2023

Cryptocurrency
Regulation Guide
 The market capitalization of crypto-assets has grown significantly. As of February 13, 2023 the global cryptocurrency market
capitalization was US$1.05 trillion, according to crypto data provider CoinGecko. Moreover, the market capitalization of all
stablecoins on February 13, 2023 equaled more than $137 billion.

But this growth has come amid large bouts of price volatility. For example, prices spiked in early May 2021 only to fall by 40%
in the same month. Cryptocurrency prices rose once again, peaking in November 2021, only to fall precipitously during 2022.
Bitcoin, for instance, hit more than US$65,000 in November 2021 only to lose around 70% of its value by September 2022.
Current market conditions have become known as a “crypto winter”.

While authorities such as central banks and financial regulators do not want to stunt innovation, the number of high-profile
cases of fraud and money laundering is worrisome. To this end, they have repeatedly warned consumers of the risks
associated with these assets.

The good news is that governments and regulators are making progress in creating legal frameworks that are modern and
accommodative but also prudent. Notably, the Biden administration issued an executive order in March 2022, calling for an
interagency report on the future of money and payment systems, including the conditions that drive broad adoption of digital
assets. And as of February 2023, there are several bills before the U.S. Congress on digital asset regulation. The EU has
developed the Markets in Crypto-assets (MiCA) law, which covers issuers of unbacked crypto-assets and stablecoins as well
as the trading venues and wallets where crypto-assets are held. The law, which will likely come into effect in 2024, could be a
model for jurisdictions throughout the world.

Here is a snapshot of recent developments in key markets.

FATF FSB

EC ESMA

FSMA SR
FCA DNB
IIROC
 GOC BB
CBI
& CSA CSSF
BOC AMF
BaFin
CFTC BF MEF
CNV & BE
SEC Consob
SNB FSA
BMA FINMA PBoC
Banxico DFSA
FSRA
 BI
R SFC
& SEBI
HKMA
MAS
CBN
GC, BR & SFC
CVM

BCDV

ASIC

MFC AUSTRAC

Global Organizations North America Europe Asia-Pacific South America Middle East Africa
C r y pto cu rren cy Regu la tion Guide
Global Organizations
Organization: Financial Action Task Force (FATF)
FATF is an intergovernmental organization that
develops policies to combat money laundering;
however, its policies are not legally binding.
Recent developments: In June 2022, FATF reported
that 11 out of 98 responding jurisdictions have started
enforcing its standards on Combating the Financing
of Terrorism, or CFT, and Anti-Money Laundering,
or AML. It said the “vast majority” of jurisdictions
assessed by the organization’s Global Network
since June 2021 “still require major or moderate
improvement” in AML/CFT compliance in accordance
with the Travel Rule.
Organization: Financial Stability Board (FSB)
Recent developments: Against a backdrop of turmoil
in the crypto markets, in July 2022 the FSB issued
another warning. In a statement, it said: “Crypto-
assets and markets must be subject to effective
regulation and oversight commensurate to the risks
they pose, both at the domestic and international
level.” In October 2022, the FSB published
International Regulation of Crypto-asset Activities: A
proposed framework – questions for consultation. The
FSB invited comment until December 15, 2022, and
they are posted on the FSB’s web site.
Organization: International Organization of Securities
Commissions (IOSCO)
Recent developments: In July 2022, IOSCO published
its Crypto-Asset Roadmap for 2022-2023 that sets
out its regulatory policy agenda and work program for
the sector over the next 12 to 24 months. The IOSCO
Board-level Fintech Taskforce (FTF), established in
March 2022, has been mandated to develop, oversee,
deliver and implement IOSCO’s regulatory agenda for
fintech and crypto-assets. The FTF is engaging with
the FSB and its relevant workstreams to coordinate
on issues relating to financial stability, particularly
where they relate to IOSCO and its members’ capital
market mandates. In October 2022, IOSCO published
measures that members should consider when
determining their policy and enforcement approaches
to retail online offerings and marketing.
North America
Bermuda
Regulator: Bermuda Monetary Authority (BMA)
Policy: Bermuda aims to have best-in-class digital
asset regulation that can serve as a model for other
jurisdictions. Passed in May 2018, the ICO Act
regulates offerings of digital assets including digital
coins and tokens that are issued as ICOs. Bermuda
has addressed crypto custody in depth. The Digital
Asset Business Act 2018 prescribes requirements
relating to safeguarding client assets. Further, the
Digital Asset Code of Practice 2018 prescribes that
a Digital Asset Business (DAB) must ensure that any
assets belonging to clients are kept segregated from
the DAB’s own assets. The Digital Asset Business
Amendment Act 2019 came into effect on October 8,
2019. It amends the existing legislation, expanding the
scope of the licensing regime to include digital assets
derivatives, digital asset benchmark administrators
and digital asset trust service providers.
Recent developments: In January 2022, the BMA
granted BlockFi International Ltd. A Class F Digital
Assets Business License, enabling BlockFi to
centralize its existing products and services for non-
U.S. retail and institutional clients. In June 2022,
Jewel Bank received its full bank and digital asset
business licenses from the BMA, becoming the island
nation’s first digital asset bank. Jewel plans to issue
a USD stablecoin and has plans for other single fiat
currencies. The bank also plans to issue stablecoins
for other banks and non-bank financial institutions
that do not have the same regulatory, technology and
compliance capabilities. In August 2022, CoinZoom
Global was granted a license allowing the exchange
to serve as a trading platform for non-U.S. customers
outside of the U.S. seeking an avenue to trade digital
assets. In November 2022, BlockFi concurrently filed
for bankruptcy in Bermuda and the U.S. due to its
significant exposure to collapsed cryptocurrency
marketplace FTX. Bermuda, like the Bahamas,
now faces a legal test to its crypto regulations. In
December 2022, Reuters reported that Bermuda
insurers are denying or limiting directors and officers
(D&O) coverage, which is used to pay legal costs, to
clients with exposure to FTX.
