Google Play Store Bans Wallets That Don't Have Banking License

Summary

Google Play Store has introduced a policy that requires any software wallet developer to obtain a license before publishing cryptocurrency wallet apps to the Google Play Store "to ensure a safe and compliant ecosystem for users."The policy targets 15 jurisdictions, including the European Union and the United States, laying out which regulations Google Play Store expects software wallet developers to comply with. This includes being a registered Money Service Business with FinCEN in the US, as well as obtaining a MiCA license in the EU.Google's new policy does not distinguish between custodial and non-custodial software, placing unmeetable burdens on non-custodial wallet developers. Forcing AML/KYC on Non-Custodial Wallets in the USIn the United States, the policy requires that "the developer must be either (a) registered with FinCEN as a Money Services Business and with a state as a money transmitter or (b) a federal or state chartered bank entity." An MSB registration then requires entities to adhere to strict Anti-Money Laundering (AML), Counter Terrorist Financing (CTF), and Know Your Customer frameworks (KYC).Google's policy thereby goes well beyond what is required of non-custodial wallets by law. As clarified in FinCEN's 2019 guidance on Convertible Virtual Currencies, FinCEN makes clear distinctions between "hosted" (meaning custodial) and "unhosted" (meaning non-custodial) wallets, which it does not classify as money transmitters.As the number one cost point for financial institutions, the compliance programs required of MSBs by FinCEN would drive the majority of non-custodial wallets out of the Play Store, stifle free software innovation to a crippling degree, and force AML/KYC on all non-custodial wallets available on out-of-the-box Google devices.FinCEN To SDNY: Samourai Wallet Did Not Need MSB LicenseA recent filing suggests that Samourai Wallet prosecutors withheld exculpatory evidence, revealing that FinCEN told SDNY that the developers likely did not ...