Google Play Store has introduced new policies that will essentially bar most cryptocurrency wallet apps from its platform unless their developers possess banking or money service licenses.
The new policy extends to 15 jurisdictions, including the United States, European Union, United Kingdom, Canada, Japan, and others. Developers of software wallets, custodial or non-custodial, must now adhere to local licensing laws prior to being listed on Google Play.
In the US, issuers of wallets are required to register as an MSB with FinCEN and obtain state money transmitter licenses, or operate as a state- or federal-licensed bank. It would subject even non-custodial wallets to draconian AML, CTF, and KYC regulations, which contradicts even FinCEN’s own 2019 report claiming unhosted wallets are not money transmitters.
Wallet developers in the EU require permission as a crypto-asset service provider (CASP) under the Markets in Crypto-Assets (MiCA) regime. The same is the case in other jurisdictions, from the UK’s FCA to Japan’s Financial Services Agency.
Critics of the policy argue that it puts “unmeetable burdens” on non-custodial wallet developers, requiring several to de-list their apps from Google Play. Compliance programs required by licensing can be prohibitively expensive, stifling open-source innovation and restricting user access to privacy-protecting tools.
Google says the changes are intended to “provide a safe and compliant environment for users” as world regulation changes rapidly. But in not distinguishing between custodial and non-custodial services, the policy could redefine the mobile crypto wallet space limiting distribution to large, licensed players, and stifling bottom-up innovation.
The rules would come into effect immediately for new submissions, while existing apps would have to comply with the licensing requirements or face removal from the Play Store.
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