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Canada
Regulator: Government of Canada and the Office of
the Superintendent of Financial Institutions (OSFI)
Policy: Cryptocurrencies are not legal tender in
Canada, and they are regulated primarily under the
securities laws as part of the securities regulators
mandate to protect the public.
Recent developments: In February 2022, the
government announced that it is broadening
the scope of Canada’s anti-money laundering
and counter-terrorist financing rules to cover
crowdfunding platforms and the payment service
providers they use. These changes cover all forms
of transactions, including digital assets such as
cryptocurrencies. In August 2022, OSFI issued interim
guidance limiting how much exposure financial
institutions may have to cryptocurrencies. The limit
applies to all coins except bitcoin, bitcoin cash,
ether and Litecoin. Similar restrictions apply in other
provinces. In November 2022, Canada’s federal
government announced it is launching a consultation
on cryptocurrencies, stablecoins and central bank
digital currencies (CBDCs).
Regulator: Bank of Canada (BoC)
Policy: The BoC is monitoring developments in
crypto-assets, cryptocurrencies and the underlying
technology, as well as how they could affect core
central bank functions.
Recent developments: In April 2022, central bank
officials said that cryptocurrencies are not a way to
“opt out” of inflation, and they will in no way replace
the Canadian dollar. The statement was made in an
apparent rebuke to Conservative Party of Canada
leadership candidate Pierre Poilievre. A report in April
2022 stated that the BoC is the first G7 country to
turn to quantum computing to simulate scenarios
where cryptocurrency and fiat currency can coexist.
In October 2022, the BoC published key findings from
its 2021 Bitcoin Omnibus Survey.
Regulators: The Canadian Securities Administrators
(CSA), Investment Industry Regulatory Organization
of Canada (IIROC) and Ontario Securities Commission
(OSC)
Policy: In September 2021, the CSA and IIROC
published guidance to help crypto trading platforms
understand and comply with requirements under
securities law and IIROC rules for advertising,
marketing and social media use. As of August
2022, the CSA requires crypto trading platforms
to provide a pre-registration undertaking to their
principal regulator to continue operations while their
application is reviewed. This must include a pledge
that clients’ assets will be held with an appropriate
custodian and segregated from the platform’s
proprietary business. Platforms must agree to the
terms and conditions that address investor protection.
The CSA maintains a list on its web site of crypto
platforms authorized to do business with Canadians.
Recent developments: In March 2022, IIROC issued
an investor alert stating Ontario Invest’s website falsely
claimed the firm was IIROC-regulated. In June 2022,
IIROC warned Canadian investors not to be fooled
by claims made by a crypto asset firm known as
liquidityswap. The company falsely claims on its web
site to be an IIROC-regulated crypto-asset trading
platform. In June 2022, the OSC approved a settlement
agreement with Bybit Fintech and ordered monetary
sanctions and a permanent ban against Mek Global and
Phoenix Fin for failing to comply with Ontario Securities
Law. In August 2022, Bitbuy and Newton announced
they are enforcing a C$30,000 annual “buy limit” for
“restricted coins” for their users based in Ontario in a
move to protect investors. In September 2022, the OSC
filed allegations against Canada-based Cryptobontix
and Bermuda-based Arbitrade for executing a pump-
and-dump scheme. In October 2022, Coinsquare
announced that IIROC approved its dealer registration
and IIROC membership.
Mexico
Regulator: Bank of Mexico (Banxico)
Policy: With a permit, cryptocurrency exchanges
and related storage providers may provide fiat
currency liquidity, guaranteed by the central bank,
to all customers. To obtain a permit, companies
must provide a detailed business plan to Banxico –
including a description of operations, staff roles and
activities, commissions charged per trade and the
procedure for a KYC mandate. Banxico will not provide
liquidity to customers on the same day of opening
exchange accounts to prevent money laundering
and other illicit activities. Additionally, all entities
conducting business must prove the legitimacy of all
customers and corporations involved in each trade.
Recent developments: In February 2022, Coinbase
global announced a pilot program to allow
cryptocurrency recipients in Mexico to cash out
their funds in pesos. Also in February 2022, Mexican
Senator Indira Kempis said she’s developing a
cryptocurrency bill based on El Salvador’s Bitcoin Law
to boost financial inclusion.
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U.S.
Regulator: U.S. Federal Government
Policy: In November 2021, the President’s Working
Group on Financial Markets released a stablecoin
report, which proposes that prudential bank
regulators should oversee stablecoin issuers. In
March 2022, an executive order from the Biden
Administration called for an interagency report on
the future of money and payment systems, including
the conditions that drive broad adoption of digital
assets; the extent to which technological innovation
may influence these outcomes; and the implications
for the U.S. financial system, the modernization of
and changes to payment systems, economic growth,
financial inclusion and national security. In September
2022, the White House released a framework for
responsible development of digital assets.
Recent developments: As of November 2022,
several cryptocurrency bills have been introduced to
Congress covering issues including regulatory clarity
and oversight for the CFTC, stablecoin regulation,
tax clarity and national security issues. In December
2022, Representative Ritchie Torres introduced two
additional House bills to prohibit misuse of customer
funds by cryptocurrency exchanges and require they
disclose proof of reserves to the SEC. Torres also
wrote a letter requesting a Government Accountability
Office (GAO) review of “the SEC’s failure to
protect the investing public from the egregious
mismanagement and malfeasance of FTX.” FTX CEO
Sam Bankman-Fried was arrested in the Bahamas
prior to his scheduled testimony before Congress
in December 2022, but his prepared remarks
were published. As of January 2023, the House
Financial Services Committee is creating the new
Subcommittee on Digital Assets, Financial Technology
and Inclusion. In January 2023, the White House
released The Administration’s Roadmap to Mitigate
Cryptocurrencies’ Risks.
