The digital assets regulatory policy tracker provides a detailed account of the different regulatory approaches to digital assets – particularly cryptocurrencies and stablecoins – across national jurisdictions.
With breakdowns across 24 countries, the tracker presents details on the regulatory treatment of financial products and services key to the operability of digital assets markets. This includes the legal status of cryptoassets exchanges, derivatives products, and stablecoin designs. Consumer protection and financial stability considerations also feature prominently, including details on the applicability of anti-money laundering legislation, financial promotions restrictions, and prudential requirements for financial institutions.
The country directory documents these provisions in greater detail. Select countries tabs to view more and to access links to more information from regulators and other official sources.
On the interactive map, scroll over countries to view the legal status of crypto products and service providers. Countries have been categorised according to their legislative approach, highlighting the growing incidence of tailored cryptoassets frameworks, particularly regarding stablecoins.
The digital assets regulatory tracker forms part of OMFIF’s research for the Digital Monetary Institute’s digital assets report. To access the latest copy of the report, click here.
The Digital Asset Regulatory Tracker is updated on a quarterly basis. The latest update occurred in October 2023.
Digital Assets 2023
Report | 28 October 2023
Regulators are rebuilding trust in digital assets
OMFIF report finds progress in convergence of digital and traditional financial worlds
Edward Maling, 6 October 2023
PayPal’s stablecoin could shake up payments world
Modernising both traditional payments systems and regulatory frameworks
Timothy Massad, 4 October 2023
Crypto ecosystem must apply anti-corruption rules
'Start designing your regulatory regimes yesterday’
OMFIF editors, 4 September 2023
Advancing CBDCs and a virtual asset regime: Perspectives from Hong Kong
Roundtable | Hong Kong | 30 October 2023
Country directory
View details of regulatory developments and access official sources by clicking on the country cards below:
Australia
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Australian Competition and Consumer Commission, Australian Government, Australian Prudential Regulatory Authority, Australian Securities and Investments Commission, Australian Taxation Office, Australian Transaction Reports and Analysis Centre, Reserve Bank of Australia
Regulatory treatment of cryptoassets is conditional on their categorisation as financial or consumer products. Financial products are regulated by ASIC under the corporations act, and securities and investment commission act. Requirements for virtual asset service providers are geared towards consumer protection, including disclosure requirements and prohibitions on market manipulation and unsolicited offers.
Consumer products are policed by the ACCC under consumer law. Businesses engaged with both are delegated to ASIC under the same laws.
VASPs are required to register with AUSTRAC. Under anti-money laundering legislation, exchanges are required to collect KYC information and monitor suspicious transactions greater than £10,000.
Use of digital assets determines their tax treatment by the ATO. Specific provisions are yet to be implemented, though they are usually subject to capital gains tax where not categorised as personal use assets.
The Treasury concluded its ‘token mapping’ exercise – which attempts to classify cryptoassets and map them against existing regulations – in March 2023. The exercise looks to inform proposals for a licensing and custody framework for VASPs. In an earlier consultation, the Treasury proposed prudential and custodial requirements for secondary service providers as part of these new rules.
A Digital Assets bill with provisions around licensing, prudential requirements, including reserve requirements for stablecoin issuers, and asset segregation was brought before parliament in March 2023, but rejected at the committee stage.
VASPs will be required to obtain an Australian Financial Services License, according to proposals set out by the Treasury's October 2023 consultation paper. The framework looks to leverage existing financial services laws with an emphasis on asset holdings and consumer protection. As well as existing obligations for licensed businesses - including disclosure, reporting and governance requirements - platforms will be subject to additional standards, such as around custody software and listing criteria, with additional obligations for activities involving staking, trading and tokenisation. Further consultations on draft legislation are expected in 2024.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
The CFR has identified developing a framework for ‘payment stablecoins’ as a priority. As part of broader reforms to payments regulation, the CFR is evaluating their incorporation into the proposed regulatory framework for stored-value facilities.
In June 2023, the Treasury launched a consultation into a new licensing framework for payments systems providers, including payment stablecoin issuers under the SVF category. This definition captures stablecoins backed by fiat currencies, with those collateralised by other digital assets, commodities, or algorithmic stablecoins likely to fall under other rules. More detailed consultations covering consumer protection and prudential rules are scheduled for late-2023, with legislation earmarked for the following year.
Simultaneously, the Treasury opened a consultation on proposed changes to the payment systems regulation act, featuring technology-neutral definitions and expanding the capabilities of the RBA under the act.
Brazil
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Banco Central do Brasil, Comissão de Valores Mobiliários
A framework for the regulation of virtual asset service providers first approached its maturity in April 2022. Taking inspiration from Japanese legislation, legislation sought to define digital asset classes to prevent overlaps with existing rules. Greater clarity on token classifications was provided by updated guidance by the CVM in October.
