Revolutionizing Crypto on iOS? EU Law May Force Apple to Open Up App Store to Third-Party Crypto Apps

Are you a crypto enthusiast with an iPhone? Get ready for a potential game-changer! Imagine a world where you can download your favorite crypto wallets, NFT marketplaces, and DeFi apps directly onto your iPhone without the hefty 30% Apple tax and stringent restrictions. Sounds like a dream? Well, it might just become reality, thanks to groundbreaking legislation brewing in the European Union.

What’s Happening? Apple’s App Store Walls May Crumble in Europe

For years, Apple’s App Store has been the undisputed gatekeeper of the iOS ecosystem. Want an app on your iPhone? You pretty much had to go through Apple’s store, playing by their rules and commission rates. But, the winds of change are blowing from Europe, and they could reshape the landscape for app developers, especially those in the crypto and NFT space.

New EU legislation, known as the Digital Markets Act (DMA), is set to challenge the dominance of tech giants like Apple. The core idea? To create a fairer digital marketplace by preventing anti-competitive practices. And one of the biggest potential shifts? Apple might be compelled to allow alternative app stores on its devices within the EU. Let’s unpack what this means for the crypto world.

The 30% Apple Tax: A Thorn in the Side of Crypto Apps

Currently, Apple’s App Store policies are quite restrictive when it comes to crypto and NFTs. Here’s the crux of the problem:

• 30% Commission: Apple takes a 30% cut on in-app purchases. For crypto apps, this means if you’re buying an NFT or using in-app features, Apple wants a significant slice.
• No Crypto Payments: Apps are generally not allowed to accept cryptocurrency payments directly. This forces developers to use Apple’s in-app purchase system, again, triggering the 30% fee.
• Restrictions on NFT Functionality: Apple’s interpretation of its rules has led to situations where even basic NFT functionalities within apps are being restricted.

These restrictions have been a major headache for crypto app developers. The 30% fee is often unsustainable for crypto transactions, especially considering gas fees and the nature of blockchain interactions. It’s like asking a traditional bank to take a 30% cut on every transaction – it simply doesn’t work!

Coinbase’s Clash with Apple: A Real-World Example

The tension between Apple’s policies and crypto reality isn’t just theoretical. Look at what happened to Coinbase, a leading cryptocurrency exchange. In December, Apple blocked an update to Coinbase’s self-custody wallet app. Why? Because Apple wanted to take a 30% cut even from “gas costs” associated with NFT transactions.

Coinbase rightly argued that this was “obviously not practicable.” Imagine paying a 30% fee on top of already fluctuating gas fees – it would make NFT transactions prohibitively expensive within the app. Coinbase even stated that Apple wanted them to disable NFT transactions altogether if they couldn’t be routed through Apple’s in-app purchase system. This incident highlights the fundamental conflict between Apple’s walled garden approach and the decentralized nature of crypto.

Enter the EU’s Digital Markets Act: A Potential Relief for Crypto

This is where the EU’s Digital Markets Act comes into play. Scheduled to fully take effect by 2024 (with some provisions starting in May 2023), the DMA aims to regulate “gatekeepers” – large online platforms that control access to digital markets. Apple, undoubtedly, falls into this category.

One of the key provisions of the DMA is forcing gatekeepers to allow “third parties to interoperate with the gatekeeper’s own services.” In simpler terms, this means Apple might have to open up iOS to alternative app stores. This could be a monumental shift.

What are the potential benefits for crypto and NFT apps?

• Bypassing the 30% Fee: If users can download crypto apps from alternative app stores, developers could potentially bypass Apple’s 30% commission on in-app purchases. This could lead to cheaper and more accessible crypto services on iOS.
• Flexibility in Payment Systems: The DMA might also push Apple to allow alternative payment mechanisms within apps, potentially paving the way for direct cryptocurrency payments.
• Innovation and Competition: A more open app ecosystem could foster greater innovation and competition in the crypto app space. Developers would have more freedom to experiment and build unique experiences without being constrained by Apple’s rigid rules.

The Crypto App Store Dream?

The potential impact of the DMA is already sparking excitement in the crypto community. Alex Salnikov, co-founder of the NFT marketplace Rarible, even tweeted about the possibility of a dedicated “crypto app store” emerging, calling it a “wonderful candidate” for venture capital investment.

Apple is preparing to allow alternate app stores on its devices to comply with new EU rules, which could be a big win for crypto and NFT app developers.

I think crypto app store would be a wonderful candidate for a VC-backed company. https://t.co/eQGYFm9r8x

— alex.rarible 💙💛 (@AlexRarible) December 13, 2022

Imagine a curated app store specifically for crypto and NFT applications, free from the constraints of traditional platforms. It could be a hub for innovation, discovery, and community within the crypto ecosystem.

Will Apple Comply and What About Security?

While the signs point towards Apple adapting to the DMA, the exact extent of their compliance remains to be seen. One crucial aspect is whether Apple will also allow developers to use alternative payment systems within apps, even those distributed through the official App Store. If they do, it could open the door for cryptocurrency payments to be integrated more seamlessly into iOS apps.

Apple is also understandably concerned about security. Opening up to third-party app stores raises questions about the vetting process and the potential for malicious apps. To address this, Apple is reportedly considering implementing security measures like Apple authentication for apps outside of its official store. The challenge will be to balance security with the openness mandated by the DMA.

EU Only… For Now?

It’s important to note that these changes, at least initially, are focused on the European Union. The DMA is an EU law, and Apple’s compliance is primarily driven by regulations within Europe. However, the ripple effects could be global.

Similar legislation is being considered in other regions, such as the Open App Markets Act proposed in the United States Congress. If the EU’s DMA proves successful in fostering a more competitive and innovative app market, it could set a precedent for regulations worldwide.

Key Takeaways for Crypto Enthusiasts and Developers:

• Potential Game Changer: The EU’s Digital Markets Act could significantly alter the landscape for crypto and NFT apps on iOS in Europe.
• Lower Fees, More Freedom: Alternative app stores could bypass Apple’s 30% fee and offer developers more flexibility in payment systems and app functionality.
• Watch the Timeline: Keep an eye on May 2023 and 2024 as the DMA is implemented and Apple’s response unfolds.
• Global Implications: The EU’s move could inspire similar regulations in other regions, potentially leading to a more open app ecosystem globally.

Conclusion: A More Open Future for Crypto on iOS?

The prospect of Apple opening up its App Store in the EU is a significant development for the crypto world. It represents a potential shift away from walled gardens and towards a more open, competitive, and user-friendly mobile app ecosystem. While challenges and uncertainties remain, the EU’s Digital Markets Act could be the catalyst for a new era of crypto innovation on iOS, empowering developers and giving users more choice and control. The crypto community will be watching closely as these changes unfold, hoping for a future where accessing and using crypto apps on iPhones is as seamless and affordable as it should be.