Regulator: U.S Federal Reserve
Policy: In August 2022, the Fed issued a supervisory
letter outlining the steps Board-supervised banks
should take prior to engaging in crypto-asset-related
activities, such as assessing whether such activities
are legally permissible and determining whether any
regulatory filings are required. The letter states that
Board-supervised banking organizations should notify
the Board prior to engaging in crypto-asset-related
activities. It also emphasizes that these organizations
should have adequate systems and controls in
place to conduct crypto-asset-related activities in a
safe and sound manger prior to commencing such
activities.
Recent developments: In January 2023, the Fed
rejected Wyoming-based Custodia Bank’s application
to become a member of the Federal Reserve System.
It stated that Custodia’s proposed business model and
focus on digital assets presented significant safety
and soundness risks. Custodia has sued the Federal
Reserve Bank of Kansas City, arguing that it has
unfairly delayed its application for a master account,
which gives companies access to Fed payment
services.
Regulator: The Securities and Exchange Commission
(SEC)
Policy: The SEC uses the “Howey Test” to determine
whether a virtual currency is a security. A Cornerstone
Research report found that the SEC brought a total
of 30 enforcement actions in 2022, a 50% increase
compared to the 20 actions brought in 2021. Of the
30 enforcement actions in 2022, 24 were litigations
and six were administrative proceedings. The number
of actions increased from 14 in 2021. The SEC also
issued two delinquent filing orders, two follow-on
actions and one stop order pursuant to Section 8(d)
of the Securities Act.
Recent developments: In April 2022, SEC Chairman
Gensler announced several initiatives to expand
investor protections in the crypto market. He said
the agency plans to register and regulate crypto
exchanges and will explore separating out asset
custody to minimize investor risk. He also announced
the SEC will partner with the Commodity Futures
Trading Commission (CFTC) to address platforms
trading crypto-based security tokens and commodity
tokens. The SEC now publishes a list of crypto
assets and cyber enforcement actions, which can
be viewed here. In July 2022, the SEC formally
listed nine cryptocurrencies as securities during an
insider trading case that involves an ex-employee
of the crypto exchange Coinbase. The nine projects
are AMP (AMP), Rally (RLY), DerivaDEX (DDX), XYO
(XYO), Rari Governance Token (RGT), LCX (LCX),
Powerdleger (POWR), DFX Finance (DFX), and
Kromatika (KROM). Coinbase is facing a probe into
whether it improperly allowed Americans to trade
digital assets that should have been registered
as securities. Also in July 2022, Coinbase filed a
petition to the SEC criticizing the current state of
cryptocurrency regulation in the U.S. In August 2022,
the SEC charged 11 individuals in a $300 million
crypto pyramid scheme. In September 2022, the SEC
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announced plans to add an Office of Crypto Assets
and an Office of Industrial Applications and Services
to the Division of Corporation Finance’s Disclosure
Review Program (DRP). Also in September 2022,
the SEC joined the Ontario Securities Commission
in a case against Canada-based Cryptobontix and
Bermuda-based Arbitrade for executing a pump-and-
dump scheme. In December 2022, the SEC released
new guidance, requiring companies that issue
securities to disclose to investors their exposure and
risk to the cryptocurrency market. Also in December
2022, the SEC charged Sam Bankman-Fried with
defrauding investors in FTX. In an appeal hearing
during January 2023, the SEC admitted that the sale
of LBRY Credits (LBC) tokens in the secondary market
does not constitute a security. In January 2023, the
SEC charged cryptocurrency lender Genesis Global
Capital and the cryptocurrency exchange Gemini
Trust with offering unregistered securities through
a program that promised investors high interest on
deposits. In January 2023, Reuters reported that the
SEC is probing registered investment advisors over
whether they are meeting rules around the custody of
client crypto assets.
Regulator: The Commodity Futures Trading
Commission (CFTC)
Policy: The CFTC interprets the term “virtual
currency” as any digital representation of value
(a “digital asset”) that functions as a medium of
exchange, as well as any other digital unit of
account that acts as a form of currency regardless
of its format (tokens, coins or digital units distributed
through smart contacts). The CFTC has limited
regulatory oversight over virtual currency spot
markets. However, it has full authority to engage in
anti-fraud and anti-manipulation enforcement actions
on commodities markets where virtual currencies
are traded as a commodity in interstate commerce
or traded for future rather than immediate delivery.
The CFTC has favored close monitoring of market
developments, especially through its LabCFTC fintech
innovation hub while not hindering the introduction
of new products such as bitcoin futures. However, in
July 2022, the CFTC announced that it is replacing
LabCFTC with the Office of Technology Innovation
because digital assets and decentralized technologies
have outgrown their sandboxes.
Recent developments: In February 2022, CFTC
Chairman Rostin Behnam called on lawmakers
to grant his agency authority to regulate
cryptocurrencies. In April 2022, FalconX became the
first and only cryptocurrency-focused swap dealer
registered with the CFTC and member of the National
Futures Association. It is the only crypto-focused
firm that can provide institutional investors access
to trading on the OTC crypto derivatives market
through a CFTC-registered entity. In May 2022,
CFTC Chairman Rostin Behnam said the CFTC has
filed more than 50 enforcement actions related to
digital asset activity since 2015, and more than half
of those cases involved allegations of fraud. About
two-thirds of the total number of crypto-related
fraud enforcement actions were brought in the past
2½ years. He said the CFTC looks to prioritize the
use of its existing authority to deter and combat
fraud and manipulation in the crypto markets and will
continue to add resources in this area, including using
tools to help its enforcement efforts. In July 2022,
the CFTC added 34 unregistered foreign entities to
its Registration Deficient List, including at least six
providing crypto-related services. The additions to
the Registration Deficient List, or RED list, include
B.O TradeFinancials, CryptoBO, Bitpay Options,
CryptoSphereFX, Direct Cryptos and Prime Crypto
FX. In September 2022, the CFTC fined bZeroX and
its founders $250,000 for illegally offering leveraged
and margined retail commodity transactions in digital
assets. The CFTC also filed a federal civil enforcement
action charging Ooki DAO with violating the same
laws as bZeroX. In his December 2022 testimony to
the Senate Agriculture Committee, CFTC Chairman
Rostin Behnam remarked on the CFTC’s inability to
register cash market exchanges and urged lawmakers
to act quickly to install a regulatory framework for
digital assets. That same month, the CFTC charged
Sam Bankman-Fried, FTX Trading and Alameda with
fraud and material misrepresentations. In a December
2022 court filing, the CFTC declared that ether is
a commodity. This could negate claims that staked
coins are securities according to the Howey Test.