Guidelines for the regulation of virtual assets were passed into law in December 2022, granting the central bank greater oversight of digital assets markets. In accordance with this law, a new decree entered into force in June 2023, gave the BCB powers to supervise and regulate for the provision of digital assets services, as well as the licensing of service providers. The CVM maintains its oversight of some tokens as it continues to fulfil its remit under securities laws. Following the decree, the BCB is expected to announce consultation processes to establish the parameters of Brazil’s regulations.
The CVM has issued a resolution allowing investment funds to consider eligible cryptoassets as financial assets. Managers had been recommended by CVM to follow due diligence procedures, while initial guidance had discouraged direct investment in cryptoassets. In 2017, the central bank initially announced that cryptoassets did not fall under e-money laws, though that foreign exchange rules may be applicable to transactions involving cryptocurrencies.
Virtual asset-linked ETFs have been approved since 2021. Existing anti-money laundering rules have been extended to cryptoasset transactions.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
October 2022 guidance initially classifies stablecoins as asset-backed.
Canada
Applying existing securities law
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Canada Deposit Insurance Corporation, Canadian Securities Administrators, Financial Transactions and Reports Analysis Centre of Canada, Government of Canada, Investment Industry Regulatory Organization of Canada, Office of the Superintendent of Financial Institutions
Crypto trading platforms are subject to securities regulation where digital assets satisfy specific criteria. The CSA has published guidance on the application of regulation to CTPs, who are subject to registration requirements by provincial securities regulators.
Amendments to the proceeds of crime and terrorist financing act mandates FATF Travel Rule compliance for CTPs, as well as transactions monitoring and reporting requirements to FINTRAC.
The CSA announced that it would tighten its supervision of CTPs in late 2022, including expectations that customer assets be segregated with an appropriate custodian. Cryptoassets are ineligible for deposit insurance under the CDIC act.
In July 2023, OFSI opened to consultation updated guidelines for banks’ and insurers’ capital and liquidity treatment of cryptoassets exposures. Adapting guidance from the BCBS, the proposals detail prudential treatments across four categories of cryptoassets. Final guidelines are earmarked for March 2024, to be enforced from 2025.
Cryptocurrency mining is legal in Canada, with tax implications depending on its status as personal or business activity.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
There is no formal regulatory distinction between stablecoins and other virtual assets. Some stablecoins may constitute securities subject to the same regulatory treatment as other cryptoassets.
OFSI commenced initial consultations on the sufficiency of international recommendations on stablecoin risks in April 2023. In October, the CSA set out interim rules for CTPs and issuers regarding fiat-backed stablecoins, such as public disclosures on governance and reserves, and that issuers maintain appropriate reserves with an eligible custodian.
The Bank of Canada has stated that it is working with domestic regulators and international partners to promote regulatory alignment on stablecoins.
China
Tailored legislation [banned]
Custody and exchange Illegal
Cryptocurrency mining Illegal
Derivatives products Illegal
Regulators China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, National Development and Reform Commission, People’s Bank of China
China has implemented an outright ban on cryptocurrencies. Financial institutions have been banned from engaging in transactions involving cryptocurrencies since 2013. The notice from the People’s Bank of China also categorised bitcoin as a virtual commodity – a point that they would reaffirm in 2017, alongside the tightening of time restrictions on cryptoassets.
Initial coin offerings were banned because of the PBoC’s concerns around illicit financial activities and risks to financial stability. Exchanges were also prohibited from engaging in exchange activities – the trading of cryptocurrencies and their conversion into fiat – or providing trading-related services.
These provisions were strengthened again in 2021, while a simultaneous crackdown on new and existing crypto mining operations, officially conducted in the name of emissions reduction, extinguished the remnants of China’s once dominant role in global mining operations. Multiple regulators were involved in the latest expansion of restrictions in September 2021, which saw the growing list of illegal crypto-related activities expand to include services provided to citizens by virtual exchanges registered overseas.
Deposit-backed stablecoins Illegal
Algorithmic stablecoins Illegal
Regulators CBIRC, CSRC, PBoC
El Salvador
Tailored legislation [legalised]
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Banco Central de Reserva de El Salvador, Superintendencia del Sistema Financiero
El Salvador became the first country in the world to accept bitcoin as legal tender in September 2021. Under the bitcoin law, all ‘economic agent[s]’, including businesses and financial institutions, with the technological capability to do so are required to accept bitcoin. The law also allows any tax payments to be made in bitcoin.
The Salvadorean government, under the Bukele administration, has also rolled out its own digital wallet, Chivo, with the objective of fostering financial inclusion and facilitate remittances. The Superintendencia del Sistema Financiero, the country’s financial and insurance regulator, oversees compliance with the bitcoin law. Bitcoin service providers are required to register with the central bank and demonstrate that they are in accordance with anti-money laundering legislation and other financial regulation.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
There is no legislation limiting the issuance or exchange of stablecoins in El Salvador. Along with the introduction of the bitcoin law making bitcoin legal tender, President Nayib Bukele also announced that the country plans to launch a national stablecoin pegged to the dollar.
