With using the MMR data structure for txo commitments, its preferable that wallets only keep information pertinent to their own spendable coins.  In previous communication we talked about how wallets could maintain the changing MMR proof for their old coins.  Yes wallets know which of their own coins are spent.  But with MMR proofs wallets also need to know the spentness status of close relatives in the MMR tree... in order to construct a valid MMR proof that their own coin is not spent.