In January 2023, the CFTC filed a civil enforcement
action charging Avraham Eisenberg with a fraudulent
and manipulative scheme to unlawfully obtain over
$110 million in digital assets from Mango Markets.
Europe
Regulator: European Union
Policy: Crypto-assets are largely unregulated, but
national operators in the EU are required to show
controls for combating money laundering. However,
the EU is in the final stages of passing the Markets
in Crypto-assets (MiCA) law. MiCA covers issuers of
C r y pto cu rren cy Regu la tion Guide
unbacked crypto-assets and stablecoins as well as
the trading venues and wallets where crypto-assets
are held. The regulation defines crypto-assets as
digital representations of value or rights that may
be transferred and stored electronically and groups
them into utility tokens, asset-referenced tokens and
electronic money tokens. The European Parliament
postponed the final vote from November 2022 to
February 2023 and later deferred it to April 2023.
Recent developments: MEPs reviewed and amended
the European Commission’s MiCA proposal, and in
March 2022 decided to begin negotiations on the final
shape of the rules with EU countries in the Council.
In April 2022, the European Parliament agreed to
start negotiations with EU countries on rules that
would allow the tracing and identification of transfers
of crypto-assets to prevent their use in money
laundering, terrorist financing and other crimes. In
June 2022, the European Council presidency and the
European Parliament reached a provisional agreement
on the MiCA proposal. The European Parliament also
passed the Transfer of Funds Regulation (ToFR),
which imposes compliance standards on crypto-
assets to crack down on money laundering risks in the
sector. The EU plans to create a new regulatory body
– a sixth Anti-Money Laundering Authority or AMLD6
– that will have authority over cryptocurrencies. In
October 2022, the European Commission launched
a proposal for a 15-month study of automated DeFi
supervision. Also in October 2022, EU lawmakers
signed off on MiCA, and if passed in the next vote,
it will require stricter rules of crypto companies. In
January 2023, a European Parliament committee
approved a draft law implementing the final stage
of Basel III. The draft law contains an amendment
requiring banks to apply a risk-weighting of 1,250% of
capital to crypto-asset exposures – enough to cover
a complete loss in their value. In December 2022, the
European Council tightened its rules on anti-money
laundering (AML) and combatting the financing of
terrorism (CFT). Crypto-asset service providers
(CASPs) must apply due diligence measures when
carrying out transactions of €1,000 or more, and cash
purchases are limited to €10,000.
Regulator: European Securities and Markets Authority
(ESMA)
Policy: ESMA has repeatedly issued warnings
to consumers about the risks of trading
cryptocurrencies. In March 2022, ESMA issued yet
another warning to consumers that “these assets are
not suited for most retail consumers as an investment
or as a means of payment or exchange.” ESMA also
stated that consumers “should be aware of the lack
of recourse or protection available to them, as crypto-
assets and related products and services typically fall
outside existing protection under current EU financial
services rules. Finally, it welcomed clarification
on “the restrictive measures against Russian and
Belarusian entities and individuals as regards crypto-
assets.” In October 2022, ESMA published a trends,
risks and vulnerabilities (TRV) report called “Crypto-
assets and their risks for financial stability.”
Recent developments: In August 2022, ESMA
launched a procurement procedure for suppliers of
trading data on crypto transactions including spot
trades and derivatives. Regulatory bodies worldwide
will use transaction data to detect market abuse,
identify counterparties and monitor risky positions
that could undermine the markets.
Belgium
Regulator: Financial Services and Markets Authority
(FSMA)
Policy: Cryptocurrencies do not have legal tender
status in Belgium. The FSMA has issued fraud
warnings pertaining to cryptocurrencies.
Recent developments: In April 2022, the FSMA said
Belgian crypto exchange providers must register with
the authorities if they plan to start operating after May
1. Those already operating have until June to notify
the regulator under a law finalized in February, which
also covers providers of custodial crypto wallets. In
June 2022, the FSMA launched a consultation draft
on the classification of crypto-assets as securities,
investment instruments or financial instruments.
In September 2022, the FSMA updated its list of
cryptocurrency operators that are not authorized
investment firms in Belgium. In November 2022,
the FSMA released a document explaining the most
common cases where crypto-assets may fall within
the scope of the prospectus rules and/or the MiFID
conduct of business rules. Cryptocurrencies without
an issuer, such as bitcoin and ether, are not securities.
France
Regulator: Banque de France
Policy: France is generally “crypto friendly”, and
the government is working to establish a legal
framework for crypto-assets. Currently, there are
no specific regulations governing virtual currencies.
However, the Banque de France does not consider
virtual currencies equivalent to domestic or foreign
fiat currencies, and it uses the term “crypto-asset”
exclusively to delineate this difference. It maintains
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that crypto-assets are too volatile to be used as
“units of account”; they are not as efficient as fiat
currencies; and they have no intrinsic value, so
they cannot be used as reserve in value. Crypto-
assets cannot be considered a means of payment or
electronic money under French law.
Recent developments: In January 2023, Banque de
France Governor Francois Villeroy de Galhau called for
stricter regulatory requirements on crypto firms and
mandatory licensing instead of the current voluntary
registration process.
Regulator: Autorité des Marchés Financiers (AMF)
Policy: France supports the EU in its efforts to adopt
a regulatory framework for cryptocurrency. In July
2021, the AMF published proposals as part of the
European Commission’s consultation on supervisory
convergence – some could apply to the crypto
markets. As of January 2023, about 60 crypto
platforms are registered with the AMF.
