Coinbase says Apple forced it to remove NFT transfers from its iOS wallet

Coinbase has accused Apple of forcing it to remove NFT transfers from its Wallet app on iOS. On Thursday, tweeted it that Apple “blocked our last app release until we disabled the feature” because the iPhone maker wanted the blockchain fees associated with an NFT transfer to go through the in-app purchase system, giving it a 30 percent cut.

According to Coinbase, it is impossible to make it happen for a number of reasons, with an important one being that Apple’s system does not support payment in crypto.

While some NFT marketplaces allow you to purchase the digital tokens using traditional fiat currency such as US dollars, the fees Coinbase is talking about are a completely different matter. On blockchains like Ethereum, which many NFT projects use, any transaction will incur a fee, which goes to pay the people who validate it. The fees are collected in cryptocurrencies, such as ETH. That’s true even if you send someone an NFT for free.

Importantly, no part of the gas fee goes to Coinbase or the person receiving the NFT. The fee also changes from moment to moment based on a variety of factors, such as the price of the cryptocurrency or how many people are trying to get transactions validated. In other words, it’s really not the kind of thing that Apple’s in-app purchase system is set up to handle.

Despite that fact, it is not necessarily a surprise that Apple told Coinbase that it was not allowed to keep the NFT transfer system as it was. In October, the company updated its App Store review policy to specifically address NFTs with this new addition under Section 3.1.1 In-App Purchases:

Apps may use in-app purchases to sell and sell services related to non-fungible tokens (NFTs), such as minting, listing and transfer. Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app. Apps may allow users to browse NFT collections owned by others, provided that the Apps do not include buttons, external links, or other calls to action that direct customers to purchase mechanisms other than in-app purchases.

The last part of the highlight section is pretty black and white, but it’s still a little surprising that Apple would claim a cut in gas taxes. Before Coinbase’s tweet thread, I would have guessed that Apple would only require the in-app purchase system to be used in a market situation where people could buy or sell NFTs.

The interpretation that Apple appears to have used here – we contacted it for comment but did not immediately hear back – would affect transfers where you simply move an NFT between your own wallets or send it as a gift to friends and family, to lend a example from Coinbase. (Side note: if a friend or family member sent me an NFT for some reason, I would reject them.)

Coinbase says it hopes this is just an oversight and that it will be able to straighten things out with Apple, although those talks may be a little tense after tweeted the CEO that the App Store is a monopoly (the jury is literally still out on that) and that some of Coinbase’s conversations with Apple have been “absurd.” If this is indeed Apple’s rule, Coinbase knows the score and just needs to find a way around it — currently it’s responding to reviews on the Wallet app and instructing users to download the Coinbase Wallet Chrome extension.