The digital assets regulatory policy tracker provides a detailed account of the different regulatory approaches to digital assets – particularly cryptocurrencies and stablecoins – across different jurisdictions.
With breakdowns across 24 countries and significant regional coverage, 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, tax treatments and advertising restrictions.
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 status and regulatory approach, highlighting the growing incidence of tailored cryptoassets frameworks, particularly regarding stablecoins. More detail is found within the country directory. Select country tabs to access official sources and information on regulatory developments.
The digital assets regulatory tracker was launched alongside the DMI’s digital assets report. To access a copy of the report, click here.
Bittrex Global addresses the biggest regulatory issues and questions surrounding digital assets in the EU. Click here view our discussion and learn more at global.bittrex.com.
The Digital Asset Regulatory Tracker is updated on a quarterly basis. Latest update: January 26th, 2023.
Interactive map

Collapse highlighted relative strengths of different regulators
Lewis McLellan, 3 February 2023
Are the threats dire enough to warrant drastic regulatory action?
Phillip Middleton, 2 February 2023
FTX collapse increases pressure on authorities to act
Howell Jackson and Timothy Massad, 15 December 2022
Symposium Wed 10 May 2023 London
The annual Digital Monetary Institute symposium in 2022 brought together central bank governors and speakers, including the US Treasury, Financial Stability Board…
Country directory
View details of regulatory developments and access official sources by clicking on the country cards below:
?? Australia
Applying existing securities law
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 categorisation as either financial or consumer product. Financial products are regulated by ASIC under the corporations act, and securities and investment commission act. Regulation focuses on consumer protection, including disclosure requirements for virtual asset service providers, as well as prohibitions on market manipulation and unsolicited product 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 AML legislation, exchanges are required to collect KYC information and monitor suspicious transactions greater than £10,000. Use of digital assets determines their treatment by the ATO. Specific tax provisions have not yet been implemented, though cryptoassets are usually subject to capital gains tax where not categorised as personal use assets.
The government set out its long-term strategy for the Australian payments system in a 2021 white paper, with a new licensing regime for VASPs has been prioritised as part of plans to introduce a more comprehensive regulatory regime. Consultation by the Treasury on licensing rules for secondary service providers has proposed prudential and custodial obligations to support investor confidence. Further consultation on classifying cryptoassets, informed with assistance of a token mapping exercise, is due to be published in early 2023, whilst APRA has set out their intent to consult on prudential treatment of bank exposures to cryptoassets.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
The Council of Financial Regulators has discussed incorporating stablecoins into the proposed regulatory framework for stored-value facilities as part of broader reforms to the payments regulatory framework. Consultation on these prudential requirements is scheduled for 2023.
?? Brazil
Tailored law in progress
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
Regulators Banco Central do Brasil, Comissão de Valores Mobiliários
The long-awaited framework for the regulation of virtual asset service providers has entered the latter stages of the legislative process having been approved in April 2022. Taking inspiration from Japanese legislation, the legislation seeks 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 VASPs were passed into law in December 2022, granting the central bank responsibility for registration and supervision, and strengthening penalties against fraud. The CVM subsequently issued a resolution allowing investment funds to consider eligible cryptoassets as financial assets. Managers had been recommended previously to follow due diligence procedures, backtracking on initial guidance discouraging 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 Canadian securities regulation where digital assets satisfy specific criteria, requiring exchanges to be registered and regulated by securities regulators. The CSA has published guidance on the application of regulation to virtual asset service providers, who are required to report large virtual currency transactions to FINTRAC under anti-money laundering laws.
Amid the upheaval in cryptoassets markets in late 2022, the CSA announced that it was tightening its supervision of VASPs, including expectations that customer assets be segregated with an appropriate custodian.
OFSI has issued interim guidance for financial institutions on the prudential treatment of their cryptoassets exposures.
The Government has pledged to conduct a legislative review of the financial sector, with a focus on digital currencies.
Cryptocurrency mining is legal in Canada, with tax implications depending on its status as personal or business activity.