France
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Autorité de Contrôle Prudentiel et de Résolution, Autorité des marchés financiers, Agence nationale de la sécurité des systèmes d’information, Tracfin / European Banking Authority, European Securities and Markets Authority
Virtual currencies fall within the scope of EU anti-money laundering legislation (5AMLD), which requires providers of exchange services and wallet providers are registered with the relevant domestic authorities. Germany has implemented the 5AMLD.
As of 2020, federal legislation provides a framework for digital asset service providers, crypto exchanges and crypto-based fundraising, including initial coin offerings. In 2018, the financial market regulator published analysis setting out the eligibility of derivatives products under existing definitions.
The EU’s comprehensive Markets in Crypto Assets (MiCA) regulation will enter into force in June 2023, to be applied by 2025. MiCA will require that issuers and VASPs produce disclosures related to governance and environmental impacts, as well as establish rules for protecting consumers and the regulation of marketing materials. VASPs that obtain a license in a member state will also be able to provide services across the EU. Simultaneously, the EU voted to strengthen its AML laws through its transfer of funds regulation, extending the travel rule to cryptoassets transfers.
The European Commission is expected to bring forward proposals for incorporating mining activities into the EU taxonomy by 2025.
The EU will enhance its supervision of bank exposures by 2025 in line with the Basel Committees prudential standards. Banks are currently subject to disclosure requirements relating to their cryptoassets exposures and business activities and, pending the standards, are required to apply a heightened risk weight for certain unbacked cryptoassets in their capital assessments. Proposed legislation on dedicated prudential measures is due to be submitted by July 2023.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
MiCA mandates prudential requirements for issuers of asset-referenced tokens (ART), including qualifying stablecoins. Issuers of ARTs will be subject to rules relating to the segregation of customer funds and reserve requirements, such as monthly disclosures. MiCA’s stablecoin provisions are set to be applied first, by June 2024.
Germany
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Federal Financial Supervisory Authority (BaFin) / European Banking Authority, European Securities and Markets Authority
Germany has developed a specific crypto regulation; the German banking act (KWG) was amended to include cryptocurrencies, classified as ‘units of account’, which are regulated as a new kind of financial instrument. Crypto derivatives are legal and regulated under the KWG. Crypto exchanges, VASPs and custodians must be licensed with BaFin.
Virtual currencies fall within the scope of EU anti-money laundering legislation (5AMLD), which requires providers of exchange services and wallet providers are registered with the relevant domestic authorities. Germany has implemented the 5AMLD.
The EU’s comprehensive Markets in Crypto Assets (MiCA) regulation will enter into force in June 2023, to be applied by 2025. MiCA will require that issuers and VASPs produce disclosures related to governance and environmental impacts, as well as establish rules for protecting consumers and the regulation of marketing materials. VASPs that obtain a license in a member state will also be able to provide services across the EU. Simultaneously, the EU voted to strengthen its AML laws through its transfer of funds regulation, extending the travel rule to cryptoassets transfers.
The European Commission is expected to bring forward proposals for incorporating mining activities into the EU taxonomy by 2025.
The EU will enhance its supervision of bank exposures by 2025 in line with the Basel Committees prudential standards. Banks are currently subject to disclosure requirements relating to their cryptoassets exposures and business activities and, pending the standards, are required to apply a heightened risk weight for certain unbacked cryptoassets in their capital assessments. Proposed legislation on dedicated prudential measures is due to be submitted by July 2023.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
MiCA mandates prudential requirements for issuers of asset-referenced tokens (ART), including qualifying stablecoins. Issuers of ARTs will be subject to rules relating to the segregation of customer funds and reserve requirements, such as monthly disclosures. MiCA’s stablecoin provisions are set to be applied first, by June 2024.
Hong Kong
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Illegal
Regulators Government of Hong Kong, Hong Kong Monetary Authority, Securities and Futures Commission
Cryptocurrencies are classified as virtual commodities, which are unregulated in Hong Kong. Some products, including certain security tokens, are classified complex products under SFC rules, restricting their access by retail investors.
The SFC determines the regulatory status of cryptocurrencies on a case-by-case basis and is responsible for overseeing VASPs providing trading services in Hong Kong. Under recent amendments to Hong Kong’s AML ordinance, individuals responsible for operating or marketing VASPs will be required to obtain a license from the regulator by June 2023.
Following the Government’s October 2022 policy statement, the SFC conducted a consultation into proposed updates to its guidelines for VASPs. Based on the existing regime, the consultation proposes new due diligence criteria relating to token admission and custodianship, including on disclosure and insurance arrangements. It also seeks views on whether and how Hong Kong should allow retail investors greater access via licensed platforms.
