Google Play Store introduced licensing requirements for cryptocurrency wallet applications across 15 jurisdictions, including the US and the EU.

According to a report by the Rage, developers must obtain regulatory approvals before publishing apps on the platform.

Furthermore, the policy requires software wallet developers to comply with local financial regulations “to ensure a safe and compliant ecosystem for users.” 

The requirements apply to both custodial and non-custodial wallets, creating compliance burdens that many developers cannot meet.

In the US, developers must register with FinCEN as a Money Services Business (MSB) and obtain state money transmitter licenses, or operate as federally or state-chartered banking entities.

MSB registration requires adherence to strict Anti-Money Laundering, Counter Terrorist Financing, and Know Your Customer frameworks.

Policy exceeds legal requirements

The report noted that Google’s requirements extend beyond current legal obligations for non-custodial wallets. 

FinCEN’s 2019 guidance on Convertible Virtual Currencies distinguishes between “hosted” custodial and “unhosted” non-custodial wallets, explicitly stating that non-custodial wallets do not qualify as money transmitters under existing regulations.

The compliance programs required of MSBs represent the highest cost burden for financial institutions and would effectively exclude most non-custodial wallet developers from the Play Store. 

The policy forces AML and KYC requirements on all non-custodial wallets available through standard Google devices.

Industry criticism mounts

Consensys lawyer Bill Hughes highlighted the policy inconsistencies on August 1, noting that Google announced the updated policy on July 10 without clearly defining “software wallet” terminology. 

Hughes observed that registering as an MSB is “something FinCEN has specifically and clearly not required” for non-custodial wallets.

He added:

“They don’t define the term and do not acknowledge that registering as an MSB is something FinCEN has specifically and clearly not required.”

He noted Google’s broader statement that cryptocurrency activities “should be conducted through certified services in regulated jurisdictions,” despite certification not being legally required.

Hughes characterized the situation as “a bit of a mess” and warned that “the final boss for crypto is now more likely to be the Big Tech platforms that still dictate the major crypto app distribution channels.”

Justin Slaughter, vice president of regulatory affairs at Paradigm, criticized the policy as particularly problematic given Google’s ongoing antitrust litigation. 

He said:

“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.”

Slaughter referenced pending congressional legislation, noting that “pure coding should not require a federal license” as outlined in draft bills addressing cryptocurrency regulation.

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The New York Department of Financial Services (NYDFS) has imposed a $48.5 million penalty on Paxos as part of its enforcement action against the stablecoin issuer, according to an Aug. 7 announcement.

The settlement includes a $26.5 million civil monetary fine and mandates Paxos to spend an additional $22 million over three years to strengthen its compliance systems.

According to the financial regulator, this development follows a wide-ranging investigation into Paxos’ compliance failures related to anti-money laundering (AML) and customer due diligence procedures.

Paxos’ relationship with Binance attracts scrutiny

The enforcement action centered on Paxos’ relationship with Binance, the largest crypto exchange by trading volume.

According to the financial regulator, Paxos began issuing the Binance USD (BUSD) stablecoin in collaboration with the exchange.

However, it failed to perform adequate due diligence on the trading platform, violating the terms of a 2020 agreement with the NYDFS.

This lack of oversight came to light during a review of Binance transactions conducted between 2017 and 2022. The review found that $1.6 billion worth of transactions were linked to illicit actors or entities sanctioned by the US Office of Foreign Assets Control (OFAC).

As a result, the NYDFS ordered Paxos to halt the issuance of BUSD in February 2023. This directive effectively ended Paxos’ partnership with Binance and led to the gradual phase-out of BUSD from the market.

Apart from the Binance issues, the NYDFS also highlighted broader systemic issues within Paxos’s compliance program.

These include weak Know-Your-Customer (KYC) protocols and delayed responses to law enforcement inquiries. Additionally, outdated, manual transaction monitoring systems failed to detect coordinated suspicious activity and clear money laundering patterns.

The investigation further noted that Paxos lacked internal policies to determine when to initiate investigations after receiving a law enforcement request. This oversight limited the firm’s ability to identify and respond to high-risk behavior in a timely manner.

New York’s crypto enforcement trend

The action is part of a broader trend in New York’s regulatory approach to the crypto industry.

Over the years, the NYDFS has taken enforcement actions against firms including Robinhood, Block Inc. (operator of Cash App), and the now-bankrupt Genesis.

