How Apple’s App Store Guidelines Update Will Impact Indian Crypto Ecosystem

Smartphone maker Apple recently updated its App Store guidelines to include rules surrounding in-app purchases that bar the use of cryptocurrencies as a payment option. The updated guidelines clearly specify that cryptocurrencies can not be used as a payment method for in-app purchases.

The update is expected to impact the NFT platforms which accept various cryptocurrencies. Though the policy has been made public now, it seems to have been in the works for some time.

For example, the London-based Cashaa app, which offers banking solutions in crypto, applied for listing on the Apple App Store on July 31, 2022, but got the final approval only on October 25, 2022.

“In order for our Cashaa app to go live on the App Store, we had to go through Apple’s in-app purchase systems showing that we have not included buttons, external links, or other calls to action that direct customers to purchase crypto other than in-app purchase,” Cashaa founder and CEO Kumar Gaurav told Inc42.

Besides, Apple conducted various checks to ensure that the company was licensed and compliant with all the regulations. The fact that it took over three months for Cashaa to go through the extensive due diligence process shows that the new policy was internally in place long before Apple made it public, and then it started to approve the applications which had all the licences in place, said Gaurav.

Let’s take a look at the key changes in the guidelines and how they can impact the crypto ecosystem:

No In-App Purchases Using Crypto

Apple has updated the guidelines to clearly explain its policy for cryptocurrency trading and NFTs. While the earlier guidelines stated that apps couldn’t use their own mechanisms to unlock content or functionality, the latest update specifically mentions that they can’t use cryptocurrencies and crypto wallets, etc., for such transactions.

The guidelines state that cryptocurrency apps cannot offer currency for completing tasks, such as downloading other apps, encouraging other users to download, posting to social networks, etc.

To Impact NFT Platforms

Apple has added a separate paragraph on NFTs in its guidelines. It states that apps may use in-app purchases to sell services related to non-fungible tokens (NFTs), such as minting, listing, and transferring, provided that the apps do not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.

India is home to over 86 NFT startups with over 1.5 Mn NFT users. The global NFT market is valued at $40 Bn, of which the Indian NFT industry is estimated to be valued at $3.3 Bn with a cumulative average growth rate of 61.6%. It is expected to rise to $27 Bn by 2028.

The changes in the guidelines are expected to impact the NFT market as currently, mostly crypto users are potential buyers of NFTs who spend mostly cryptos to buy NFTs.

Commenting on the change, Giottus CEO Vikram Subburaj told Inc42 that while nearly 20% of its customers use Apple devices, there would be no impact on the crypto platform as it does not use Apple’s payment systems.

“The revised guidelines may certainly impact NFT marketplaces. Giottus is yet to launch an NFT marketplace,” he added.

The Impact On Indian Crypto Ecosystem Is Minimal, Claim Founders

The new guidelines are expected to have a limited impact on Indian crypto apps compared to global ones as the number of users of Apple devices, and hence its App Store, is very small in the country. “We have 94% Android users and just 6% iPhone users. These guidelines don’t affect us as we are an exchange ourselves,” Unocoin CEO and cofounder Sathvik Vishwanath said.

It’s worth noting that the guidelines state that apps of crypto exchanges may facilitate transactions on an approved exchange, provided they are offered only in countries or regions where the app has appropriate licensing and permissions to provide a cryptocurrency exchange.

Mridul Gupta, COO at CoinDCX also said that the changes in the guidelines would have no material impact on any apps of CoinDCX as only the top 200+ crypto coins are available for purchase or sale on them.

Additionally, CoinDCX has always prioritised investor interests and thus does not provide preferential treatment for users based on their crypto asset holdings or any other parameter, Gupta added.

India is currently believed to have over 25 Mn users. Considering the fact that India has approximately 95.8% Android phone users and 3% Apple phone users, the change in guidelines may impact approximately 750K users.

Guidelines Go Against Decentralisation

While most Indian founders believe that the updated guidelines would have little impact, they said that the move is against the idea of decentralisation.

Web 3.0 and cryptocurrencies are based on the fundamental idea of decentralised finance and distributed ledger. “Apple’s guidelines, especially ones that specifically mandate people to use in-app services, are restrictive and go against the idea of decentralisation,” said Subburaj.

Similarly, Sharat Chandra, cofounder of India Blockchain Forum, said that Apple’s new guidelines are inhibitive and prevent apps from acting as wallets where assets can potentially unlock utility. These guidelines are regressive and would stifle the development of the Web3 ecosystem, he said.

“Apple might be on its way to exploring a full-fledged Web3 wallet. The smartphone is uniquely positioned to drive the adoption of its native wallet and claim dominance in the space. Apple’s existing wallet already has a payment abstraction and Hardware Security Module encryption through FaceID. It can be easily extended to Web3 key pairs,” Chandra added.