The SFC published the conclusion to this consultation shortly before the June launch of its new licensing regime.
Retail investors are able to gain exposure to digital assets indirectly via regulated ETFs. The SFC has authorised three digital asset-linked ETFs since setting out its guidance in 2022. A separate consultation on futures products is expected in the future. Under current rules, VASPs are not allowed to offer or trade in derivatives.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
Authorities are seeking to implement a regulatory regime for payment-related stablecoins. The HKMA published the conclusion to its cryptoassets consultation in January 2023, outlining the key activities and entities that will be subject to its new licensing regime, including requirements relating to issuance, governance, and risk management. The scope of regulation extends to the underlying stabilisation mechanisms and reserve assets of stablecoins, requiring that these be sufficiently safe and liquid so as to safeguard users’ redemption rights at parity. Algorithmic stablecoins will not be accepted under these rules.
The HKMA plans to share more details in the near future, with a view of implementing regulations in 2023/24. Prior to this framework, stablecoins are not eligible for retail trading.
India
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Reserve Bank of India, Securities and Exchanges Board of India, Advertising Standards Board of India
Indian authorities are drafting legislation which, in its current form, would ban the use of cryptocurrencies in India. Regulation has been strict to date: the RBI banned financial institutions from engaging with virtual currencies in 2018, prohibiting domestic crypto exchanges. The ban was reversed following a supreme court ruling in 2020.The legal status of crypto derivatives and futures is under judicial review.
The Cryptocurrency and Regulation of Official Digital Currency Bill was introduced to the Lok Sabha in 2021, seeking to simultaneously establish a framework for a national CBCD, and prohibit, with few exceptions, private cryptocurrencies. Concomitantly, the Securities and Exchange Board of India issued operational guidelines for distributed ledger technology in April 2022.
In April 2023, the Ministry of Finance expanded the scope of India’s AML laws to digital assets trading. Amendments to the the Prevention of Money Laundering Act require that VASPs perform due diligence on customers and monitor suspicious transactions.
The Finance Ministry announced steeper tax measures for cryptoassets in 2022, including a 30% tax on earnings, and additional 1% tax deducted at source for all transactions. Promotions involving digital assets are subject to guidelines issued by ASCI.
In January 2023, the Governor of the RBI called for an outright ban on cryptocurrencies.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
In December 2021, the RBI published a warning against the use of stablecoins on monetary sovereignty grounds. Regulations, including a ban on stablecoins, are currently under consideration.
Italy
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Organismo Agenti e Mediatori, Commissione Nazionale per le Società e la Borsa/ European Banking Authority, European Securities and Markets Authority
There is no official definition of cryptocurrencies in Italian legislation. The Commissione Nazionale per le Società e la Borsa, Italy’s securities regulator, classifies cryptocurrencies as financial products subject to some criteria, such as expectations of return, and regulates them as such. Operational from May 2022, a decree from the ministry of economics and finance established Italy’s register of crypto exchanges at the Organismo degli Agenti e dei Mediatori.
Virtual currencies fall within the scope of EU anti-money laundering legislation (5AMLD), which requires providers of exchange services and wallet providers are registered with the relevant domestic authorities. Italy has implemented the 5AMLD.
The EU’s comprehensive Markets in Crypto Assets (MiCA) regulation will enter into force in June 2023, to be applied by 2025. MiCA will require that issuers and VASPs produce disclosures related to governance and environmental impacts, as well as establish rules for protecting consumers and the regulation of marketing materials. VASPs that obtain a license in a member state will also be able to provide services across the EU. Simultaneously, the EU voted to strengthen its AML laws through its transfer of funds regulation, extending the travel rule to cryptoassets transfers.
The European Commission is expected to bring forward proposals for incorporating mining activities into the EU taxonomy by 2025.
The EU will enhance its supervision of bank exposures by 2025 in line with the Basel Committees prudential standards. Banks are currently subject to disclosure requirements relating to their cryptoassets exposures and business activities and, pending the standards, are required to apply a heightened risk weight for certain unbacked cryptoassets in their capital assessments. Proposed legislation on dedicated prudential measures is due to be submitted by July 2023.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
MiCA mandates prudential requirements for issuers of asset-referenced tokens (ART), including qualifying stablecoins. Issuers of ARTs will be subject to rules relating to the segregation of customer funds and reserve requirements, such as monthly disclosures. MiCA’s stablecoin provisions are set to be applied first, by June 2024.
Japan
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Financial Services Agency, Japan Virtual Currency Exchange Association
Japan has developed a broad regulatory framework underpinned by the FSA priorities of financial stability, anti-money laundering and investor protection. Amendments to the payment services act have imposed registration requirements for exchange service providers, along with mandating prudential measures and extending advertising restrictions. Virtual assets service providers are only permitted to deal with FSA-approved assets, screened by industry-convened regulators such as the JVCEA, and are obliged to store consumer assets in cold wallets. As of 2023, 30 exchanges were registered with local FSA bureaus.
