Google reverses course on non-custodial crypto wallet ban following backlash

来源 Cryptopolitan

Google has reversed its plans to license all cryptocurrency wallets on the Play Store, including non-custodial wallets. This action follows criticism and confusion within the industry regarding the scope of the policy.

In an updated statement, Google clarified: “Non-custodial wallets are not in scope of Google Play’s Cryptocurrency Exchanges and Software Wallets Policy. We are updating the Help Center to make this clear.”

Google had earlier said that new Play Store requirements would have required wallet developers to receive official financial services licenses before their apps were published. The regulations, which covered 15 jurisdictions such as the U.S. and the EU, did not distinguish between custodial and non-custodial wallets, which raises concerns among developers and lawyers.

In the U.S., the policy would have necessitated being registered with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB) and a state permit for money transmitters. Such precautions are commonplace in custodial services but are, technically, not legally obligatory in non-custodial wallets under the 2019 FinCEN guidance.

Consensys attorney Bill Hughes voiced apprehensions over the lack of clarity in the policy. He explained that Google informed them of the update on July 10, without defining what constitutes a “software wallet.”

Hughes emphasised that MSB registration is not something the FinCEN has expressly and explicitly required, and that the rule would thus be an unusual turnaround compared to existing U.S. regulatory policy. He also referred to Google’s more general policy that cryptocurrency-related activities are supposed to be performed by certified services in regulated jurisdictions. However, certification is not necessarily legally required.

Hughes referred to the policy as “a bit of a mess,” and cautioned that Big Tech platforms, rather than government agencies, could potentially be the biggest gatekeepers in crypto application distribution.

In the European Union, the original Google policy would have meant that wallet developers needed to obtain Crypto Asset Service Provider (CASP) licenses under the Markets in Crypto-Assets (MiCA) regulation. This would have stopped many independent developers who do not enjoy CASP from listing their apps on the Play Store since they are not custodial wallets. The proposal resembled aspects of the Financial Action Task Force (FATF) ideas to extend scrutiny on virtual asset service providers.

Reversal shows industry influence

The move by Google to withdraw non-custodial wallets due to the licensing requirement is a result of increasing opposition among legal experts, cryptocurrency advocacy organizations, and industry leaders.

Justin Slaughter, the regulatory affairs vice president of Paradigm, had condemned the move as being too limiting, particularly as Google battles antitrust litigation. He termed it “surprising” that the company would enforce these rules at this time, labeling them as “draconian limitations” to developers of non-custodial wallets.

Slaughter cited pending congressional proposals that declare that “pure coding should not require a federal license,” implying that the policy may be incompatible with the prospective congressional guide.

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