ACINQ responds to regulatory uncertainty with Phoenix wallet withdrawal

ACINQ, a company that makes Phoenix Wallet, reported that it is ending its operations for U. S. customers because of uncertain regulatory requirements. Phoenix Wallet, an app used by Americans, will cease being available on iOS and Android stores as of May 3rd, 2024, demanding reaction from the customers and others who have their assets stored in the app.

Phoenix wallet removal and user advisories

This news arises following the recent cases of legal complexity that ACINQ had to go through and that is the core reason for this withdrawal. The company has provided specific instructions for users to follow If users are planning not to use their wallet, they are supposed to clear it in advance

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

For Android users: Pick up Settings and then, click on “Close Channels.”

For iOS users: Choose Settings, and click on the “Withdraw Wallet” option. Likewise, the user’s wallet should not be closed seriously or even force-closing because the transaction on the blockchain will form a large fee.

Directions, laws, and impacts on business model

ACINQ’s withdrawal is the result of a U.S. regulatory disclosure that classifies self-custodial wallet providers, Lightning service providers, and Lightning nodes as something like a money transmission business. Regulatory uncertainties weighed down on Communications and made its decision to leave the US market.

After the decision of the CEO, ACING, is planning to evaluate if the move will influence the running of the organization. This decision is a pivotal event in the cryptocurrency regulations world, especially in the United States which is facing the challenge of regularly assessing the different crypto services.

The end date is also closely linked to the fact that the US is discovering legal grounds to disable cryptocurrency entities. Among many other activities that were ultimately ruled illegal, the founders of the Bitcoin mixer app Samourai were indicted by the court in the Southern District of New York. The indictment says that they were involved in the process of moving transactions of an illicit nature through filtration, including money laundering.

ACINQ’s exit reflects the shifting crypto regulatory landscape

While the disclosure was dropped, the FBI later rolled out a series of warnings and informed users that its undercover agents were tracking the growth of the unregistered crypto firms. This testifies to new regulatory enforcement attempts that approach these many-faceted operators that do business outside the range of traditional financial laws.

This action by ACINQ demonstrates the hurdles which apply service providers of cryptocurrencies try to cope with while regulating regimes. That deliberate action is closely related to a general tendency of picking up the regulatory body scrutiny and enforcement actions towards the cryptocurrency fraction, which the relevant authorities try to handle issues of illegitimate activity and consumer protection.

Under such shifting regulatory conditions, both users and market agents must take continual precautions as well as to keep abreast of regulatory developments affecting accessibility as well as the availability of services with cryptocurrency. ACINQ`s decision to discontinue operations in the US  and let go of its US subsidiary becomes a lesson for all the crypto players in the market about the need for compliance and regulatory coherence.