On May 23, Telegram announced its new virtual currency, Telegram Stars, which will take effect with new regulations on June 12 for all telegram Bots and MiniApps. This currency will become the only form of permitted payment for digital products and services on Telegram. Apple will charge a 30% commission and Telegram will only do payouts of the payments on the TON blockchain.

More importantly the swift introduction of Stars clearly shows Telegrams disposition to accept and enforce Apple policies. This could have far reaching implications for web3 projects. Some of the common practices of web3 projects might become out ruled.

Examples of such Apple policies that Telegram might start to enforce include:

No incentives for reviews; must use the provided API for reviews.

No gifting of in-app purchase content to incentivize user actions.

Only the referrer can be rewarded, not the referee.

Incentivizing social network posts is prohibited

Furthermore Apple has specific regulations for crypto apps:

Apps facilitating ICOs and crypto trading must be developed by established financial institutions and comply with relevant laws.

Apps can only facilitate crypto transactions in regions where they have obtained appropriate licensing and permissions.

NFTs can only be sold via in-app purchases, but ownership must not unlock additional features, and external purchase links or calls to action are prohibited.

Apple has a few exceptions for crypto wallets. Crypto wallets are exempt from in-app purchase regulations when it comes to exchanging crypto and connecting to dApps for transactions. However, embedding a wallet into a web2 game that unlocks features or issues tokens will be subject to increased regulations.

Web3 projects active on Telegram, should review and potentially adapt their models to align with the upcoming changes.

Official Telegram Stars Announcement

Introducing Payments for Digital Goods and Services

With the upcoming Telegram update, your bots and mini apps will be able to sell digital goods and services.

To allow for this change in compliance with third-party store terms, we are rolling out a new in-app currency, Telegram Stars. Users will soon be able to acquire Stars from Telegram using standard Apple and Google in-app purchases and then use them to buy digital goods and services from you.

All payments for digital goods and services have to be carried out exclusively in Telegram Stars. If digital goods and services can be purchased for your bot or mini app on other platforms, like your external website, the same goods and services must also be available for purchase with Telegram Stars, in compliance with Apple Review Guideline 3.1.3(b).

To accept payments for digital goods and services, starting with Bot API 7.4, you can use the sendInvoice or createInvoiceLink methods with the currency field set to "XTR" and the provider_token field left empty. To refund payments, you can use the refundStarPayment method.

💎 Developers will be able to withdraw Telegram Stars using the TON blockchain.

⚠️ Payments for physical goods and services are unaffected by this change and can continue operating as usual. […]

FAQs on Telegram Stars

This FAQ is based on the information currently available from Telegram announcements and Apple App Review Guidelines. Note that details may change as more information becomes available.

Sources: Apple App Review Guidelines, Telegram announcement, communications with bot owners (initial and updated).

Disclaimer: Telegram seems to be aligning with Apple's IAP (In-App Purchase) rules for the App Store. However, Telegram has not yet published its own guidelines.

1. What are "digital goods and services" according to Telegram?

Apple considers the following as digital goods and services:

Consumables: Items that can be used up within the app, like game boosts, lives, digital currency (Stars, crystals, virtual account top-ups, etc.).

Non-consumables: Items that do not disappear after use, like account upgrades or unlocking features.

Auto-renewable subscriptions: Services that renew automatically, such as SaaS (e.g., most moderator bots).

Non-renewable subscriptions: Fixed-term services, often called subscriptions, like annual service access or season passes.

All paid content: This includes paid sticker packs, videos, etc.

Items not considered digital goods and services:

P2P Payments: Payments between private individuals.

Personal Donations: Voluntary contributions to individuals.

Physical goods and services: Offline products and services.

Apple strictly enforces these guidelines and prohibits attempts to circumvent them (e.g., selling physical goods with digital content).

2. Do Apple Guidelines apply to desktop, Android, and web users?

It's currently unknown. However, purchasing Stars through Google Play, Fragment.com and Premium bot is already included in new methods. Apple moderators are likely to enforce these rules, focusing on Apple devices. It is unclear if Telegram will enforce these guidelines universally or specifically for Apple devices. Telegram has not provided its own guidelines yet.

