A Crypto Lawyer’s Perspective: Why Nova Wallet Is Not an Exchange and Falls Outside Financial Regulation

Tubrazy Shahid
1 day ago
4 min read

As regulatory scrutiny around digital assets increases globally, it has become essential for wallet developers to clearly distinguish non-custodial software tools from regulated financial services. Misclassification can lead to unnecessary compliance burdens, platform rejections, or delayed approvals—particularly with gatekeepers such as Apple’s App Store.

This article explains, from a legal and technical standpoint, why Nova Wallet does not constitute an exchange, broker, or custodial financial service under applicable regulatory frameworks, including MiCA (EU), FinCEN (US), and FCA (UK).

1. Core Architecture: Non-Custodial by Design

Nova Wallet is a self-custodial cryptocurrency wallet and information platform. At no point does Nova Wallet custody, control, or have access to user funds.

Wallet Services

Wallet functionality is provided via Privy.io
All wallets are self-custodial
Nova Wallet cannot access, freeze, move, or recover user funds
All transactions are executed directly on public blockchains
Users retain exclusive control of their private keys at all times

This architecture places Nova Wallet squarely within the category of software infrastructure, not financial intermediation.

📘 Reference: https://docs.privy.io/basics/get-started/about

2. Swap Functionality: On-Chain, User-Initiated, Non-Custodial

A frequent regulatory misconception is that “swap functionality” equals exchange activity. From a legal standpoint, this is incorrect.

How Swaps Work in Nova Wallet

All swaps are initiated by the user
Transactions are signed by the user’s wallet
Swaps are executed entirely on-chain
Nova Wallet does not:
- Operate an order book
- Act as a counterparty
- Control pricing or execution
- Hold or route user funds

Nova Wallet merely provides a technical interface to decentralized protocols.

3. No Relationship With Centralized Exchanges

Per Apple’s review request, it is important to clarify:

Nova Wallet does not work with, onboard users to, or integrate centralized cryptocurrency exchanges.

Nova Wallet:

Is not a centralized exchange
Is not a decentralized exchange operator
Does not intermediate trades
Does not perform off-chain settlement

All transactions occur directly between the user and blockchain smart contracts.

4. Third-Party Decentralized Protocol Integrations

Nova Wallet integrates with public, non-custodial, decentralized protocols, including but not limited to:

0x Protocol (DEX aggregation)https://0x.org/docs
Uniswap Protocolhttps://docs.uniswap.org
KyberSwaphttps://docs.kyberswap.com

These protocols:

Are open-source smart contract systems
Do not custody user funds
Do not rely on Nova Wallet as a counterparty
Simply calculate routes or provide liquidity logic

Nova Wallet does not set exchange rates, control liquidity, or influence execution.

5. Jurisdictional Availability & Regulatory Positioning

Nova Wallet does not offer regulated exchange services in any jurisdiction.

No user onboarding to centralized exchanges
No regional licensing triggers
Any jurisdictional restrictions are enforced at the protocol level
Nova Wallet does not bypass or override third-party compliance controls

6. UK FCA Position

Under the UK Financial Conduct Authority framework:

Nova Wallet does not market cryptoassets as investments
It does not qualify as a financial promotion
It does not arrange or execute trades for users

It functions solely as a self-custodial wallet interface, which falls outside the FCA regulatory perimeter.

7. Liquidity Pools (LP) and Staking

Liquidity provision and staking features:

Interact directly with public smart contracts
Require user-initiated deposits
Are fully enforced by smart contract logic
Allow users to withdraw assets independently

Nova Wallet:

Never takes custody
Never controls rewards
Never intervenes in withdrawals

8. Prediction Markets: Informational Only

The “Prediction Markets” feature is read-only.

No bets can be placed through the app
No markets are hosted or operated by Nova Wallet
Data is sourced from third-party providers
Used purely for educational and informational purposes

9. Regulatory Clarification (Plain Language)

From a legal standpoint:

Nova Wallet is not an exchange
Not a broker
Not a custodian
Not a money transmitter
Not a financial intermediary

Users always transact directly with blockchain protocols, using wallets they fully control.

10. Technical Confirmation: API Usage Is Non-Custodial

All third-party APIs used by Nova Wallet:

Generate quotes or unsigned transactions
Require the user to sign and submit
Never introduce a custodial wallet

This applies across:

EVM chains (KyberSwap, 0x)
Solana (Jupiter)
Cross-chain routes (LI.FI)

APIs serve as route calculators, not transaction executors.

Conclusion: Why This Matters

From a legal perspective, non-custodial wallet software must not be conflated with financial services. Nova Wallet operates entirely within the scope of user-controlled, on-chain activity, a distinction recognized across major regulatory regimes.

For platform reviewers, regulators, and app marketplaces, the conclusion is clear:

Nova Wallet is a software interface, not a regulated crypto exchange.

Further clarification or jurisdiction-specific legal opinions can be provided where required.

Disclaimer

The information provided in this article is for general informational purposes only and does not constitute legal or financial advice.

Author & Crypto Consultant

Shahid Jamal Tubrazy (Crypto & Fintech Law Consultant)

Shahid Jamal Tubrazy, a certified top expert in Crypto Law from Duke University, is a leading authority in the cryptocurrency and blockchain space. As a seasoned Fintech lawyer, he offers a full spectrum of services, including licensing, legal guidance for ICOs, STOs, DeFi, and DAOs, as well as specialized expertise in crypto mediation, negotiation, and mergers and acquisitions. With a proven track record and published works on Blockchain Regulation and Cryptocurrency Laws, Shahid provides unparalleled insights into the complexities of the fintech world, ensuring compliance and strategic success. 🌐💼 #CryptoLaw #Fintech #Blockchain #LicenseServices #CryptoMediator #MergersAndAcquisitions #CryptoCompliance #FrozenAssetsrecovery.