Securities legislation has also been amended, expanding the existing framework to crypto derivatives products. Under the act, issuers of security tokens must satisfy disclosure requirements where a significant number of investors are involved, while intermediaries are subject to additional custodial and information expectations to protect consumers. Although supervisory guidance restricts traditional financial institutions’ involvement in digital asset speculation, trust banks are eligible to provide custodial services.
In line with FATF recommendations, revisions to strengthen AML measures, are due to take effect in mid-2023.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
Japanese authorities have ratified a bespoke regulatory framework for digital-money type stablecoins, scheduled for implementation in June 2023. Stablecoin issuance is limited to banks, fund transfer service providers and trusts, with each subject to redemption requirements. Bank stablecoins are issued as deposits, allowing consumers to benefit from deposit insurance. Issuers are also expected to comply with user protection and AML rules. Under broader requirements, stablecoin intermediaries are obliged to enter risk-sharing arrangements with issuers and meet capital requirements.
Algorithmic stablecoins do not satisfy the criteria for digital-money type stablecoins and receive the same regulatory treatment as conventional tokens. Under advertising rules, it is illegal to present these assets as if redemption at parity is without risk.
Liechtenstein
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Financial Market Authority Liechtenstein
A comprehensive framework for cryptoassets service providers is derived from the Tokens and Trusted Technologies (TVTG) act. Coming into force from 2020, the TVTG provides legal basis for the registration and regulation of ten virtual asset service categories with the FMA.
Since it is separate from financial markets law, service providers registered under the TVTG are not treated as financial intermediaries and are not subject to the equivalent European licensing requirements. In similar vein, registration applies only to Liechtenstein, and does not equate to authorisation in other jurisdictions under EU/EEA financial market laws.
Supervision regarding the requirements of the TVTG is conducted on an ad-hoc basis, in contrast with the AML provisions of the due diligence act (DDA) which applies to both traditional intermediaries and VASPs. Obligations under this anti-money laundering framework includes the collection of know-your-customer data, transactions monitoring, and reporting suspicious transactions. Supervision related to the FATF recommendations, incorporated into the TVTG, are also included under amendments to the DDA. The 4th and 5th EU AMLD regulations have also been passed into law through an extension of the due diligence framework.
The TVTG states that token issuers must report each issuance in advance to the regulator.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Mexico
Applying existing securities law
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Banco de México, Comisión Nacional Bancaria y de Valores, Secretaría de Hacienda y Crédito Público
Joint communication from the three regulatory bodies in 2019 stated that virtual currency does not substitute legal currency.
In addition to provisions on ‘virtual assets’ including cryptocurrencies in the 2018 law to regulate financial technology companies, the comprehensive law regulating financial technology institutions, or fintech law, was enacted in 2021. As outlined in the fintech law, the only financial institutions entitled to operate with virtual assets are banks and fintech institutions defined under the legislation. Banxico has the authority to determine the criteria which virtual assets must fulfil to be used by financial entities.
There are number of regulatory sandboxes in place for the development of various technologies relevant to cryptocurrencies, including DLT and blockchain, which benefit from looser regulation.
Deposit-backed stablecoins Illegal
Algorithmic stablecoins Illegal
A 2021 communication from the Banxico, finance ministry and financial regulatory banned the use of stablecoins.
Nigeria
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Central Bank of Nigeria, Securities and Exchange Commission
Based on a 2020 statement by Nigeria’s Securities and Exchange Commission, crypto assets are distinguished from fiat currency and e-money, and treated as commodities or securities based on their categorisation.
Updated guidance in 2022 from the SEC , the ‘New Rules on Issuance, Offering Platforms and Custody of Digital Assets’, sets out new rules applicable to digital service providers. Financial institutions looking to offer crypto products and services are required to register with the regulator, involving compliance with anti-money laundering standards, obtaining permits and settling various fees.
Exchanges cannot facilitate the trading of any cryptocurrency or digital asset until having received a ‘no objection’ from the SEC. Exchanges are, therefore, effectively required to submit applications for each listed asset.
This stance of the regulator is particularly noted for its contrast to the stark warnings of Central Bank of Nigeria. In 2021, the CBN published a reminder to banks of its 2017 notice forbidding their involvement in cryptocurrency activities.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Digital asset regulation in Nigeria does not differentiate between stablecoins and other types of digital assets.
