Google Revises Play Store Crypto Policy Exempting Non-Custodial Wallets

Google has revised its cryptocurrency licensing policy for the Google Play Store, exempting non-custodial wallets from the previous requirements that demanded regulatory compliance akin to those for custodial services. The change follows significant pushback from developers and advocacy groups who argued that applying money transmitter regulations to non-custodial wallet software was impractical [1]. Under the updated policy, developers who create self-custody solutions—applications that allow users to manage their own private keys without holding control over user funds—will no longer be required to obtain licenses to publish their apps on the Play Store.

The original policy, introduced earlier this year, imposed licensing mandates on all wallet developers across 15 jurisdictions, including the U.S. and the European Union [1]. This created a compliance burden for non-custodial wallet creators, as they would have been forced to adhere to anti-money laundering (AML), counter-terrorist financing, and know-your-customer (KYC) frameworks typically reserved for custodial services. In the U.S., this would have required registration with FinCEN as money service businesses (MSBs), while in the EU, it necessitated MiCA licensing for Crypto Asset Service Providers (CASP). Since non-custodial wallets do not control or hold user funds, these requirements were effectively unattainable, rendering the policy a de facto ban on such applications [1].

Developers highlighted that the compliance costs associated with MSB registration would have made it nearly impossible for open-source and independent non-custodial wallet developers to operate within the Play Store [1]. AML/KYC programs are among the most expensive operational expenses for financial institutions, and applying them to open-source software projects was seen as disproportionately burdensome. Google’s revised policy now removes these mandates for non-custodial wallets, distinguishing between applications that provide custody services and those that enable self-custody [1].

The company confirmed the change via its official social media account, stating that non-custodial wallets are no longer in scope of its Cryptocurrency Exchanges and Software Wallets Policy. Google also announced it would update its Help Center to reflect this clarification [1]. The updated policy preserves access to non-custodial wallets for Android users while retaining licensing requirements for custodial services. This distinction aligns with existing regulatory frameworks that already differentiate between custodial and non-custodial models [1].

The revised policy also reflects the limitations of applying Financial Action Task Force (FATF) guidance directly through commercial enforcement without legislative support. While FATF recommendations influence regulations for member states, they remain non-binding and are intended for risk management rather than as enforceable requirements [1]. Google’s decision to exempt non-custodial wallets acknowledges the existing regulatory nuance, particularly the FinCEN 2019 advisory, which distinguishes between hosted and unhosted wallets [1].

This shift in policy marks a significant win for the crypto developer community, particularly for open-source and privacy-focused wallet applications. It also signals a broader movement toward more flexible and context-aware regulatory enforcement in the digital asset space, potentially encouraging greater adoption of self-custody solutions on the Android platform [1].

Source: [1] Google Exempts Non-Custodial Wallets From Play Store Licensing Rules After Pushback (https://coinedition.com/google-exempts-non-custodial-wallets-from-play-store-licensing-rules-after-pushback/)