Google Play Store’s New Licensing Policy for Crypto Wallets
In a significant move, Google Play Store has introduced a fresh policy requiring developers of cryptocurrency wallet applications to obtain a license before launching their software on the platform. This policy is particularly significant in 15 key jurisdictions, including the European Union (EU) and the United States, and outlines specific regulatory compliance that developers must meet.
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Google Enforces Stricter Rules for Crypto Wallet Applications
Developers in the United States must now register as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN) and adhere to rigorous Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and Know Your Customer (KYC) protocols. This poses a substantial challenge for developers of non-custodial wallets, which do not hold users’ funds and, according to FinCEN’s 2019 guidance, are not considered money transmitters.
As a result, the new policy demands compliance that surpasses current legal requirements, potentially excluding many non-custodial wallets from the Play Store. This regulatory shift could stifle innovation within the cryptocurrency industry, as developers may find the compliance costs prohibitive. Consequently, users could face a reduction in the variety of wallet options available on Google devices.
Commercial Enforcement as a Regulatory Tool?
The situation in the European Union mirrors that of the United States. Developers are required to secure authorization as a Crypto Asset Service Provider (CASP) under the Markets in Crypto-Assets (MiCA) regulation from the respective national authorities. However, this licensing framework primarily targets entities that manage or hold digital assets, effectively excluding simple non-custodial wallets from obtaining the necessary licenses. As a result, only licensed CASPs will be allowed to offer wallet services on the Play Store in the EU, further constricting the market.
This policy aligns closely with the guidelines set forth by the Financial Action Task Force (FATF), which advises on managing risks associated with virtual assets and their service providers. Although FATF’s recommendations are not legally binding, they provide a regulatory framework for countries to develop their own regulations. Thus, commercial entities like Google may enforce compliance measures that exceed statutory requirements, driven by the goal of mitigating risks and maintaining a secure ecosystem.
Moreover, the FATF has acknowledged that even decentralized applications (dApps) may have a central entity that exercises some level of control, blurring the lines between custodial and non-custodial services. This ambiguity further complicates the regulatory environment, as developers may find themselves subject to custodial regulations despite not directly handling user funds.
The introduction of these licensing requirements by major platforms like Google signals a shift towards “regulation by commercial enforcement.” It represents a new era where commercial entities influence regulatory practices, potentially reshaping the landscape for cryptocurrency wallet developers.
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