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

Illustration by Alex Castro / The Verge

Coinbase has accused Apple of forcing it to remove NFT transfers from its Wallet app on iOS. On Thursday, it tweeted 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 its in-app purchase system, giving it a 30 percent cut.

According to Coinbase, it’s impossible to make that happen for a variety of reasons, with one important one being that Apple’s system doesn’t support paying in crypto.

While some NFT marketplaces let you purchase the digital tokens using traditional fiat currency like the US dollar, the fees Coinbase is talking about are a different matter entirely. 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, like ETH. That’s true even if you’re sending 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, like the price of the cryptocurrency or how many people are trying to get transactions validated. In other words, it’s really not the sort of thing that Apple’s in-app purchase system is even set up to handle.

Despite that fact, it’s not necessarily a surprise that Apple told Coinbase that it wasn’t allowed to keep its NFT transfer system as it was. In October, the company updated its App Store review guidelines to specifically address NFTs with this new addition under section 3.1.1 In-App Purchase:

Apps may use in-app purchase to sell and sell services related to non-fungible tokens (NFTs), such as minting, listing, and transferring. 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 may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.

That last part of the bolded section is pretty black and white, but it’s still a bit surprising that Apple would demand a cut of gas fees. Before Coinbase’s tweet thread, I would’ve guessed that Apple would only demand its in-app purchase system be used in a marketplace situation where people could buy or sell NFTs.

The interpretation that Apple appears to have applied here — we contacted it for comment but didn’t immediately hear back — would affect transfers where you’re just moving an NFT between your own wallets or sending it as a gift to friends and family, to borrow an example from Coinbase. (Side note: if a friend or family member sent me an NFT for any reason, I would disown them.)

Coinbase says that it hopes this is all just an oversight and that it’ll be able to straighten things out with Apple, though those conversations might be a bit tense after its CEO tweeted 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 really is Apple’s rule, though, Coinbase knows the score and will just have to find some way around it — at the moment, it’s replying to reviews on its Wallet app and instructing users to download the Coinbase Wallet Chrome extension.