Commenting on these enforcement actions, Superintendent Adrienne Harris reaffirmed the agency’s commitment to safeguarding financial markets and consumers.

She said:

“The Department of Financial Services has led the nation in regulating the virtual currency industry, protecting consumers and markets through examinations, supervision, and where necessary, enforcement.”

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Nigeria’s Securities and Exchange Commission (SEC) has expressed support for stablecoin businesses that operate within the bounds of the country’s digital asset regulations.

During the Nigeria Stablecoin Summit held in Lagos, SEC Director-General Emomotimi Agama reportedly said the African country is ready to embrace blockchain-based payment innovations as long as they comply with existing laws.

He highlighted the growing relevance of stablecoins in Africa’s digital economy, where volatile local currencies have pushed many toward dollar-backed assets for stability.

Agama described Nigeria’s digital landscape as “dynamic, young, and increasingly decentralized,” pointing to how stablecoins are becoming integral to daily transactions.

Considering this, the financial regulatory chief said:

“I stand before you as both a regulator and an advocate for responsible innovation. My message today is clear: Nigeria is open for stablecoin business, but on terms that protect our markets and empower Nigerians.”

Nigeria ranks as one of the top countries for crypto adoption globally. According to data from Chainalysis, the country sits second in the world, driven by the practical use of digital currencies for remittances, commerce, and cross-border payments.

For many, stablecoins like USDT and USDC have filled a critical gap left by unreliable access to foreign currency and rising inflation.

Commenting on the SEC’s new stance, Nathaniel Luz, President of the Africa Stablecoin Network, told CryptoSlate that the announcement provides clarity that has long been needed in the emerging industry.

According to him:

“It’s a square peg in a square hole. It’s the right endorsement for the industry at this point. Up until now, so many crypto companies have treaded in the Nigerian market with great caution. Having such clarification from the DG of the SEC brings a high sigh of relief, while opening the door to foreign players.”

Meanwhile, this shift follows Nigeria’s crackdown on crypto firms last year, which included the arrest of Binance executive Tigran Gambaryan.

Since then, the authorities have moved toward structured regulation, including exploring a tax framework for crypto transactions to support national revenue efforts.

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At Kraken, we are committed to building a secure and reliable platform for our clients. Over the past few years, we have significantly strengthened our global compliance framework. We invest deeply in the people, processes and systems that keep our platform safe.

We recently reached an important milestone on that journey. This concludes a multi-year effort to strengthen the sanctions compliance program across the board. This achievement reflects not only the continued engagement with regulators (such as finalizing commitments over the past few years), but also the continued advances in Kraken’s approach to risk, surveillance and operational excellence.

As part of ongoing work with US regulators, Kraken recently completed its third final certification of the US Treasury Department’s Office of Foreign Assets Control (OFAC) (OFAC).

Companywide efforts towards common goals

What began as an initiative to enhance sanctions control is a comprehensive effort to build one of the industry’s most robust, scalable and future compliance programs.

What Kraken will enhance compliance:

• GEOIP Firewall and VPN Screening
  A sophisticated tool that actively restricts unauthorized access based on geographical and network indicators.
• A comprehensive screening
  End-to-end product, client, and transaction-level screening ensures real-time risk detection.
• Over 100 Embedded Internal Controls
  Automatic checks and balances built into every tier of Kraken’s infrastructure.
• Upgraded policies, procedures, and processes
  An overview redesign of how compliance is approached across teams and workflows.
• Strict risk assessment, auditing, training
  Regular assessments and company-wide education to sharply align our defenses.
• Sanctions are controlled at all layers
  Overall protection measures integrated throughout Kraken’s architecture.
• Regulatory benchmarks and licensing expansions
  Tools and standards that allow for smoother licensing, and faster time to market globally.
• Active engagement with regulatory authorities
  Open and constructive dialogue that helps shape thoughtful and effective regulations.
• Strengthening due diligence for investors, M&As and product launches
  Strategic compliance is integrated into the way we grow.

All of these upgrades are a step towards our bigger goal. It is to make Kraken the most trusted and secure venue for code. Together, these features help protect clients, strengthen trust and strengthen Kraken’s role as a responsible industry leader.

