Google Play Store’s New Licensing Rule Could Wipe Out Non-Custodial Crypto Wallets

Google Play Store has introduced a sweeping policy change requiring all crypto wallet developers to obtain banking or money service licenses before their apps can be listed — a move critics say could effectively ban non-custodial wallets in major markets.

The updated rules apply to crypto wallet developers in 15 jurisdictions, including the United States and the European Union. According to Google, the policy is aimed at “ensuring a safe and compliant ecosystem for users.” However, the requirements go far beyond existing legal frameworks, blurring the line between custodial and non-custodial services.

US Impact: Forcing AML/KYC on Wallets That Don’t Hold Funds

In the U.S., Google’s policy requires developers to be registered with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB) and as a state-licensed money transmitter, or to be a federally or state-chartered bank. This mandates full AML (Anti-Money Laundering), KYC (Know Your Customer), and CTF (Counter-Terrorist Financing) compliance — obligations that FinCEN itself has stated do not apply to non-custodial wallets.

This runs contrary to FinCEN’s 2019 guidance, which makes a clear distinction between “hosted” custodial wallets (which store user funds) and “unhosted” non-custodial wallets (which don’t). Forcing non-custodial wallet developers into costly compliance could drive them out of the Play Store entirely.

EU Impact: A De Facto Ban Under MiCA

In the EU, Google requires developers to hold a MiCA (Markets in Crypto-Assets) license as a Crypto Asset Service Provider (CASP). Since MiCA licensing is generally granted only to custodial service providers such as exchanges and brokers, standalone non-custodial wallets are effectively excluded. This could leave only large, licensed CASPs able to offer non-custodial wallets on Android devices in Europe.

Commercial Enforcement of Global Standards

Critics argue that this is an example of “regulation by commercial enforcement”, where corporate policy enforces rules beyond what laws require. The policy appears aligned with the Financial Action Task Force (FATF)’s 2021 recommendations, which expanded the definition of Virtual Asset Service Providers (VASPs) to potentially include developers of decentralized applications.

Although FATF’s guidance is non-binding, member states often implement its recommendations to avoid economic blacklisting. Now, private corporations like Google with this policy seem to be acting as gatekeepers, imposing FATF-style compliance globally — regardless of local legal obligations.

terrible https://t.co/n5wmZNFjGz

— jack (@jack) August 13, 2025

Industry Backlash and Potential Consequences

The Google policy change threatens to shrink the diversity of crypto wallet options, stifle open-source innovation, and push users toward custodial solutions that carry greater privacy and security risks. Some developers warn that it could mark the end of easily accessible non-custodial wallets on Android, undermining the decentralization ethos of cryptocurrency.

The Google Play Store policy change rollout underscores a growing trend: rather than regulating through lawmaking, authorities and corporations are shaping the crypto ecosystem through platform restrictions and compliance mandates — even when those mandates exceed legal requirements.