Google Play Bans Unlicensed Crypto Wallets in 15 Regions

Google Play mandates licenses for crypto wallets in 15 regions, sparking backlash over non-custodial wallet restrictions and developer burdens.

Google Play Store announced a new policy on Thursday, requiring crypto wallet developers to hold banking or money services licenses. This rule applies to 15 regions, including the United States and the European Union. The policy will establish a secure and compliant user environment. However, it has brought concerns to the developers, particularly to those developing non-custodial wallets.

Google Requires MSB or MiCA Licenses for Crypto Wallet Apps

The policy demands that developers become a Money Services Business (MSB) with FinCEN in the U.S. or have a MiCA license in the EU. In the U.S., the developers must also be money transmitters registered with the state or chartered banks. Such licenses require adherence to Anti Money Laundering (AML), Counter Terrorist Financing (CTF), and Know Your Customer (KYC) regulations. Consequently, there are huge expenses and regulatory burdens imposed on the developers.

Notably, the policy is not differentiated between custodial wallets and non-custodial ones. Custodial wallets store funds of users, whereas in non-custodial wallets, users have their keys. In its guidance of 2019, FinCEN stated that non-custodial wallets are not considered money transmitters. Thus, the policy of Google provides more severe rules than the law of the United States does. This has drawn rebukes from non-custodial wallet designers.

The new regulations may get rid of a lot of non-custodial wallets on the Google Play Store. It is costly to implement compliance programs, and small developers may find it difficult to comply with them. As a result, the innovation of free software may be harmed. In addition, imposing AML and KYC regulations on non-custodial wallets can restrict the privacy of the users since non-custodial wallets are created to provide users with control of their assets.

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Google Clarifies Policy: Non-Custodial Wallets Exempt from New Rules

Google later clarified that non-custodial wallets were not meant to fall under this policy. The company said that it will change the policy in the Play Store to this effect. However, the first announcement left the crypto community perplexed and alarmed. The developers fear that the ambiguous rules would continue to affect the capacity to provide apps on Google devices.

The policy impacts 15 jurisdictions, which is a serious part of the global market of Google Play. The U.S. and EU are two of the biggest crypto centers, and programmers in these areas have problems right now. As an example, developers of non-custodial wallets might have to redesign their business or even abandon the Play Store altogether. This may limit choices to those who want safe, confidential crypto wallets.

On the other hand, the decision by Google seeks to shield users against fraud and unregulated apps. The crypto space has been riddled with fraud and security problems, and more regulations may establish confidence. However, opponents claim that the policy is biased against non-custodial wallets whose main focus is the user control of their funds. There is always a struggle between safety and innovation.

The move is aligned with the increasing crypto adoption across the globe. Google Play Store is a primary app distribution service, and its policies have an impact on the crypto world. Developers and users will be on the lookout as Google perfects its rules. The result would affect the construction of crypto wallets and their accessibility worldwide. At the current time, the policy reveals the contradiction between freedom and regulation in the crypto world.