3. Can I use my own website and offer other payment methods there?

Yes. You can use your website to offer different payment methods. However, the purchase of Stars still needs to be an option. The specifics of how this should be implemented are not yet detailed, so there might be some flexibility.

4. Can I discourage the use of Stars by setting higher prices?

Yes, you can set arbitrary pricing. There is no strict prohibition against this. You can set a higher price for payments in Stars if you wish.

Keep in mind that this is not explicitly forbidden, but Apple may interpret these rules arbitrarily and decide that you are trying to circumvent the IAP rules.

Legally, they may be right. On the other hand, they won't be able to check all bots and miniapps.

5. How will the withdrawal of Stars be handled?

Details are currently unclear. It is likely that Stars will be converted to TON or another token on the TON network.

6. Is it legal to receive TON from Telegram?

This depends on the jurisdiction:

Russia: Selling for cryptocurrency is prohibited. However, withdrawing TON is not the same as selling for cryptocurrency since Stars are not considered cryptocurrency. Problems may arise when converting to fiat currency.

US and UK: Payments in internal currency (scrip) are generally not allowed.

Cryptocurrency Income: Legalizing such income is theoretically possible but complex. Tax authorities and accountants often view this unfavorably.

The main issue for many will be the availability of transaction details, which are necessary for verifying the source of income. This could be problematic in the EU, US, and other jurisdictions with stringent anti-money laundering regulations.

Legalizing through exchanges is an option for companies, but requires thorough KYC processes and may not accept TON (e.g., Coinbase, Kraken). Verifying the source of income might be difficult if Telegram does not provide sufficient details.

7. Refunds

https://core.telegram.org/bots/api#refundstarpayment

Most likely the refunds will be on the bot's side in case to return the stars to the user, but if the user requests a refund from Apple or Google, most likely the stars will be forcibly withdrawn from the developer's account. Most likely, due to the need to provide a “reserve” for such refunds, the withdrawal will be with some periodicity and from a certain amount, possibly with an irreducible balance.

Telegram's Sparks: Walking the Fine Red Line

Personal opinion by @

Introduction Spark is a virtual currency that will be the only accepted form of payment for sellers of digital goods and services in Telegram. Recently, Telegram announced its intentions to make an IPO, and it depends on downloads from the app stores of Apple and Google. While the exact reason for the timing is unclear to the public, it's likely due to pressure from Apple and Google. According to Telegram, Spark is introduced to comply with several regulations of the Apple App Store, such as in-app purchasing. However, many speculate that the motivation is simply driven by maximizing revenue as well as increasing the use of the TON chain. End users will have to purchase Sparks through Apple Pay and then use it to pay for digital services and products in Telegram. On the other side, sellers of these goods and services will only be allowed to accept Sparks as a form of payment and not promote any other option to pay.

Compliance with Regulation According to Telegram, the decision to introduce Stars is primarily to comply with Apple’s App Store guidelines 4.7 and 3.1.1. The introduction of Spark comes with a new payment API feature and Telegram regulation concerning their usage as the only permitted form of payments for sellers of digital goods and services on Telegram. If Telegram does not comply with these regulations, it could face limitations or delisting from the Apple App Store.

Emerging Regulations in the EU and USA The EU's Digital Markets Act (DMA) and the USA's Open App Markets Act (OAMA) are the emerging regulations affecting Apple and as a result Telegram. These regulations force vendors like Apple to allow alternative marketplaces and forms of payment on their platforms. This ensures users have a choice, the market stays competitive, and pricing is fair. By enforcing Apple App Store policies, Telegram sides with practices that are considered monopolistic and are likely to change due to recent initiatives by regulators in the US and Europe. These changes might lead to additional adjustments in the future or, in the worst case, further problems with regulators for anti-competitive practices.

Move to Closed Markets The introduction of Spark is seen as a move towards closed markets because it reduces the choice of payment for sellers and customers to a single option provided only by the platform vendor. Closed markets limit competition and choices for sellers, buyers, and platforms, leading to higher prices and reduced innovation. In contrast, open, free markets encourage competition, lower prices, and foster innovation by allowing unrestricted participation and trade.

