Google Play’s New Cryptocurrency Policy
In a significant shift for the cryptocurrency industry, Google Play has announced a new policy regarding apps related to crypto exchanges and custodial wallets, requiring them to obtain necessary financial licenses to remain available in specified major markets. This policy, which impacts over 15 markets including the U.S., European Union, U.K., Canada, Switzerland, Japan, and several others, places a heavy compliance burden on developers operating in these jurisdictions.
Compliance Requirements
Google’s revamped stance requires that any app providing exchange services or custodial functions adheres to local licensing and registration laws. This means developers must align their practices with stringent financial regulations or risk being removed from the Google Play Store, posing a challenge for smaller apps that may struggle to meet these standards.
In America, custodial wallet and exchange applications will need to comply with robust Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations that are typically enforced on traditional financial institutions. Similarly, in the European Union, apps must acquire a license as a Crypto-Asset Service Provider (CASP) in accordance with the Markets in Crypto-Assets (MiCA) legislation, while in the U.K., registration with the Financial Conduct Authority (FCA) is mandatory. Other regions have their own local regulatory requirements that must also be satisfied by developers.
Clarification on Non-Custodial Wallets
While the new policy initially sparked confusion, particularly regarding its implications for non-custodial wallets, Google has since clarified that these types of wallets are not subjected to the same licensing requirements.
This crucial distinction means that users and developers can continue using self-custody solutions without concerns about their status on the Google Play Store. This clarification has been met with relief in the industry, as it supports decentralized access and innovation.
Next Steps for Custodial Services
In light of this development, custodial services and centralized exchanges will need to thoroughly assess the jurisdictions in which they operate to ensure compliance with relevant regulations, such as registration with FinCEN and various state money transmitter licenses. At Kelman Law, we specialize in assisting developers of custodial wallets and crypto exchanges through the complexities of financial regulations, offering insight into MSB registrations and state licensing requirements. If you need guidance on navigating this evolving regulatory landscape, feel free to reach out for a complimentary consultation.