Russia
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Central Bank of Russia, Ministry of Finance, Rosfinmonitoring
Federal legislation, ‘On Digital Financial Assets’, passed in 2020, legitimised the sale, mining and exchange of cryptocurrencies through a regulatory framework, but determined that they cannot be used as a means of payment. In this sense, cryptocurrencies are regulated as an asset rather than a currency. Penalties for violating the ban are included alongside other policy proposals included in a consultation published by the central bank in January 2022. Prohibiting the exchange and issue of cryptoassets in Russia and bans on financial institutions involvement were also accompanied by suggested penalties.
Shortly thereafter, in February, and at odds with the policy proposals contained in the central bank consultation, the Russian government approved regulations on the circulation of digital currency. Directives outlined in the proposals set out the concepts of a regulatory framework to ‘bring the digital currency industry out of the shadows’, including licensing requirements for exchanges.
Russia’s financial crime and anti-money laundering agency, Rosfinmonitoring, is responsible for monitoring crypto transactions.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
While the framework introduced in 2022 does not differentiate between stablecoins and other cryptocurrencies, the legislation mandates safety nets ‘in terms of liquidity and capital adequacy’, effectively banning the issuance and sale of algorithmic stablecoins.
Saudi Arabia
Tailored legislation [banned]
Custody and exchange Illegal
Cryptocurrency mining Illegal
Derivatives products Illegal
Regulators Saudi Central Bank, Capital Markets Authority
In 2018, the standing committee for awareness on dealing in unauthorised securities activities in the foreign exchange market, a subdivision of the Saudi Arabian Monetary Authority, issued a warning against the risks of virtual currency. Officially, the decree declared all digital assets illegal inside the kingdom; in practice, however, the regulation is opaque, failing to differentiate between ownership, issuance and/or exchange of digital assets and cryptocurrencies, and lacks an outlined enforcement mechanism.
Deposit-backed stablecoins Illegal
Algorithmic stablecoins Illegal
Singapore
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Monetary Authority of Singapore, Inland Revenue Authority of Singapore
MAS has issued guidelines regarding the applicability of existing laws to digital assets. Issues and offers are regulated under the securities and futures act where they qualify as capital markets products, including securities and derivatives. Principal regulation governing service providers focuses on countering financial crime risks. MAS employs rigorous screening to service providers, who are required to be licensed under the payment services act, as well as those operating overseas under the 2022 financial markets and services bill, and are subject to know-your-customer and anti-money laundering provisions.
The collapse of FTX has led to suggestions for introducing basic consumer protections for VASPs licensed in Singapore. Further consultations on regulatory measures for service providers concluded in December 2022.
MAS has said that the ‘trading of [digital payment tokens] is not suitable for the general public’. Advertising guidelines were tightened in January 2022, restricting VASPs from promoting services beyond their company domains.
While long term investments are not subject to capital gains tax, businesses are may be taxed on profits derived from trading. Income tax rules apply where used for remuneration.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
The treatment of stablecoins as digital payments tokens under the payment services act has prompted discussion in the past. After the collapse of the algorithmic stablecoin TerraUSD, MAS restated that it would consult on the ‘merits of a regulatory regime tailored to the specific characteristics and risks of stablecoins, such as regulating the reserve requirements and the stability of the peg’. Consultation on the proposed regulation of stablecoins closed in December 2022.
South Africa
Applying existing securities law
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Financial Sector Conduct Authority, Intergovernmental Fintech Working Group, South African Reserve Bank, South African Revenue Service
In October 2022, the Financial Sector Conduct Authority published its declaration of a crypto asset as a financial product in the government gazette. The amendments to the financial advisory and intermediary services act defines crypto assets as a financial product – broadly as tradable digital representations of value not issued by the Reserve Bank – and requires that VASPs register with the FSCA from June 2023.
Mining operations are not subject to supervision at this legislative stage, given a relatively indirect implications for consumer protection.
Bringing crypto assets under the existing regulatory framework is seen as crucial to risk mitigation in the interim phase, in line with the legislative roadmap set out by the recommendations of the Intergovernmental Fintech Working Group’s 2021 policy position report, as well as addressing some of the concerns identified by the Financial Action Task Force. South Africa faces the risk of being grey-listed unless sufficient progress towards adherence with FATF recommendations is made.
As set out in a 2014 position paper, the South African Reserve Bank does not regulate or supervise crypto assets, and does not consider them legal tender. The South African Revenue Service states that normal income tax rules apply to crypto asset earnings, though provisions for cost adjustments can be made in the cases where capital gains is applicable.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
South Korea
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Illegal
Regulators Bank of Korea, Financial Services Commission, Financial Supervisory Service, Financial Intelligence Unit
Cryptocurrency exchanges in South Korea are primarily overseen by the financial regulator (FSC) and supervisory authority (FSS).
Existing regulation focuses on Korea’s anti-money laundering framework – strengthened following amendments to the reporting and using specified financial transaction information act. VASPs are required to register with the KoFIU, while the FSC more broadly is responsible for the application of the FATF-aligned travel rule.
