Phoenix Wallet to Stop Serving U.S. Residents Amid Regulatory Uncertainty
The popular Bitcoin wallet designed for Lightning payments, Phoenix Wallet, has announced that it will no longer be available to U.S. residents starting May 3. ACINQ, the company behind Phoenix Wallet, revealed that the app will be removed from U.S. app stores on that date, leaving American users unable to access their funds through the platform.
In light of this decision, ACINQ has advised its U.S. customers to withdraw their funds promptly. However, the company cautioned against force-closing the wallets, as it could result in higher on-chain fees. Instead, iOS users are encouraged to drain their wallets through the settings page, while Android users can safely empty their wallets by closing the channels in the settings section.
The reason for pulling Phoenix Wallet from U.S. app stores has not been officially disclosed. However, ACINQ hinted in a tweet that recent statements from U.S. government authorities have raised concerns about potential regulation of self-custodial wallets, Lightning service providers, and Lightning nodes as Money Services Businesses.
This decision comes shortly after the legal action taken against the creators of Samourai Wallet, a Bitcoin mixing wallet. Federal prosecutors in the Southern District of New York indicted Keonne Rodriguez and William Lonergan Hill, accusing them of aiding illegal transactions through Samourai. The U.S. Department of Justice alleges that over $2 billion in unlawful transactions were conducted through Samourai, leading to the arrest of Rodriguez and Hill.
The crypto community has expressed outrage over the indictments, with CryptoQuant CEO Ki Young Ju defending Rodriguez and Hill by emphasizing the importance of privacy protection in Bitcoin transactions. Ju compared the situation to punishing the inventor of a knife instead of the one who misuses it, highlighting the significance of intent in determining the legality of tool usage.
As the landscape of cryptocurrency regulation continues to evolve, the actions taken against Phoenix Wallet and Samourai Wallet underscore the challenges faced by companies operating in the space. The implications of these developments on the broader crypto industry remain to be seen.