Recent developments: In July 2022, the AMF and the
Professional Advertising Regulatory Authority (ARPP)
announced plans to develop a recommendation for
ARPP members on communications relating to digital
assets. This will be a priority project of their joint
work program for 2022 and 2023. Also in July 2022,
BNP Paribas entered the crypto custody space in
partnership with Metaco and Fireblocks. In September
2022, Crypto.com secured approval to launch its
services in France. In October 2022, Société Générale
was approved to operate digital asset services through
its subsidiary Forge. In December 2022, the AMF
and Prudential Supervision and Resolution Authority
(ACPR) updated a blacklist of web sites identified as
unauthorized investments in crypto-assets. In 2022,
they blacklisted two web sites in the crypto derivatives
category, down 92% from 24 sites in 2021. In January
2023, Marie-Anne Barbat-Layani, the head of the AMF,
said the regulator wants to accelerate the mandatory
licensing of cryptocurrency service providers to come
into effect before MiCA comes into effect in 2024.
Germany
Regulator: The Deutsche Bundesbank
Policy: Germany’s central bank is open to innovation,
including in crypto-assets. However, it also has taken
the stance that global regulators should ensure that
security standards as well as monetary and financial
stability are not negatively affected, and payment
transactions are not compromised.
Recent developments: None.
Regulator: Federal Financial Supervisory Authority
(BaFin)
Policy: Virtual currencies are not considered legal
tender, currencies, foreign notes, coins or e-money.
Generally, virtual currency brokers, multilateral trading
facilities, exchanges – and miners in some cases –
must be authorized by BaFin, and failure do so is a
criminal offense.
Recent developments: In January 2022, BaFin began
publishing a crypto securities list on the internet to
provide an overview of the key data associated with
a crypto security. The issuer of an electronic security
must publish certain information via the Federal
Gazette (Bundesanzeiger) when entering a crypto
security into the crypto securities register and notify
BaFin. According to a press report in April 2022,
Commerzbank has applied for a local cryptocurrency
license to legally offer digital assets services. In May
2022, Binance confirmed that it is in talks with BaFin
to secure a local crypto license. In May 2022, BaFin
granted licenses to DLT Finance for trading, custody
and staking of digital assets. In June 2022, BaFin
published a notice about the licensing procedure
for companies that want to keep crypto securities
registers. An October 2022 report says DZ Bank is
working on a digital asset custody solution, and it
plans to appoint a consultant to help to implement the
solution and assist with BaFin regulatory approval.
In November 2022, Austrian crypto exchange
and custody platform Bitpanda received a crypto
trading license from BaFin. Also in November 2022,
BaFin ordered Coinbase to “ensure proper business
organization” after an “audit of the annual financial
statements revealed organizational deficiencies at the
institute.”
Ireland
Regulator: Central Bank of Ireland
Policy: The Central Bank of Ireland has not issued
specific guidance about cryptocurrencies, but it
has issued consumer warnings about them. It is
concerned about retail funds’ ability to cover the risks
associated with the asset class. It has noted that it
is difficult for depositaries to provide safekeeping
where direct investments are involved. In addition,
the central bank sees conflicts with Europe’s
sustainable finance agenda given cryptocurrencies’
disproportionate draws on non-renewable energy
resources.
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Recent developments: In April 2022, the Central Bank
of Ireland advised the Irish Funds Industry Association
that they have approved in principle a Qualifying
Investor Alternative Investment Fund with a low level
of exposure to cash settled bitcoin futures traded
on the CME. In July 2022, cryptocurrency platform
Gemini received the first Virtual Asset Service
Provider (VASP) registration from the Central Bank
of Ireland. The company is now approved to provide
its crypto services to individuals and institutions
in the Irish market. As of November 2022, Ripple
is seeking a virtual asset service provider (VASP)
license from the Irish central bank so it can passport
its services throughout the EU via an entity based
there. Ripple also plans to file an application for an
electronic money license in Ireland. In January 2023,
Gabriel Makhlouf, governor of the central bank,
urged lawmakers to ban advertising of crypto-assets
targeted at young adults, likening crypto not linked to
any underlying assets to a Ponzi scheme.
Italy
Regulator: Ministry of Economy and Finance (MEF)
and the Organismo Agenti e Mediatori (OAM)
Policy: Cryptocurrency exchanges and investors,
must be registered by the Institution of Agents and
Mediators by providing documentation data and the
websites of businesses. Cryptocurrency issuers must
mention that the coin is not issued by the central
bank or any other public authority. Entities opting for
cryptocurrencies must collect information from parties
and submit a full report to the authorities. The OAM
oversees financial agents and credit brokers in Italy
and implements anti-money laundering controls.
Recent developments: In February 2022, the
MEF published a draft of a ministerial decree that
details registration and reporting requirements for
cryptocurrency firms based in Italy. It is set to be
implemented within three months of the adoption
of the decree. Also mentioned in the draft is the
cooperative relationship between police forces and
the MEF to address digital currency firms that refuse
to comply. In May 2022, the Italian arm of Binance
registered in Italy. In July 2022, Singapore-based
Crypto.com and German investment platform Trade
Republic on Tuesday said they had registered as
cryptocurrency operators in Italy. In July 2022,
Coinbase said it had met requirements from the
OAM. In August 2022, U.K.-based Blockchain.com
registered as a virtual asset service provider in Italy.
In October 2022, a CoinDesk article claims that
Italy’s OAM hasn’t vetted 73 crypto firms it approved
that year. Also in October 2022, BitMEX received
registration and regulatory approval from the OAM
as a provider of virtual currency and digital wallet
services.
Regulator: The Commissione Nazionale per la Societa
e la Borsa (Consob)
Policy: Consob is the authority responsible for
supervising markets and listed companies as well as
investor protection in Italy. It defines crypto-assets
as “digital registrations which incorporate rights
connected to investments in entrepreneurial projects.”
Regarding crypto-asset platforms, it is seeking to
establish a regulatory framework for the conduct of
offerings upon the issue of crypto-assets from the
perspective of investor protection. This will consider
initiatives on the EU level.
