What Google actually changed
Google updated its Play Store policies around crypto apps. The headline: custodial wallets and exchange apps are expected to meet applicable licensing and compliance requirements in regions such as the United States and the European Union. The clarification that followed is critical for builders and users: self custody wallets remain exempt, since they do not take possession of user funds.
🧠 Custody versus self custody in practice
A custodial service holds your keys and moves assets on your behalf. That looks like money transmission to regulators, which triggers licensing. A self custody wallet lets you hold your own keys and sign transactions locally. The app never sits between you and the chain. That functional difference is why non custodial wallets can continue to operate without the same licensing burden.
🏗️ What this means for developers
Clarity for product roadmaps: teams that build non custodial wallets can keep shipping features without waiting on expensive licenses.
Compliance by design for custodial apps: if your app holds funds or intermediates transfers, expect audits, disclosures, and regional gating.
Edge cases need care: hybrid apps that add fiat ramps or off-ramp services must separate flows cleanly to avoid blurring lines with money transmission.
User impact: sovereignty and accountability
For users, the update preserves self sovereign access on Android. People can still install wallets that keep control of private keys on device, use hardware signer support, and interact with DeFi directly. At the same time, the bar rises for custodial convenience apps, which is appropriate when providers take custody risk and operational risk on behalf of the user.
🌍 Policy context and the path ahead
The direction aligns with long standing guidance that distinguishes software tools from custodial financial services. Expect three developments over the next quarters:
Regional enforcement notes inside app listings that explain where custodial features are available.
Developer transparency around custody models, audit partners, and incident response.
Better wallet UX that onboards users without sacrificing seed phrase safety, including social recovery and passkey options.
🧪 DeFi, ETH and the builder economy
Developer confidence matters for the broader ecosystem. Clear rules on Android lower friction for wallet integrations with Layer 2 networks, restaking dashboards, and onchain identity. That is constructive for ETH activity and onchain volume, even if price cycles dominate headlines. The takeaway is simple: shipping gets easier when the platform owner defines the lane.
⚠️ Risks and open questions
Policy drift is always possible if regional regulators push for broader scopes.
Hybrid features such as custodial staking, pooled yield, or built in swaps may bring the app under licensing even if the core wallet is self custodial.
Review delays can slow launches when apps straddle the line between tool and service.
