Coinbase Wallet, the crypto wallet app operated by Coinbase, disabled NFT transfers in its Apple iOS app on Thursday. According to Coinbase, Apple demanded that Coinbase pay a 30% fee on all the gas fees spent by users during crypto transactions.
Of course, there's no way for Coinbase to give Apple 30% of a transaction's gas fee, because neither the sender nor recipient in a transaction receive the gas fee. The gas fee goes to the blockchain's operators.
In October, Apple clarified that NFT transactions would be subject to its 30% App Store fee a week ahead of Instagram's NFT minting feature release. Now it seems like Apple is serious about cracking down on NFTs, and Coinbase is the first victim. Apple blocked Coinbase Wallet's app release until the devs disabled NFT transfers.
Instagram is not subject to Apple's fees for now because Instagram has pledged to pay gas fees on behalf of its users for a couple years.
Apple Will Influence the Future of Crypto
Apple's demand is odd because it's impossible, and there's no way the company is this dumb. I think Apple is trying to get all the income it can from its app store, and for now there isn't enough mainstream interest in crypto to make Apple change its App Store policies.
Naturally, Coinbase is very unhappy with Apple's 30% fee. Coinbase says Apple's demands are “akin to Apple trying to take a cut of fees for every email that gets sent over open Internet protocols.”
To me, it seems like Apple is delaying dealing with crypto while also pushing the NFT market toward a more corporate-friendly future. Think about Dapper Labs' FLOW blockchain, where NBA TopShot operates. I have no idea what gas costs on that blockchain and I doubt TopShot collectors do either.
If NFT collectors are forced to KYC into special marketplaces and use credit cards to buy NFTs, then Apple can more easily extract its 30% fee and no one has to worry about gas. And of course, if NFT gaming ever goes mainstream, Apple will benefit more from a marketplace-driven ecosystem where there are no gas fees.
Wait, Do We Need a Crypto Phone?
If Apple is going to make crypto transactions impossible from apps in its App Store, then there may actually be a use case for a crypto cell phone. Solana was the farthest along in the crypto-centric phone race, with its Saga phone coming in Q1 2023.
But Solana has its own problems: today its TVL is just $302M, which is about $600M less than it was a month ago. Many of Solana's main backers and its DeFi ecosystem's primitive protocols were owned and operated by companies that collapsed along with FTX. It's not clear if Solana will survive long enough to scale out a cell phone for crypto that can compete with the iPhone.