Recent developments: In July 2022, Consob added
five domains to its register of banned internet sources
for illegally promoting trading products in the country.
The blacklisted sites offer FX and CFDs trading, but
Consob says some of the names featured in the
warning are dealing in crypto-assets, either in the
form of the underlying coins or its related derivatives
such as CFDs. In December 2022, Consob invited
auditing firms and statutory auditors to carry out
an adequate risk assessment when acquiring and
maintaining statutory auditing assignments relating to
companies operating in the cryptocurrency sector.
Luxembourg
Regulator: Commission de Surveillance du Secteur
Financier (CSSF)
Policy: CSSF was a pioneer in the EU with its official
“Bitcoin Communiqué 2014”. This stated that even
if there is no specific legal framework, the existing
traditional financial regulation may apply. Additionally,
bitcoin may qualify as “scriptural money” if broadly
adopted as a means of payment by its user network.
CSSF has a rigorous vetting process and will only
license companies that have proven their potential
and commitment to strong KYC policies and anti-
money laundering/countering financing of terrorism
(AML/CFT) checks. Since 2021, Luxembourg-based
alternative investment funds (AIFs) are allowed to
invest in digital assets.
Recent developments: In January 2022, CSSF issued
FAQs on investments in virtual assets by undertakings
in collective investments and credit institutions. In
April 2022, CSSF released some new guidance to the
attention of consumers who have obtained increasing
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access to virtual assets. In December 2022, PayPal
said it is expanding its crypto service in Luxembourg,
the company’s EU headquarters, which could serve
as a gateway to the other EU countries once MiCA
comes into effect.
Netherlands
Regulator: De Nederlandsche Bank (DNB)
Policy: Cryptocurrencies are not recognized as legal
tender, but they are not banned in the Netherlands.
Recent developments: In April 2022, Holland
Crypto, the sister company of trading platform
BOTS, announced that it is registered as a provider
of cryptocurrency services with the DNB. This gives
the company permission to offer exchange services
between euro and crypto and wallets. In July 2022,
DNB fined Binance €3.3 million for offering services
in the Netherlands without the appropriate license. In
September 2022, Coinbase won regulatory approval
to offer crypto products and services to consumers
and businesses in the Netherlands. That means once
MiCA comes into force, Coinbase will be able to offer
crypto trading services in the other 26 EU nations.
In December 2022, the DNB warned KuCoin that it
does not have a legal registration with the central
bank. In January 2023, the DNB fined Coinbase €3.3
million for failing to obtain the necessary registration
to offer services in the Netherlands prior to beginning
operations in the country. Authorities claimed
Coinbase was non-compliant between November
2020 and August 2022.
Spain
Regulators: Banco de España (Bank of Spain)
Policy: In a joint statement released in February
2018, Comisión Nacional de Valores (CNMV) and
the Banco de España noted that virtual currencies
are not issued, registered, authorized or verified by
any regulatory agency in Spain. Virtual currencies
purchased or held in Spain are not backed by any of
the guarantees or safeguards provided by regulations
applicable to banking or investment products. In
other words, they are not legal tender. The Bank of
Spain has warned of the problems of crypto assets
and its concern about the risk to financial stability. In
February 2021, the CNMV and Bank of Spain issued
a statement on cryptocurrency investment risks,
warning of their potential lack of liquidity and other
liabilities they may pose to small-scale investors. The
Bank of Spain registers cryptocurrency platforms.
However, it does not supervise platforms’ financial
and operating risks and being in the registry does not
imply an approval of its activities by the central bank.
Recent developments: In February 2022, the Bank
of Spain licensed Bit2Me to be the country’s first
crypto service provider. Bit2Me may provide banks
based in Spain with a white-label service for crypto
trading on their platforms. In July 2022, the Bank of
Spain registered the local unit of Binance as a virtual
currency platform with procedures against money
laundering and financing of terrorism. In September
2022, Prosegur Crypto, Bots, Rand Protocol, Coin
Direct and JBH Financial Group were registered the
Bank of Spain’s registry of cryptocurrency providers.
In October 2022, BVNK became registered as a
virtual asset services provider (VASP). In November
2022, Coinmerce and Bitledger became registered,
bringing the total number of registered platforms to
49. Depasify and Bitstamp also became registered.
As of November 2022, 53 registration applications
have been rejected, and about 80 applications were
being reviewed. In December 2022, Finland-based
Coinmotion obtained the go-ahead to register as a
virtual currency exchange service.
Regulators: Comisión Nacional de Valores (CNMV)
Policy: In June 2022, President Rodrigo Buenaventura
commented that he does not believe that digital
currencies currently pose a systemic risk, although
this could change in a few months or years.
Recent developments: In January 2022, the CNMV
issued a circular controlling the advertising of crypto-
assets to mass audiences through any channel.
Companies that market crypto-assets must inform
the CNMV at least 10 days in advance about the
content of their campaigns. In May 2022, the CNMV
prohibited Binance from selling cryptocurrency
derivatives in Spain. Binance disabled its derivatives
services in Spain while seeking regulatory approval
from the CNMV. Binance, Coinbase and Bit2Me are on
the CNMV’s gray list, which identifies organizations
not allowed to operate as fully licensed entities.
Sweden
Regulator: Sveriges Riksbank
Policy: The Swedish central bank has issued warnings
about the risks associated with cryptocurrencies. In
May 2022, it commented on social media that bitcoin
and other cryptocurrencies are not money. Bitcoin’s
price is very volatile, making it a bad store of value,
and it has yet to achieve substantial momentum as a
means of trade with retailers.
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Recent developments: In June 2022, Sweden named
bitcoin skeptic Erik Thedéen as the new central bank
governor, and he will take up his position in January
2023.
Regulator: Financial Supervisory Authority (FSA)
Policy: The FSA has issued warnings about
cryptocurrencies and stated that they present a high
risk of investors losing their money. The regulator
called for the EU to consider an EU-wide ban on proof
of work mining. It proposed introducing measures in
Sweden that halt the establishment of new mining
sites. It also suggested that companies that trade
and invest in cryptocurrencies that were mined via
the proof-of-work method should be prohibited from
describing their activities as sustainable.