Built for scale designed for reliability

Strong compliance is not just a risk reduction, but a strategic advantage. With these improvements, Kraken is ideally positioned below:

• Expand our business to new countries and expand with new products
• Promote stronger banking relationships
• Navigate the regulatory environment with confidence
• Mitigate audit and operational risks
• Supports faster and safer growth across the market

The compliance infrastructure we build is scalable, resilient, dynamic, and designed to not only meet today’s demands, but also predict tomorrow’s demands. We are proud of how far we have come and are even more excited about where we are heading. Because at Kraken, we don’t just build responsibly. It’s how we can lead the way, create a safer industrial ecosystem and accelerate the adoption of crypto.

Building and maintaining a high bar for security and compliance is fundamental to how you serve your clients’ needs. Today we are pleased to announce that Kraken facility grade qualified custody has successfully completed the SoC 2 Type 2 compliance test. This is an important milestone that further strengthens our long-standing commitment to protecting the assets and data of our institutional clients.

What is SOC 2 Type 2 and why it matters

SOC 2 (Systems and Organization Control 2) is an internationally recognized framework developed by the US CPAS Institute (AICPA) to manage customer data based on five “Principles of Trust Services,” security, availability, processing integrity, confidentiality and privacy.

Based on Kraken’s previous SOC 2 Type 1 report, successful SoC 2 Type 2 exams demonstrate not only the rigorous design of security management, but also the consistent execution and effectiveness over time. This independent third-party verification is based on existing security infrastructure and reflects its ongoing commitment to strengthening internal processes and technical infrastructure. These are stress-tested to meet the highest industry standards for system reliability and protection of sensitive data.

“Completing the SOC 2 Type 2 exam is an important milestone, but it is just one element of our comprehensive, security-first corporate culture and operational strategy.” “We consider security as a continuous and overall commitment that expands beyond a single audit, reporting requirement or certification. As Kraken continues to expand and the threat landscape evolves, we will remain laser-centric in investing in exceptional talent to strengthen our internal controls and support our commitment to protecting our clients’ data and their assets.”

What does this mean for our clients:

• Strengthening asset protection: SOC 2 Type 2 Compliance validates that Kraken’s institutional management platform assets are protected by robust, industry-leading security protocols and are continuously monitored and strengthened to combat evolving cybersecurity threats.

• Trust through transparency:This recognition allows clients to have more confidence in Kraken’s operational integrity. Reconfirm how security controls are not only well designed, but are also well-executed for long periods of time.

• Commitment to excellence: This achievement reflects Kraken’s ongoing investment in best-in-class security practices and infrastructure, reinforcing its mission to provide true security-first offerings that drive the wider adoption of digital assets globally.

Take a step forward

SOC 2 Type 2 Compliance is an important milestone, but it is just part of Kraken’s larger security-first philosophy. We are committed to continuing to strengthen our infrastructure, protocols, personnel and overall operations to ensure our clients’ needs both now and long term.

The crypto industry has seen a significant shift toward regulatory compliance since its early days, according to James Smith, co-founder of Elliptic, a crypto compliance firm established in 2013.

“In the early days, only a few companies approached compliance in a serious way,” Smith told Cointelegraph at the Token2049 event. “Coinbase was our first customer — they knew from the start that they wanted to build their business that way. But for most others, it just wasn’t a major priority.”

That began to shift as regulators, including those in New York State, took a more active interest in the crypto industry. The involvement of traditional financial institutions like Fidelity and DBS Bank also contributed, as they entered the space with established compliance expectations from traditional finance services.

Fidelity, for instance, offered its first crypto service for customers in 2019, while the Asian giant DBS created a digital exchange for accredited and institutional investors in 2020.

“We’ve seen a big change in the last couple of years. Exchanges on the global map all care about compliance now, because they want to be part of a global ecosystem,” Smith said.

Related: DeFi security and compliance must be improved to attract institutions

Compliance questions after Bybit hack

Crypto exchanges and peer-to-peer protocols remain the industry’s key compliance targets. For authorities, these firms are seen as critical choke points where Anti-Money Laundering and broader financial surveillance controls take effect. At the same time, they’re frequent candidates for sophisticated hacks and laundering operations, as seen in the Lazarus Group’s tactics.

The latest example comes from the Bybit hack, where the Lazarus Group engaged in a sophisticated money laundering scheme to funnel funds. The hackers quickly swapped low-liquidity tokens for Ether (ETH), then swapped them for Bitcoin (BTC) using no-KYC (Know Your Customer) decentralized exchanges.

“They went through some no KYC exchanges, which probably shouldn’t exist, but also through a decentralized protocol where there was lots of liquidity provision that enabled them to get it into Bitcoin,” Smith said, adding that “we’re making it too easy for them as an industry.”