Cryptoassests are ineligible for deposit insurance under the CDIC act.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
There is no formal regulatory distinction between stablecoins and other virtual assets, and no authority has been granted jurisdiction over their supervision. Many stablecoins constitute securities and are subject to regulatory treatment as with wider cryptoassets.
The Bank of Canada has stated that it is working with domestic regulators and international partners to promote regulatory alignment on stablecoins. OFSI plans to consult and implement risk management expectations for digital currencies, including stablecoins, in 2023.
?? 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 regulation in accordance with anti-money laundering legislation (5AMLD), which requires providers of exchange services between crypto exchanges and wallet providers are registered with national financial intelligence units and the relevant authorities at the domestic level. The directive came into force in 2018 and had a January 2020 implementation date. France 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.
Due to the energy intensity and sustainability implications of crypto mining, the European Parliament is discussing legislation to include crypto-asset mining activities within the EU taxonomy for sustainable activities by 2025. It is anticipated that legislative proposals will seek to ban the more carbon intensive ‘proof of work’ mining.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
The first comprehensive EU regulatory framework on digital assets, Markets in Crypto Assets (MiCA), was agreed upon in 2022 and will come into force in 2024. MiCA mandates licensing and prudential requirements, including the regulation of reserve assets, on issuers of asset-referenced tokens or stablecoins.
?? Germany
Tailored legislation
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 European Union regulation, in accordance with anti-money laundering legislation (5AMLD), which requires providers of exchange services between crypto exchanges and wallet providers are registered with national financial intelligence units and the relevant authorities at the domestic level. The directive came into force in 2018 and had a January 2020 implementation date. Germany has implemented the 5AMLD.
Due to the energy intensity and sustainability implications of crypto mining, the European Parliament is discussing legislation to include crypto-asset mining activities within the EU taxonomy for sustainable activities by 2025. It is anticipated that legislative proposals will seek to ban the more carbon intensive ‘proof of work’ mining.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
The first comprehensive EU regulatory framework on digital assets, Markets in Crypto Assets (MiCA), was agreed upon in 2022 and will come into force in 2024. MiCA mandates licensing and prudential requirements, including the regulation of reserve assets, on issuers of asset-referenced tokens or stablecoins.
?? Hong Kong
Tailored legislation
Custody and exchange Legal
Cryptocurrency mining Legal
Derivatives products Legal
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. As the market regulator, the SFC determines the regulatory status of cryptocurrencies on a case-by-case basis and is responsible for overseeing intermediaries engaging in their sale or trade. Some products, including certain security tokens, are considered complex products under SFC rules, restricting their access by retail investors. Registered entities, including crypto exchanges, are required to comply with anti-money laundering and counter-terrorist laws.
Following amendments to the ordinance, authorities turned their efforts towards establishing a comprehensive regulatory framework for digital assets in October 2022, including mandatory licensing rules for service providers. As part of these plans, the SFC has hinted that it could lower its guard to retail investors, with a public consultation due to be launched on granting them access to virtual products from licensed providers. This may include access to digital asset-linked ETFs, for which the regulator simultaneously set out its expectations for their authorisation.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Following the release of a discussion paper in January 2022, the HKMA is currently in the process of exploring the regulation of payment-related stablecoins. Asset-backed stablecoins are the focus of regulators attention, given the perception that these have capacity to develop as a means of payment, though algorithmic stablecoins have not yet been discounted from any potential regulatory framework. Next steps are set to be announced following the outcome of this consultation, with a framework for stablecoin regulation expected by 2023/24.
?? 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 currently 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.
The RBI advises that entities which engage in cryptocurrency services comply with AML/CFT obligations. 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 due to the risks they pose to the stability of the rupee. 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. In practice, 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 regulation in accordance with anti-money laundering legislation (5AMLD), which requires providers of exchange services between crypto exchanges and wallet providers are registered with national financial intelligence units and the relevant authorities at the domestic level. The directive came into force in 2018 and had a January 2020 implementation date. Italy has implemented the 5AMLD.