Recent developments: In June 2022, the FSA closed
the investigation of Safello, which was announced in
October 2021, in relation to the company’s compliance
with money laundering and terrorist financial rules.
In August 2022, the FSA allowed Hashdex to list
exchange-traded products (ETPs) in the EU, following
the approval of its European Base Prospectus.
In January 2023, Binance Nordics was granted
registration as a financial institution for management
and trading in virtual currency.
Switzerland
Regulator: Swiss National Bank (SNB)
Policy: Switzerland is recognized as a cryptocurrency
and blockchain-friendly country due to the activity in
“Crypto Valley”, located in Zug.
Recent developments: In April 2022, SNB Chairman
Thomas Jordan commented that the central bank
is not interested in holding bitcoin, but could move
quickly to do so at some point.
Regulator: Swiss Financial Market Supervisory
Authority (FINMA)
Policy: FINMA recognizes the innovative potential
of blockchain technology and supports the federal
government’s Blockchain/ICO Working Group. In
February 2018, FINMA published guidelines on how
it intends to apply financial market legislation in
handling enquires from ICO organizers. In assessing
ICOs, FINMA will focus on the economic function
and purpose of the tokens (payment tokens,
utility tokens and asset tokens). Depending on the
function, the tokens must comply with anti-money
laundering regulations, securities law requirements
and civil law requirements under the Swiss Code of
Obligations. FINMA has warned that more needs to
be done to protect investors. In September 2019,
FINMA published stablecoin guidelines. In August
2021, FINMA published guidelines for applications
concerning licensing as a DLT trading facility and
FinTech license applications.
Recent developments: In February 2022, FINMA-
regulated SEBA Bank launched institutional-grade
Ethereum staking. In June 2022, FINMA published
a fact sheet on crypto-assets. In November 2022,
FINMA revised its AML Ordinance requiring crypto
users to prove their identity if they transact with a
total value of CHF1,000 or more within 30 days. This
applies to exchange transactions of virtual currencies
for cash or other anonymous means of payment.
U.K.
Regulator: Bank of England (BOE)
Policy: In March 2022, the Bank of England began
sketching out Britain’s first regulatory framework
for crypto-assets. It said that although the sector is
small, its rapid growth could pose risks to financial
stability in the future if left unregulated. In August
2022, Bank of England analysts blogged that they see
crypto having important roles in the metaverse.
Recent developments: In August 2022, the Digital
FMI Consortium, a group of private-sector companies,
said it plans to test cross-border payments and
provide recommendations to the Bank of England
using its own sterling-backed stablecoin, dSterling.
In a December 2022 interview with Sky News, BOE
Deputy Governor Jon Cunliffe said the central bank
plans to step up its efforts with new laws to regulator
crypto trading following FTX’s collapse. Also in
December 2022, the bank published a blog post on
how DLT should be governed.
Regulator: Financial Conduct Authority (FCA)
Policy: The FCA has jurisdiction over AML and
counter-terrorism regulations. In addition, in October
2022, the House of Commons voted in favor of an
amendment to the Financial Services and Markets
Bill, which brought crypto under the jurisdiction of
the FCA. That means the FCA can regulate crypto
promotions and ban companies that are not allowed
to operate in the U.K. Crypto firms are expected to
register with the FCA before they can operate in the
U.K. As of January 2023, the FCA received over 300
crypto-asset applications for registration under the
money laundering regulations (MLRs) and determined
over 260. Of the applications the FCA determined
C r y pto cu rren cy Regu la tion Guide
(decided), it approved and registered 41; 195 were
either refused or the application was withdrawn, and
29 submissions were rejected.
In August 2022, the FCA published a policy document,
clamping down on marketing of high-risk investments
to consumers. In February 2023, the FCA published
a statement on crypto-asset firms marketing to U.K.
consumers and compliance with the new UK financial
promotions regime. Violators could face jail time.
Recent developments: In March 2022, the FCA
reiterated in a joint statement with other regulators
that all U.K. financial services firms, including the
crypto-asset sector, are expected to ensure that
sanctions on Russia are complied with. In addition, the
regulator announced that it opened more than 300
cases between April 1, 2021 and September 30, 2021
relating to businesses possibly involved in crypto-
assets. During the period, it received 16,400 enquiries
about possible scams, up nearly one-third from the
same period in 2020. In May 2022, Sarah Pritchard,
executive director at the FCA, said the regulator will
consider recent stablecoin depegging when drafting
crypto rules. The FCA hosted its first policy-focused
CryptoSprint events in May and June 2022, and it
set up workstreams to further understand future
standards and requirements. In a speech given in
July 2022, FCA Chief Executive Nikhil Rathi said the
U.S. and the U.K. will deepen ties on crypto-asset
regulation and market developments, including in
relation to stablecoins and the exploration of CBDCs.
Also in July 2022, Zodia Markets received crypto-
asset registration from the FCA and officially launched
its institutional crypto exchange and brokerage
business. In August 2022, Crypto.com received
regulatory approval from the FCA as a crypto-asset
business. In September 2022, the FCA warned that
crypto exchange FTX is providing services without
authorization. In January 2023, the FCA published
feedback on good and poor quality applications under
the crypto-asset AML/CTF regime.
Asia-Pacific
Australia
Regulator: Australian Prudential Regulation Authority
(APRA)
Policy: The APRA’s mandate is to promote financial
stability, but that does not translate into restricting
innovation with a view to preserving the status quo.
Recent developments: In April 2022, the APRA said
it wants to provide institutions, including banks and
retirement funds, with more clarity relating to crypto
and financial regulation. It was in the final stages of
issuing a letter to financial institutions that set out
its expectations for how digital assets in the country
should be handled. Then on April 21, 2022, the APRA
published its expectations regarding risk management
of crypto-assets and its policy roadmap up until 2025.