Balance Between Monopolistic Practices and Free Markets The main monopolistic practices of large tech companies related to their app stores include charging high commission fees (up to 30%) on transactions, enforcing exclusive payment systems, restricting alternative app distribution channels, and prioritizing their own apps over competitors. Further, specifically Telegram, given its failed attempt with crypto in the past, needs to avoid problems with regulators by further closing ties with the TON blockchain, which could again be viewed as problematic by the market and regulators. Telegram is a supporter of decentralized technologies, including blockchains in general and the TON blockchain specifically. However, how Telegram will specifically maintain the balance between monopolistic practices and free market principles is very much unclear. Aligning and complying too much with big tech and contradicting their own core principles could alienate and scare their core user base, leading to a less dynamic, less attractive market, and ultimately no differentiation. On the other hand, not enforcing could lead to being banned from the Apple and Google App Stores, as well as limiting the company’s options for an IPO.

Counterarguments The main arguments in favor of Spark and closed markets include the ease of use for end users, which will increase conversion rates and as a result revenue for sellers, leading to a more active ecosystem. Additionally, closed markets reduce regulatory risk, the ability to enforce security rules, and maximize revenue. Proponents justify the move towards Spark and closed markets by stating that it is required to avoid partial or complete shutdown by Apple and Google, and it makes payment easier for end users. However, the strongest arguments against the introduction of Spark are that it limits the choice of end users, forces the use of the TON blockchain, introduces a fast change with a lack of transparency, and potentially damages the Telegram brand. Telegram argues they have no choice but to comply.

Conclusion Not complying with regulations could lead to a full or partial shutdown. Complying with regulations from big tech means working against a trend in regulation in Europe and the US where Apple was already fined Apple €1.8 billion for preventing music streaming app developers from informing iOS users about alternative and cheaper subscription services available outside the app. Adding today regulations that further reduce choice for consumers is not only backwards but more importantly could cost Telegram its differentiation and erode users trust. Telegram should remember that trust takes years to build, seconds to break, and forever to repair. Instead Telegram should try act in accordance with US and European regulators in this matter and use it in defense against big tech regulation enforcement. Telegram has to maximize choice for sellers and buyers whenever possible, focusing on allowing crypto as a payment option. Telegram should make sure—especially given its own challenges with regulators—to provide sellers and buyers with a choice of blockchain technologies not limited to TON.

Telegram has likely no choice but to change its policies and implement a solution like Sparks that at the very least makes payment in Telegram much easier. However, at the same time, Telegram should make sure it (a) supports the freedom for payment in crypto wherever possible and (b) choices of tokens and blockchain not limited to TON.

Outline for the Opinion above

IntroductionWhat is Spark, Telegram's virtual currency? Spark is a virtual currency that will be the only accepted form of payment for sellers of digital goods and services in Telegram.

Why is Telegram introducing Spark at this time? Recently announced its intentions to make an IPO and it depends on downloads from the app stores of Apple and Google. While the exact reason of the timing is unclear to the public its likely due from pressure of Apple and Google.

What are the main objectives of introducing Spark? According to Telegram Spark is introduced to comply with several regulations of the Apple App Store such as in-app purchasing. However, many speculate that the motivation is simply driven by maximizing revenue as well as increase the use of the TON chain.

How do data regulations impact Telegram's operations and necessitate Spark? End users will have to purchase Sparks through Apple Pay and then use it to pay for digital service and products in Telegram. On the other side sellers of these goods and services will only be allow to accept sparks as form of payment and not promote any other option to pay.

Compliance with RegulationWhat specific data regulations are influencing Telegram’s decision? According to Telegram the decision to introduce Stars in primarily to comply with Apple’s App Store guidelines 4.7 and 3.1.1.

How does Spark help Telegram comply with these regulations? The introduction of Spark comes with a new payment API feature and Telegram regulation concerning their usage as the only permitted form of payments for sellers of digital goods and services on Telegram,

What are the potential consequences for Telegram if it does not comply with these regulations? Telegram could face limitation or delisting from the Apple Apps Store.

