Google Implements Strict Licensing For Crypto Wallets Across Multiple Regions

By: Eliza Bennet

In a move that could reshape the landscape for cryptocurrency wallet developers, Google Play Store has announced new licensing and compliance requirements for wallet applications in over 15 jurisdictions, including significant markets such as the United States and the European Union. This change affects both custodial and non-custodial wallets, though recent updates suggest non-custodial wallets may be spared from some mandates. The policy, which takes effect on October 29, mandates developers to obtain local regulatory approvals, potentially adding a substantial compliance burden.

Under these new requirements, developers in the United States are compelled to register with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB) or secure state-specific money transmitter licenses. Similarly, in the European Union, developers are required to register as crypto-asset service providers (CASPs). These stipulations are designed to strengthen the ecosystem by ensuring adherence to local financial regulations, thereby promoting user safety within the Google Play Store environment.

The introduction of such stringent policies has generated considerable criticism within the industry. Bill Hughes, a lawyer from Consensys, points out inconsistencies in the policy, especially regarding their definition of "software wallet" and the registration demands that exceed current legal obligations for non-custodial wallets as per FinCEN guidelines. These remarks have been echoed by industry peers who criticize Google's approach amidst ongoing antitrust challenges. Justin Slaughter from Paradigm expressed concerns over the policy's timing, particularly as it coincides with antitrust litigation, and emphasized that pure coding should remain outside the purview of federal licensing.

The policy signals a pivotal shift as industry stakeholders reckon with the influence major tech platforms wield over app distribution channels. While Google asserts that these changes are meant to bolster the security and compliance of its offerings, the ripple effects of this policy may affect the development and distribution of crypto wallet services. As the October deadline approaches, developers must navigate this regulatory labyrinth, the outcome of which could set a precedent for tech platforms globally.