Due to the energy intensity and sustainability implications of crypto mining, the European Parliament is discussing legislation to include crypto-asset mining activities within the EU taxonomy for sustainable activities by 2025. It is anticipated that legislative proposals will seek to ban the more carbon intensive ‘proof of work’ mining.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
The first comprehensive EU regulatory framework on digital assets, Markets in Crypto Assets (MiCA), was agreed upon in 2022 and will come into force in 2024. MiCA mandates licensing and prudential requirements, including the regulation of reserve assets, on issuers of asset-referenced tokens or stablecoins.
?? 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, 31 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).
Current 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 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 covering developments in cryptoassets regulation. 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 Illegal
Regulators Comisión Nacional del Mercado de Valores/ European Banking Authority, European Securities and Markets Authority
At present, Spain does not have national cryptocurrency regulation. The regulation of digital assets falls under Spain’s general securities and investments laws.
In May of 2022, Comisión Nacional del Mercado de Valores, the financial regulator, prohibited the e-currency platform Binance’s sale of crypto derivatives until the entity was registered and obtained the necessary accreditation to operate within Spain. The case has effectively left the sale of crypto derivatives in regulatory limbo. The outcome of Binance’s registration is likely to set the precedent for the regulation (or prohibition) of crypto futures and derivatives trading in Spain.
In January 2022, Spain’s financial regulator was granted permission to regulate crypto advertising, including social media influencers. The country is the first EU member state to implement a crypto advertisement restriction.
Virtual currencies fall within the scope of European Union regulation, in accordance with anti-money laundering legislation (5AMLD), which requires providers of exchange services between crypto exchanges and wallet providers are registered with national financial intelligence units and the relevant authorities at the domestic level. The directive came into force in 2018 and had a January 2020 implementation date. Spain has partially implemented the 5AMLD.
Due to the energy intensity and sustainability implications of crypto mining, the European Parliament is discussing legislation to include crypto-asset mining activities within the EU taxonomy for sustainable activities by 2025. It is anticipated that legislative proposals will seek to ban the more carbon intensive ‘proof of work’ mining.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Illegal
The first comprehensive EU regulatory framework on digital assets, Markets in Crypto Assets (MiCA), was agreed upon in 2022 and will come into force in 2024. MiCA mandates licensing and prudential requirements, including the regulation of reserve assets, on issuers of asset-referenced tokens or stablecoins.
?? 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
Applying existing securities law
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 brought to the financial services and markets bill, nearing legislative approval, would recognise all cryptoassets as financial instruments under FCA regulation.
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. In January 2022, the government announced its intention to incorporate cryptoassets with existing advertising rules for financial products.
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.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
The impending financial services and markets bill seeks to establish a regime for stablecoin regulation, extending payments legislation and bringing tokens under FCA supervision.
HM Treasury published a response to their stablecoins consultation in April 2022, and proposed bringing future stablecoin regulation under the Bank of England’s supervision. The Bank has evaluated a series of regulatory models against its expectations for stablecoins supplemented by a March publication focusing on financial stability. The nature of the prospective models imply that algorithmic stablecoins are likely to be excluded.
?? 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 regulated exchanges. The Treasury-led Financial Stability Oversight Council acknowledged this regulatory arbitrage and gaps facing virtual markets, such as limited oversight of non-securities in spot markets. Recently tabled legislation would place these spot markets under CFTC supervision.
In March 2022, an executive order urged cooperation among regulators to address the risks facing consumers.
Deposit-backed stablecoins Legal
Algorithmic stablecoins Legal
Unless remunerated, most stablecoins are exempt from SEC securities regulation. The FDIC, Office for the Comptroller of the Currency and Working Group on Financial Markets joint-report on stablecoins, noted that there are no consistent prudential standards governing stablecoin arrangements.
At the federal level, the stablecoin transparency act – which would require monthly reserve asset disclosures by issuers – has been referred to the House Committee on Financial Services.
Virtual assets service providers that host stablecoin wallets generally have to register with the FCEN as money services businesses, requiring compliance with know-your-customer and anti-money laundering laws. Enforcement agencies may apply these requirements to instruments not based in the US if they are offered to US-based persons.
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