- Google clarifies non-custodial wallets excluded from licensing requirements.
- The initial policy would have required MSB registration for all wallet developers.
- The update removes barriers for self-custody software on the Play Store platform.
Google has clarified that non-custodial wallets will be exempt from its new cryptocurrency wallet licensing requirements following pushback from the developer community. The company announced that its Play Store policy will be updated to exclude self-managed wallet applications from the licensing mandates that initially applied to all cryptocurrency software.
The original policy required any wallet developer to obtain licenses before publishing cryptocurrency applications on the Google Play Store across 15 jurisdictions, including the United States and the European Union. Google stated the requirements aimed to ensure “a safe and compliant ecosystem for users,” but created unworkable compliance burdens for non-custodial wallet creators.
Initial Requirements Created Impossible Compliance Standards
Under the original framework, US developers faced requirements to register with FinCEN as money service businesses (MSBs) and obtain state money transmitter licenses. These registrations would have forced non-custodial wallets to implement anti-money laundering, counter-terrorist financing, and know-your-customer frameworks typically reserved for custodial services.
The policy went above what was required by law for non-custodial wallets, which are specifically distinguished from money transmitters in FinCEN’s 2019 advice. Since self-custody apps do not have control over user funds, FinCEN categorizes “unhosted” wallets differently from “hosted” custodial services.
In the European Union, the policy requires MiCA licensing for Crypto Asset Service Providers, specifically for exchanges and custodial platforms. Non-custodial wallet developers couldn’t obtain CASP licenses since they don’t hold custody of digital assets, effectively creating a complete ban.
Developer Community Response Forces Policy Revision
The compliance costs associated with MSB registration would have eliminated most non-custodial wallet developers from the Play Store. Financial institutions consider AML/KYC compliance programs their highest operational expense. This makes such requirements prohibitive for open-source software projects.
The policy appeared to implement the Financial Action Task Force’s (FATF) 2021 guidance on Virtual Asset Service Providers through commercial enforcement rather than legislative action. While FATF recommendations influence regulations for member states, their guidance documents remain non-binding suggestions for risk management.
Google’s clarification removes these barriers for developers creating self-custody solutions that don’t control user funds. The update distinguishes between applications that provide custody services and those that simply enable users to manage their own private keys.
The policy revision preserves access to non-custodial wallets for Android users while maintaining licensing requirements for custodial services. This distinction aligns with existing regulatory frameworks that treat self-custody differently from third-party custody.
Related: PayPal Rolls Out ‘Pay With Crypto’ Feature, Supports 100+ Coins and Major Wallets
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