also risen by 1.46% within the same time frame.