The growing adoption of cryptocurrency has led platforms and governments to adopt new regulations that will provide security and compliance. This upward trend can be seen in a recent policy reform by the Google Play Store, in which developers of cryptocurrency wallets and exchanges will now be obliged to acquire governmental licenses prior to publishing their apps. The action raises a crucial question: Is government-licensing the new standard of crypto services?
As stricter regulation policies arise around the world, crypto institutions might find themselves in more regulated frameworks, which could directly affect their operations and accessibility.
Google Play’s Licensing Rules and Industry Reaction
In early August 2025, Google announced a policy that cryptocurrency exchange and wallet developers must possess legal licenses issued by the government to publish applications in 15 key jurisdictions. These are the United States, the United Kingdom, the European Union, Canada, Japan, South Korea, among others. At the beginning, the rule was related to both custodial and non-custodial wallets, their different regulatory classifications.
Following industry concerns, Google issued a clarification. A company representative stated that “non-custodial wallets are not in scope” and promised an update to its Help Center.
This is an important distinction when considering the critical features of custodial and non-custodial wallets. Whereas custodial wallets handle user funds, as traditional banks do, non-custodial wallets allow users to have total control of their assets. Such wallets enable users to interact with the blockchain and hold their private keys directly on their devices, which means that users have complete control and safety of their funds without third-party involvement.
Furthermore, the policy mandates compliance with local licensing regimes for custodial wallet providers. In the U.S., this means registering as a Money Services Business with the Financial Crimes Enforcement Network (FinCEN) and obtaining state-level money transmitter licences. In the EU, it means securing Crypto-Asset Service Provider (CASP) authorisation under the Markets in Crypto-Assets (MiCA) regulation. UK-based providers must register with the Financial Conduct Authority (FCA).
The licensing demands go beyond what some laws require. U.S. federal guidance from 2019 explicitly excluded non-custodial wallet providers from money transmitter status. Under MiCA, CASP authorisation typically applies to services that handle client assets, not to software enabling self-custody. The original Google policy, therefore, illustrated how platform operators can set stricter requirements than governments.
Related: SEC’s Crypto Decision Sparks Surge in RWA Custody Services
Licensing Momentum in Government Policy
The Google Play case is not occurring in isolation. Around the world, regulators are adopting licensing frameworks for crypto institutions as a central element of oversight.
U.S. Regulatory Developments
Stablecoin Law and Banking Charters
In July 2025, the U.S. enacted the GENIUS Act, the first federal law regulating stablecoins. It also mandates issuers to hold one-to-one reserves in high-quality assets, submit to regular audits, and adhere to the federal and state standards of oversight. This legislation has introduced the concept of licensing as a key feature of stablecoin issuance, pushing companies towards a full regulatory system.
Several crypto firms are also pursuing banking-style charters. Paxos has applied for a U.S. national trust bank licence from the Office of the Comptroller of the Currency, and Ripple is seeking a U.S. banking licence and a Federal Reserve master account to support its RLUSD stablecoin. These moves come amid the broader trend of crypto firms adopting a regulated financial institution strategy to gain access to larger markets and payment systems.
U.S. Federal Reserve Shift
In the U.S., the Federal Reserve recently discontinued its Novel Activities Supervision Program, which monitored banks’ participation in crypto and other emerging technologies. The termination of the program indicates the transition to incorporating crypto monitoring standards into standard supervision activities instead of maintaining separate frameworks.
The shift is consistent with efforts by other U.S. bank regulators, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, that have sought to scale back restrictive crypto guidance. It is also indicative of the current administration’s policy shift to promote regulated crypto adoption and risk control.
However, even as direct regulatory oversight softens in some areas, private actors like Google are stepping in with their own compliance requirements. The result is a layered system where market access depends on both legal authorisation and adherence to platform policies.
Europe’s MiCA Framework
The MiCA regulation by the European Union, which became effective in late 2024, requires crypto-asset service providers to acquire CASP authorisation to operate legal business operations within the EU. The regulations apply to custodial wallets, exchanges, trading platforms, and stablecoin issuers. This coordinated system is one of the most detailed license systems globally and establishes a high compliance bar for market entry.
Google’s new rule aligns its Play Store requirements for EU consumers with MiCA’s requirements, effectively extending regulatory enforcement to the app distribution level.
Asia and Emerging Markets
Stablecoin licensing in Hong Kong has been legislated and is anticipated to start in 2026. The Hong Kong Monetary Authority will manage compliance and focus on reserve support, consumer protection, and operational resilience.
In July 2025, Pakistan established the Pakistan Virtual Assets Regulatory Authority (PVARA). The body regulates all virtual asset service providers, imposes anti-money laundering measures, and uses national regulations in line with those of the Financial Action Task Force (FATF). This is one of the most extensive regulatory rollouts in South Asia.
Platforms as Regulatory Gatekeepers
The most notable feature of the Google licensing case is that a privately controlled platform has also served as a gatekeeper for regulators. Android runs approximately 70% of all smartphones globally, and the Play Store acts as the primary distribution mechanism of apps. Users may sideload apps, but the technical process required is challenging and less secure for most users.
Google decides which crypto tools become available to mainstream users by conditioning access to its platform to comply with its licensing requirements. Critics dub this “regulation by commercial enforcement,” or private policy decisions that operate as binding requirements without legislative action. This is an element of a broader shift where big tech firms determine operating standards that reflect or exceed government regulations.
The 2021 guidance issued by the Financial Action Task Force proposed that decentralised applications could be considered as Virtual Asset Service Providers where the developers retain control of user interfaces. Although such guidance is non-binding, it affects corporate policy. Google’s initial approach represented a cautious interpretation of these recommendations.
Compliance Costs and Crypto Market Impact
Licensing imposes significant costs. In the United States, application fees, legal costs, and surety bonds can cost hundreds of thousands of dollars to obtain state money transmitter licences. MiCA regulation in the EU involves capital requirements, reporting obligations, and governance structures comparable to those of mainstream financial institutions.
In addition, Smaller developers, who are often behind innovative wallet projects, may not be able to meet such requirements. This could result in market consolidation, where well-financed, larger companies control the licensed part of the industry. Community-based tools and open-source projects could be excluded from the primary distribution channels.
Additionally, this might result in decreased consumer choice, particularly in privacy-focused apps that operate outside traditional financial models. As much as licensing facilitates security and accountability, it might restrict the variety of available tools.
Related: SEC Mobilizes to Modernize Crypto Rules, Embracing Trump-Era Policies
Global Trend Toward Licensing as the Baseline
In the U.S., through the GENIUS Act, the EU’s MiCA, Hong Kong’s stablecoin framework, and Pakistan’s PVARA framework, licensing is emerging as the regulatory tool toward crypto regulation. The trend extends across various categories such as:
- Exchanges and trading platforms: Required to register or obtain licences in most major jurisdictions.
- Stablecoin issuers: Subject to reserve, audit, and operational licensing requirements.
- Custodial wallet providers: Increasingly regulated like money transmitters or financial institutions.
- Service aggregators: Potentially covered under broad definitions of crypto-asset service providers.
The licensing push aims to bring crypto activities on track toward anti-money laundering, counter-terrorist financing, and consumer protection standards. It also aims to integrate digital assets into the wider financial system without destabilizing regulatory oversight.
