Google Drops Licensing Rule for Non-Custodial Wallets After Industry Backlash

Highlights:

• Google removes licensing rule for non-custodial wallets after industry backlash and confusion.
• New Play Store rules require wallet apps to follow regional laws and industry standards.
• US developers must register with FinCEN and obtain state money transmitter licenses.

Google has removed licensing requirements for non-custodial crypto wallets from the Play Store. The change comes after criticism and confusion in the crypto industry. Earlier, Google announced new Play Store rules for 15 regions, including the US and EU. These rules would have required wallet developers to get financial services licenses before publishing apps. The announcement’s lack of distinction between custodial and non-custodial wallets sparked concern among developers and legal experts.

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Thanks for flagging this. 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.

— News from Google (@NewsFromGoogle) August 13, 2025

Google Clarifies Crypto Wallet Policy and Sets New Global Compliance Rules

Google said in response to a report by The Rage, the first outlet to cover the planned ban, that “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.”  The rumored ban quickly drew strong backlash on X. In a blog update, Google outlined fresh rules for crypto wallet apps. It stated that cryptocurrency exchanges and software wallets could only appear on the Play Store if they follow local regulations and recognized industry practices. 

New Google Play Store policy forces AML/KYC on non-custodial wallets in the US, effectively bans non-custodial wallet developers from Play Store in EU

Full Story👇https://t.co/xhPoyPT1Gt

— The Rage (@theragetech) August 13, 2025

For US developers, the company said they must register with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business and hold a state money transmitter license. They can also operate as a federally or state-chartered bank instead. This could result in wider use of Know Your Customer checks and similar measures.

In the EU, Google’s earlier policy would have made wallet developers get Crypto Asset Service Provider (CASP) licenses under Markets in Crypto-Assets (MiCA) rules. Google Play’s policy update states that the new rules will take effect on October 29. The policy closely follows guidance from the Financial Action Task Force (FATF), which advises on reducing risks linked to virtual assets and related services. Google said the changes aim to “provide a safe and compliant environment for users” as global regulations evolve quickly. The rules will apply immediately to new submissions, while existing apps must meet licensing requirements or risk removal from the Play Store.

Google Backs Down on Licensing Rules for Non-Custodial Wallets After Criticism

Google’s decision to drop the licensing requirement for non-custodial wallets came after strong pushback from lawyers, crypto advocacy groups, and industry leaders. Justin Slaughter, Vice President of Regulatory Affairs at Paradigm, criticized the original plan as overly restrictive. He called it surprising for the company to introduce such rules now and described them as harsh limits for non-custodial wallet developers. 

Surprising move here by Google, especially amid their antitrust litigation, to suddenly place draconian restrictions on persons making non-custodial wallets available on the App Store.

As we see with BCRA in CLARITY/SBC Draft, pure coding should not require a federal license. https://t.co/ZbFk2DK18s

— Justin Slaughter (@JBSDC) August 13, 2025

Slaughter said new proposals in Congress explain that writing code should not need a federal license. He believes Google’s policy might go against these upcoming rules. Gabor Gurbacs, a notable figure in the cryptocurrency sector, said Google Play’s new rules for non-custodial wallets could limit access and hurt crypto innovation. He believes big tech, not banks, poses the bigger challenge.

Google Play Store bans non-custodial wallets that don't have banking licenses and a FinCEN registration or a MiCA license.

Bitcoin’s real enemies aren’t banks/Wall Street but Silicon Valley/Big Tech. Now you understand why I said what i said last week.https://t.co/UavM1AZfQF pic.twitter.com/t23z0jZBhA

— Gabor Gurbacs (@gaborgurbacs) August 13, 2025

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