Financial institutions operating in South Korea are banned from facilitating trades of bitcoin futures. 2021 amendments to the special payments act also effectively banned the trade of privacy coins. The FSC has set out its intention to revise regulations on security tokens, permitting their issuance and circulation under its capital markets frameworks.
The implementation of a 20% tax on capital gains exceeding KRW2.5 million has been delayed until 2025.
Several laws are currently being ratified by the Government. The digital asset basic act – expected to introduce a tailored digital assets framework in 2023 – would impose consumer protections in the form of disclosures, redemption rights and prudential regulations.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Under present frameworks, the FSC does not differentiate between stablecoins and other virtual assets. The Bank of Korea relayed the importance of designing special regulations for stablecoins, including stricter capital requirements and reserve audits for VASPs, whilst avoiding regulatory divergence with existing payment related laws in a December 2022 report. Algorithmic stablecoins do not satisfy the definitions or prudential requirements for stablecoins under the proposals.
Following the collapse of the TerraUSD stablecoin, the creation of a digital assets committee was launched with the objective of developing a draft of non-binding listing guidelines for digital tokens, including stablecoins.
Spain
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Comisión Nacional del Mercado de Valores, Banco de España/ European Banking Authority, European Securities and Markets Authority
At present, the regulation of digital assets falls under Spain’s general securities and investments laws. Virtual currencies fall within the scope of EU anti-money laundering legislation (5AMLD), which requires providers of exchange services and wallet providers are registered with the relevant domestic authorities. Spain has partially implemented the 5AMLD. As of May 2023, 68 VASPs are registered with the BdE under provisions within its local application of the anti-money laundering rules. However, this registration does not hold any supervisory or prudential implications.
In January 2022, Spain became the first EU jurisdiction to grant the financial regulator powers to regulate crypto advertising, including social media influencers. The Banco de España and the CNMV have released a number of joint statements highlighting investment risks posed by cryptoassets, most recently in 2022.
The EU’s comprehensive Markets in Crypto Assets (MiCA) regulation will enter into force in June 2023, to be applied by 2025. MiCA will require that issuers and VASPs produce disclosures related to governance and environmental impacts, as well as establish rules for protecting consumers and the regulation of marketing materials. VASPs that obtain a license in a member state will also be able to provide services across the EU. Simultaneously, the EU voted to strengthen its AML laws through its transfer of funds regulation, extending the travel rule to cryptoassets transfers.
The European Commission is expected to bring forward proposals for incorporating mining activities into the EU taxonomy by 2025.
The EU will enhance its supervision of bank exposures by 2025 in line with the Basel Committees prudential standards. Banks are currently subject to disclosure requirements relating to their cryptoassets exposures and activities and, pending the standards, are required to apply a heightened risk weight for certain unbacked cryptoassets in their capital assessments. Proposed legislation on dedicated prudential measures is due to be submitted by July 2023.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
MiCA mandates prudential requirements for issuers of asset-referenced tokens (ART), including qualifying stablecoins. Issuers of ARTs will be subject to rules relating to the segregation of customer funds and reserve requirements, such as monthly disclosures. MiCA’s stablecoin provisions are set to be applied first, by June 2024.
Switzerland
Applying existing securities law
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators State Secretariat for International Financial Matters, Swiss Financial Market Supervisory Authority
Federal legislation has established a legal framework for trading rights via digital ledgers and adapted securities laws, segregating cryptoassets in the event of bankruptcy. The implementation of such cryptoasset and VASP regulation falls under the jurisdiction of the Swiss Financial Market Supervisory Authority (FINMA) and categorises digital tokens as payment tokens, utility tokens and asset tokens. Asset tokens, as well as utility tokens judged by regulators to serve investment purposes, are categorised as securities. In 2018, FINMA published guidelines relating to the application of legislation to initial coin offerings.
Concerns around anonymity and transactional benefits as a mechanism for evading existing anti-money laundering legislation and the reputational risks associated, has led to an extension of these fiat-based rules to financial institutions dealing with payment tokens, and other cryptoassets.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Stablecoins are not governed by specific regulations, in so far as they are distinct from the broader regulatory framework applied by FINMA to digital asset tokens. Supplementary to ICO guidelines, FINMA published guidelines on stablecoins in 2019. Regulations are consistent with principles applied to wider digital tokens – same risks, same rules – whereby focus is given to the economic purpose and structure of each coin, often with assessment made on merit. Guidance identifies where, conditional on these factors, certain market laws might apply. For example, it is noted that where redemption claims can be levied against the issuer, transactions may be subject to licensing requirements under Banking or Collective Investment Scheme Acts. FINMA states that enforcement measures are ‘probable’ when projects involving dubious stabilization mechanisms are conducted domestically.
