Google has recently implemented stricter licensing rules for cryptocurrency apps in its Play Store, a decision that has sparked concerns among experts about the increasing control of Big Tech platforms over the distribution of such apps.
The updated policy, which was quietly introduced on Google’s developer pages in early August, specifically targets crypto wallet and exchange apps in several key jurisdictions, including the United States, the European Union, Japan, and South Korea. Google stated that the changes were meant to ensure a safe and compliant ecosystem for users, but the new requirements could potentially make it challenging for many custodial wallet developers to meet the criteria.
In the United States, wallet apps must now register as a Money Services Business with the Financial Crimes Enforcement Network and obtain a money transmitter license in at least one state, or be a federally or state-chartered bank. Similarly, in the EU, developers are required to obtain authorization as a crypto-asset service provider under the bloc’s new Markets in Crypto-Assets framework known as MiCA.
Initially, there was confusion regarding whether the new requirements applied to non-custodial crypto wallets, leading to backlash from the crypto community. SEAL 911, a group focused on crypto and cybersecurity issues, expressed concerns about Google Play potentially censoring crypto wallets through what they described as “insane legal requirements.” This raised fears that users might resort to untrusted sources for accessing crypto wallets.
Bill Hughes, a lawyer at Consensys, which develops the non-custodial crypto wallet MetaMask, raised concerns about the lack of accountability in Google’s decision-making process. He pointed out that identifying the Google lawyer responsible for approving the updated crypto policies could be challenging, highlighting the lack of transparency in the process.
The move by Google underscores the growing gatekeeping power of Big Tech platforms over the distribution of crypto apps. With Google’s clarification that non-custodial wallets are not within the scope of the new policy, the focus remains on custodial wallet providers who are now required to adhere to stringent regulatory requirements, including user identification, anti-money laundering checks, and transaction record-keeping.
The new policy aligns with the Financial Action Task Force’s 2021 guidance on regulating virtual asset service providers, signaling a broader trend towards increased regulatory oversight in the crypto space. While developers can still publish apps in countries not on the licensing list if they comply with local laws, the inclusion of major crypto markets in the new requirements leaves limited room for global distribution without meeting the stringent criteria.
Overall, Google’s decision to impose stricter licensing rules on cryptocurrency apps reflects a broader trend towards regulatory compliance and oversight in the crypto industry. However, concerns remain about the accountability and transparency of Big Tech platforms in shaping the distribution of crypto apps, underscoring the need for a balanced approach to regulation in this rapidly evolving sector.