Smith also noted that even after firms flagged the funds as stolen, users continued to trade them through decentralized platforms. “Why was there so much liquidity available to help launder this money?” he said, arguing that those providing liquidity to such protocols should be subject to basic checks on the source and destination of funds. “Go and look at who’s making money. And that’s the first place to start putting some controls.”

Magazine: Lazarus Group’s favorite exploit revealed — Crypto hacks analysis

]]> https://earlybirdsinvest.com/huge-shift-in-crypto-firms-compliance-mindset-says-elliptic-co-founder/feed/ 0 33689 https://earlybirdsinvest.com/binance-introduces-stricter-compliance-measures-for-south-african-users/ https://earlybirdsinvest.com/binance-introduces-stricter-compliance-measures-for-south-african-users/#respond Wed, 23 Apr 2025 16:39:18 +0000 https://earlybirdsinvest.com/binance-introduces-stricter-compliance-measures-for-south-african-users/

The US House of Representatives introduced an updated version of the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act on March 26, substantially revising the February 5 draft. 

The legislation aims to regulate payment stablecoins, introduce new compliance mechanisms, expand oversight powers, and clarify key definitions governing the issuance and use of dollar-backed digital assets.

The STABLE Act of 2025, formally introduced by Representatives Bryan Steil (R-WI) and French Hill (R-AR), aims to create a federal framework for payment stablecoin issuance.

Additionally, the bill delineates qualified issuers into federally supervised institutions, nonbank entities approved by the Comptroller, and state-approved entities operating under certified regimes. 

New provisions and structural changes

The March 26 revision introduces several substantive changes compared to the initial February draft.

The updated bill explicitly excludes various financial products, such as securities, deposits, and credit union accounts, from the definition of “payment stablecoin.” This exclusion gives developers and institutions greater legal clarity on what qualifies under the act.

The new draft mandates monthly reserve attestations verified by registered public accounting firms and requires chief executive and financial officers to certify the accuracy of those reports. 

Knowingly submitting false certifications may result in criminal penalties of up to $1 million in fines or 10 years in prison. These certification provisions were not present in the February version.

Further updates include detailed procedures for reviewing and approving new stablecoin issuers. The revised draft imposes decision deadlines for federal regulators, offers formal appeal rights, and allows applicants to reapply following a denial. 

Regulators must also submit annual reports to Congress on the timing of pending applications.

Representative Bill Huizenga (R-MI), an original cosponsor, highlighted the bill’s importance on an X post. He said:

“Stablecoins have the potential to simplify our payment systems and revolutionize the way we move money. I’m proud to be an original cosponsor of this bipartisan bill with Representative Bryan Steil and Representative French Hill and look forward to next week’s markup.”

Rulemaking and industry alignment

A key addition is the mandate for regulators to initiate rulemaking within 180 days of enactment to define application requirements and streamline approval for well-capitalized entities.

The bill also provides express protection for issuers using public, decentralized networks, clarifying that such a design choice is not grounds for denial but a critical assurance for developers building on blockchain infrastructure.

Both the February and March versions aim to exclude payment stablecoins from being classified as securities. However, the newer version more comprehensively amends related statutes under the Advisers Act, Securities Act, Exchange Act, and SIPA to ensure consistent treatment across financial regulations.

The updated STABLE Act consolidates its treatment of decentralized and non-payment stablecoins into a single study provision and restructures its approach to international interoperability. 

Under the revised Section 10, the Treasury will coordinate with foreign jurisdictions to assess comparability and support cross-border stablecoin use, replacing the earlier draft’s standalone reciprocity section.

Additional provisions

The March 26 bill imposes strict reserve standards on stablecoin issuers, requiring full backing by cash-equivalent assets such as Treasury bills or demand deposits.

It also prohibits issuers from paying yield to token holders and restricts issuer activities to core functions such as issuance, redemption, and custody services.

To protect consumers, the bill also includes provisions clarifying that the US government does not insure stablecoins and prohibits any misrepresentation to the contrary. Violations may trigger civil penalties or criminal prosecution under existing federal laws.

The March 26 revision signals a growing bipartisan consensus in Congress to formalize stablecoin regulation and adapt financial policy to blockchain-native payment systems.

Additionally, it reflects increased responsiveness to the needs of developers and institutions operating at the intersection of fintech and traditional banking.

The House Financial Services Committee is expected to take up the bill for markup in the coming days. Markup is the period when committee members study the viewpoints and discuss amendments.

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