Two
Bitcoin
wallets
are
pulling
out
of
the
U.S.
market
—
likely
as
a
response
to
recent
regulatory
action
taken
against
the
non-custodial
Samourai
Wallet
and
indications
that
the
U.S.
Securities
and
Exchange
Commission
is
investigating
the
most
popular
Ethereum
access
point
MetaMask.
This
is
an
excerpt
from
The
Node
newsletter,
a
daily
roundup
of
the
most
pivotal
crypto
news
on
CoinDesk
and
beyond.
You
can
subscribe
to
get
the
full
newsletter
here.
On
Friday,
Paris-based
Bitcoin
company
Acinq
announced
it
is
pulling
its
popular
Lightning
network
wallet,
Phoenix,
from
app
stores
in
the
U.S.,
citing
regulatory
uncertainty.
Users
are
recommended
to
close
their
channels
and
move
their
funds
before
access
is
terminated
on
May
3,
2023.
A
day
later,
zkSNACKs
announced
it
is
closing
off
access
to
its
privacy-preserving
Wasabi
Wallet
in
the
U.S.,
saying
“In
light
of
recent
announcements
by
U.S.
authorities,
zkSNACKs
is
now
strictly
prohibiting
U.S.
users
from
using
its
services,”
in
an
April
27
statement.
The
point
was
echoed
in
Acinq’s
statement,
which
said
“recent
announcements
from
U.S.
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.”
It’s
unclear
exactly
what
announcements
Acinq
is
responding
to,
but
legal
action
taken
against
Samourai
Wallet
and
the
recently
disclosed
Wells
Notice
inquiring
about
MetaMask
indicate
that
non-custodial
wallets
could
fall
under
U.S.
regulatory
purview.
Further,
an
April
26
U.S.
Department
of
Justice
court
document
responding
to
a
motion
to
dismiss
a
case
against
Tornado
Cash
co-founder
Roman
Storm
indicates
that
even
decentralized,
non-custodial
services
likely
need
to
implement
KYC/AML
and
register
with
FinCEN,
based
on
Section
1960
of
the
U.S.
Code.
“This
would
extend
the
MSB
laws
to
encompass
practically
everything
in
the
cryptocurrency
space
outside
of
a
user
who
runs
their
own
node,”
crypto
advocate
Seth
For
Privacy
wrote
on
X.
“If
no
control
is
required
for
money
transmission,
then
anything
that
makes
it
easier
to
use
Bitcoin
could
fall
into
this
overbroad
definition.”
Many
observers
in
the
crypto
community
have
noted
that
the
decision
to
pull
Phoenix
from
the
U.S.
is
regrettable,
but
largely
understandable
given
the
legal
uncertainty.
Jack
Dorsey,
founder
of
fintech
firm
Block,
which
built
a
hardware
wallet,
lamented
that
Acinq’s
move
“feels
completely
unnecessary.”
“Agreed.
This
is
not
the
way,”
Lightning
Labs
CEO
Elizabeth
Stark
said
in
response
to
Dorsey.
The
news
comes
off
the
heels
of
the
latest
crypto
company
indictment,
the
arrest
of
Samourai
Wallet
CEO
Keonne
Rodriguez
and
Chief
Technology
Officer
William
Hill,
for
running
an
unlicensed
money
transmission
business.
The
DOJ
alleges
that
Samourai
processed
over
$2
billion
in
unlawful
transactions,
earning
more
than
$4.5
million
in
fees
since
2015.
While
legal
experts
have
challenged
the
ground
for
going
after
non-custodial
platforms
that
do
not
hold
assets
on
behalf
of
users,
authorities
around
the
world
have
for
years
tried
to
bring
these
software
systems
under
some
sort
of
regulatory
oversight.
The
E.U.,
for
instance,
has
been
mulling
a
1,000
euro
($1,080)
limit
on
crypto
transactions
from
self-hosted
crypto
wallets
as
part
of
new
anti-money
laundering
laws.
U.S.
authorities
have
also
considered
introducing
legislation
that
would
essentially
ban
“unhosted
wallets,”
which
was
successfully
beaten
back
in
2022.
But
new
legal
actions
and
statements
from
authorities
have
upped
the
uncertainty,
raising
the
prospect
that
many
core
crypto
activities
beyond
building
wallets
could
fall
under
money
transmission
laws,
including
even
hosting
a
Lightning
node.
Like
much
else
in
crypto,
these
concerns
will
likely
come
down
to
court
decisions,
which
is
partially
why
Consensys,
for
one,
has
decided
to
sue
the
SEC.
It’s
unclear
whether
Phoenix
and
Wasabi
will
be
the
only
wallets
to
leave
the
U.S.,
though
at
least
one
wallet
company,
Zeus,
has
vowed
to
stay.
“We’re
not
going
anywhere,”
the
Zeus
account
said
on
X.
“We
believe
that
Zeus
is
following
the
letter
of
the
law
right
now.
If
the
law
changes
or
any
judgments
are
made,
we
will
make
adjustments
accordingly,”
Zeus
founder
Evan
Kaloudis
said.
“If
Zeus
falls,
all
other
Lightning
node
operators
are
next.
If
Lightning
node
operators
fall,
self-custody
is
next.
This
is
the
hill
to
die
on:
self-custody.
If
you
don’t
agree,
you
were
never
in
Bitcoin
for
the
right
reasons.
So
get
behind
us,
or
go
home.
Future
generations
are
watching
and
depending
on
us.”
