Following initial controversy over its guidelines, Google has outlined new rules for crypto wallet applications in multiple regions, including the U.S. and EU.

In many regions, Google Play will mandate that crypto wallets be licensed by their respective domestic regulators and adhere to industry standards. In the United States, crypto wallet providers will need recognition from FinCEN as money services businesses (MSBs) and authorization from their state as money transmitters, unless they are federally- or state-chartered banks.

In the UK, providers must obtain approval from the Financial Conduct Authority (FCA). For the European Union, crypto wallets must register under the Markets in Crypto Assets (MiCA) framework.

Concerns Over Licensing Requirements

The crypto community responded with concerns, particularly regarding whether non-custodial wallet providers would be exempted from these rules. Some companies pointed out that self-custodial wallets currently don’t require licenses under U.S. law.

In response to these concerns, Google clarified its policy to state that non-custodial wallets are not subject to the licensing requirements, which will go into effect in October.

The Compliance Dilemma

Globally, there has been a push for regulatory clarity on digital assets, including MiCA and the GENIUS Act. While this has brought some relief after years of uncertainty, it also poses increased compliance challenges for crypto firms.

For instance, firms must register as MSBs with FinCEN, which includes developing an anti-money laundering (AML) plan, creating Suspicious Activity Reports (SARs), performing Know Your Customer (KYC) checks, and more. This presents a significant tradeoff for many decentralized crypto companies considering their options.