Emerging Regulations in the EU and USAWhat are the emerging regulations in the EU and USA that affect Telegram and Apple? The EU's Digital Markets Act (DMA) as well as the USAs Open App Markets Act (OAMA).

How might these regulations impact Telegram and its users? An important aspect of these regulation is that they force vendors like apple to allow alternative marketplaces and forms of payment on their platform. It makes sure users have a choice, the market stays competitive and pricing is fair.

What are the challenges Telegram faces in navigating these regulations? By enforcing Apple Appstore policies Telegram sides with practices that are considered monopolistic as a result likely to change due to recent initiatives of regulators in the US and Europe. They might to lead to additional changes in thee future or worst case further problems with regulators for anti-competitive practices.

Move to Closed MarketsWhy is the introduction of Spark seen as a move towards closed markets? It reduces choice of payment for sellers and customers to a single option provided only by the platform vendor.

What are the implications of closed markets for Telegram and its users? Closed markets limit competition and choices for sellers, buyers, and platforms, leading to higher prices and reduced innovation.

How do closed markets contrast with open, free markets? Open, free markets encourage competition, lower prices, and foster innovation by allowing unrestricted participation and trade.

Balance Between Monopolistic Practices and Free MarketsWhat are the monopolistic practices of large tech companies that Telegram needs to avoid? The main monopolistic practices of large tech companies related to their app stores include charging high commission fees (up to 30%) on transactions, enforcing exclusive payment systems, restricting alternative app distribution channels, and prioritizing their own apps over competitors. Further, specifically Telegram given its failed attempt with crypto in the past needs to avoid problems with regulators by further closing ties with TON blockchain that could be viewed again as problematic by the market and regulators.

How does Telegram plan to balance its operations between monopolistic practices and free market principles? Telegram is a supporter or decentralized technologies including blockchains in general and the TON blockchain specifically. How Telegram will specifically maintain the balance is very much unclear.

What are the potential risks and benefits of walking this "fine red line"? One sone side aligning and complying to much with big tech and contradicting there own core principles could alienate and scare their core user base leading to a less dynamic, less attractive market and ultimately no differentiation. On the other side not enforcing could lead to being banned from Apple and Google App Store as well as limiting the companies option for a IPO.

CounterargumentsWhat are the main arguments in favor of Spark and closed markets?

ease of use for end users will increase transaction amount and revenue for sellers leading top a more active ecosystem

closed markets reduce regulatory risk, ability to enforce security rules and maximize revenue

How do proponents justify the move towards Spark and closed markets?

it is required to avoid partial or complete shut down by Apple and Google

making payment easier for end user

What are the strongest arguments against the introduction of Spark?

limiting choice of end users

forcing use of TON blockchain

a fast introduction with lack of transparency

damaging Telegram brand

How can these arguments be refuted or addressed?

Telegram chooses they have no choice but to comply

ConclusionSummarize the main reasons why Spark is necessary for Telegram’s compliance with regulations. Not complying with regulations could lead to full or partial shut down.

Recap the challenges posed by emerging regulations in the EU and USA. Complying with regulations from big tech means working against a trend in regulation of the biggest economies.

Discuss the potential long-term outcomes for Telegram if it continues on this path. Adding regulations that further reduce choice could make Telegram loose its differentiation to its biggest competitors like Meta, erode trust it its core differentiators and ultimately destroy the brand.

What steps should Telegram take to successfully navigate between monopolistic practices and free market regulations? Telegram should act in accordance with US and European regulators in this matter and use it in defense against big tech regulation enforcement. Telegram should maximize choice for seller and buyers whenever possible focusing on allowing crypto as payment option. Telegram should make sure - specially given its own challenges with regulators - to provide sellers and buyers with a choice of blockchain technologies not limited to TON.

End with a strong closing thought or call to action. What should readers take away from this discussion? Telegram has likely no choice but to change its policies and implement a solution like Sparks that at the very least makes payment in Telegram much easier. However, in the same time Telegram should make sure it (a) supports the freedom for payment in crypto wherever possible and (b) choices of tokens and blockchain not limited to TON.