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Google has clarified that non-custodial crypto wallets are not subject to Play Store licensing requirements. {

the cancellation came after an overwhelming industry reaction to the rules, which wanted to cover all wallets.

Custodial wallets are still required to comply with license requirements, while non-custodial wallets remain available.

Google has dropped plans to license all cryptocurrency wallets on the Play Store, including non-custodial wallets. This decision comes after criticism and misunderstanding in the industry regarding the scope of the policy.

In an updated statement, Google clarified: Non-custodial wallets are not covered by Google Play’s policy on cryptocurrency exchanges and programmatic wallets. We’re updating the help to clarify this.

Thank you for your attention to this issue. Non-custodial wallets are not subject to Google Play’s policy on cryptocurrency exchanges and programmatic wallets. We are updating the help center to clarify this.

Google previously said that new Play Store requirements required wallet developers to obtain official financial services licenses before publishing apps. The rules, which apply to 15 jurisdictions such as the US and EU, did not distinguish between custodial and non-custodial wallets, causing concern among developers and lawyers.

In the US, such a policy would have required registration with the Financial Crimes Enforcement Network (FinCEN) as a money services business (MSB) and state authorization for money transfers. Such precautions are common for custodial services, but are not formally required for non-custodial wallets under FinCEN’s 2019 guidance.

Consensys attorney Bill Hughes expressed concern about the lack of clarity in the policy. He explained that Google notified them of the July 10 update without clarifying what a software wallet is.

Hughes emphasized that MSB registration is not something FinCEN explicitly and unambiguously requires, and that the rule would be an unusual twist on existing regulatory policy in the United States.

He also referred to Google’s more general policy that cryptocurrency-related activities must be conducted by certified services in regulated jurisdictions. However, certification is not always required by law.

Hughes called the policy “somewhat confusing” and warned that Big Tech platforms, rather than government agencies, could potentially become the biggest gatekeepers to the proliferation of cryptocurrency applications.

In the European Union, Google’s initial policy would have meant that wallet developers would have to obtain Crypto Asset Service Provider (CASP) licenses under the Markets in Crypto-Assets (MiCA) regulation. This would prevent many independent developers without CASPs from listing their apps on the Play Store because they are not custodial wallets. The proposal was reminiscent of the Financial Action Task Force’s (FATF) ideas to strengthen controls on virtual asset service providers.

Google’s decision to exclude non-custodial wallets due to licensing requirements is the result of growing opposition from legal experts, cryptocurrency advocacy organizations and industry leaders.

Justin Slaughter, Paradigm’s vice president of regulatory affairs, denounced the move as overly restrictive, especially as Google struggles with antitrust laws. He called it “surprising” that the company is imposing these rules now, characterizing them as “draconian restrictions” on non-custodial wallet developers.