Turkey
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Banking Regulation and Supervision Agency, Capital Markets Board, Central Bank of the Republic of Turkey, Financial Crimes Investigation Board
In April 2021, Turkey’s ‘Regulation on the Disuse of Crypto Assets in Payments‘ came into force. The legislation classified cryptocurrency as an asset and banned its use as a payment method.
A May 2021 presidential decree amended the ‘Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism’, requiring crypto firms to comply with AML/CFT obligations in accordance with FATF recommendations. This was accompanied by guidance from the Treasury’s financial crime watchdog, MASAK.
A proposed amendment to the capital market law introduced in December 2021 presents a framework for the custom regulation of cryptocurrencies under the purview the Capital Markets Board.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
There is no legislation limiting the issuance or exchange of stablecoins in Turkey.
United Kingdom
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Illegal
Regulators Bank of England, Financial Conduct Authority, HM Treasury
Regulatory strategy in the UK is organised by members of the cryptoassets taskforce – including the Treasury, Bank of England and FCA – who published the roadmap for regulatory development in 2018.
Cryptoassets are categorised according to their structure. Assets akin to payments tokens fall outside of the FCA’s remit, limiting access to consumer protection mechanisms. Amendments to the financial services and markets bill which, would recognise all cryptoassets as financial instruments under FCA regulation, are expected to enter into its final stages before ascent in June 2023.
Cryptoassets are regulated for anti-money laundering purposes, including financial crime reports and acquisition screening measures. Compliance with updated FATF travel rule standards is expected from September 2023.
Virtual assets service providers are required to register with the FCA. In November 2022, the FCA reported that 85% of requests had either failed to meet the regulators expectations or withdrawn applications.
Citing the vulnerabilities of retail investors, the FCA prohibited the sale of cryptoasset derivatives in 2021. The government has announced its intention to incorporate cryptoassets with financial promotions rules in 2023.
The Law Commission is set to publish its reform recommendations concerning digital assets, including property rights, in 2023. OMFIF hosted a roundtable with the UK Law Commissioner in November 2022 to discuss the consultation. HMRC updated its tax manual for cryptoassets in February 2022.
In February 2023, the Treasury published its consultation on the UK’s future comprehensive cryptoassets regime. To follow the passage of the FS&M bill, the consultation sets out the proposed design features for frameworks on custody, operating an exchange, and issuance and disclosures. The plans also include proposals for a market abuse framework, and regulating lending and borrowing activities.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
HM Treasury proposed bringing future stablecoin regulation under the Bank of England’s supervision following its 2022 stablecoins consultation.
The updated FS&M bill seeks to establish a regulatory framework for stablecoins. This includes extending payment systems regulation to digital assets used in payments, under the Bank of England. The FCA will be given jurisdiction over fiat-backed stablecoins’ issuance and custody. Regulators plan to launch consultations on frameworks this year.
Algorithmic stablecoins would not qualify as a stablecoin under the proposals and are set to be subject to requirements for other unbacked cryptoassets. Previously, the Bank of England has evaluated a series of regulatory models against its expectations for stablecoins.
United States
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Commodities and Futures Trading Commission, Federal Deposit Insurance Corporation, Financial Crimes Enforcement Network, Securities and Exchanges Commission, US Department of the Treasury
The SEC treats cryptocurrencies as securities, requiring most tokens to be registered as securities in accordance with Howey test criteria. The CFTC treats cryptocurrencies as commodities and allows derivatives to be traded on registered exchanges. The Treasury-led Financial Stability Oversight Council acknowledged the uncertainty created by this regulatory arbitrage and gaps facing virtual markets.
There have been a number of attempts to clarify regulatory jurisdictions through targeted legislation. One example – the responsible financial innovation act – would place spot markets under CFTC supervision.
In March 2022, an executive order urged cooperation among regulators to address the risks facing consumers. In March 2023, the SEC warned consumers of the risks’ associated with unlicensed VASPs amid intensifying enforcement actions.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Unless remunerated, most stablecoins are exempt from SEC securities regulation. A Treasury-led report on stablecoins, noted that there are no consistent prudential standards governing stablecoin arrangements.
Efforts to regulate stablecoins stepped up in 2022 with the introduction of a stablecoin transparency act. The text sought to clarify a definition for fiat-backed stablecoins, eligible reserves assets, and mandate issuers to publish audited disclosures on their reserves on a monthly basis.
The House Financial Services Committee built on this in April 2023 in a draft bill. Reserve requirements were tightened to include one-to-one backing, and shorter maturities for eligible securities. The proposals also include a temporary ban on new issuances of non-asset backed stablecoins. Oversight of non-bank issuers would be granted to the Fed.
VASPs that host stablecoin wallets generally have to register with FinCEN as money services businesses under the bank secrecy act, requiring compliance with know-your-customer and anti-money laundering laws. Enforcement agencies may apply these requirements to instruments not based abroad if they are offered to US-based persons.
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