Regulator: Australian Securities and Investments
Commission (ASIC)
Position: ASIC is responsible for overseeing ICOs. In 2017,
it issued guidelines indicating that the structure of tokens
(security or utility) will determine their legal treatment
under general consumer law and the Corporations Act.
Australia plans to use token mapping as a framework for
crypto regulation. Token mapping involves uncovering
the characteristics of all digital asset tokens in Australia
including charting the type of crypto asset, its underlying
code and any other defining technological feature. In
February 2023, a Token Mapping Consultation Paper was
published, and responses may be submitted until March
3, 2023. ASIC is also bolstering its crypto team.
Recent developments: In May 2022, three crypto
ETFs – Cosmos Purpose Bitcoin Access ETF, ETFS
21 Shares Bitcoin ETF and ETFS 21Shares Ethereum
ETF – were launched. In August 2022, digital asset
manager Monochrome received regulatory approval to
offer spot crypto ETFs. In addition, the Digital Finance
Cooperative Research Center (DFCRC) was launched.
DFCRC is a A$180 million 10-year program, funded
by industry partners, universities and the Australian
government. Twenty-five partners from the finance,
academic and regulatory sectors, including the central
bank and ASX, will participate. In September 2022,
ASIC began considering whether to bring proof-of-
stake tokens such as Ethereum, Cardano and Solana
under its remit. In October 2022, ASIC made interim
stop orders preventing Holon Investments Australia
Limited (Holon) from offering or distributing three
crypto funds to retail investors because of non-
compliant target market determinations (TMDs). Also
in October 2022, ASIC filed proceedings against BPS
Financial Pty Ltd. It alleged that the company made
false, misleading or deceptive representations and
engaged in unlicensed conduct in relation to a non-
cash payment facility involving Qoin. In November
2022, ASIC sued Block Earner for allegedly offering
cryptocurrency investments without a license.
ASIC also halted FTX’s financial services license. In
December 2022, ASIC sued Finder Wallet because
the company allegedly sold a debenture product
without a financial services license by inviting people
to deposit money in an account, converting it to a
stablecoin and paying guaranteed returns.
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Regulator: Australian Transaction Reports and
Analysis Centre (AUSTRAC)
Policy: Virtual currencies and exchanges have
been legal in Australia since 2017. Digital currency
exchange providers must be enrolled on AUSTRAC’s
Digital Currency Exchange (DCE) Register. Similar to a
bank, the exchange must also identify and verify the
identities of their customers, and report suspicious
matters, international transactions, and transactions
involving physical currency that exceeds A$10,000 to
AUSTRAC.
Recent developments: In April 2022, AUSTRAC
issued a financial crime guide, providing banks and
digital currency exchanges with behavioral and
financial indicators it expects will trigger enhanced
due diligence on some customers. In August 2022,
Huobi Group, Quoqqa (Treta) and Seed CX (Zero
Hash) registered as digital currency exchanges with
AUSTRAC. Other digital exchanges operating in
Australia include Binance, Digital Surge, eToro, Kraken
and Bybit. In September 2022, the Australian Federal
Police established a new cryptocurrency unit to focus
on monitoring crypto-related transactions. Also in
September 2022, Senator Andrew Bragg introduced
the Digital Assets (Market Regulation) Bill 2022. This
introduces licenses for digital asset exchanges, digital
asset custody services and stablecoin issuers.
China
Regulator: People’s Bank of China (PBoC)
Policy: In July 2019, China’s Hangzhou Internet Court
found bitcoin is a commodity because it carries value,
it is scarce, and it can be used to transfer value.
However, bitcoin is not legal tender. Moreover, the
state-owned Bank of China posted an infographic on
its web site explaining the history of bitcoin and how
cryptocurrencies work. As of June 2020, the Shanghai
No.1 Intermediate People’s Court ruled that bitcoin
is an asset protected by law, and the Shenzhen
Futian District People’s Court ruled that ether is legal
property with economic value. In addition, China
passed the Civil Code in May 2020, which protects
cryptocurrency inheritance. In May 2021, China
banned financial institutions and payment companies
from providing services related to cryptocurrency
transactions. It had issued similar bans in 2013
and 2017. In September 2021, regulators issued a
blanket ban on all crypto transactions and mining.
Ten agencies, including the central bank, financial,
securities and foreign exchange regulators, vowed
to work together to root out “illegal” cryptocurrency
activity, the first time the Beijing-based regulators
have joined forces to explicitly ban all cryptocurrency-
related activity.
Recent developments: In September 2022, the PBoC
declared victory in cracking down on virtual asset
transactions as part of its message at the Communist
Party’s national congress. In January 2023, Huang
Yiping, a former advisor to China’s central bank, said
Beijing should consider the long-term effects of its
cryptocurrency ban, and blockchain is valuable to
regulated financial systems. He also commented that
allowing private institutions to issue e-CNY-backed
stablecoins is a very sensitive question.
Hong Kong
Regulator: Securities and Futures Commission (SFC)
Policy: The SFC’s regulatory remit is overseeing
securities only. Funds with virtual assets exceeding
10% of aggregate assets must be licensed by the SFC.
In November 2020, the SFC issued a position paper
setting out a regulatory framework for virtual asset
trading platforms. Platforms that operate in Hong
Kong and offer trading of at least one security token
may apply to be licensed by the SFC. In addition,
issuers of tokens in Hong Kong or those targeting
Hong Kong investors much obtain a license from
the SFC. The SFC’s regulatory framework is aligned
with the recommendations of international standard
setting bodies. Dozens of cryptocurrency exchanges
operate in Hong Kong, including some of the world’s
largest. The city currently has an “opt in” approach
under which exchanges can apply to be licensed by
the SFC, but it is not a requirement. In July 2022 the
SFC issued new guidance and requirements regarding
investments in virtual assets and insurance-linked
securities by SFC-authorized funds.
Recent developments: In January 2022, the SFC and
HKMA issued a joint circular and appendix document
on intermediaries’ virtual asset activities. It covers the
distribution of virtual asset-related products as well
as the provision of virtual asset dealing and advisory
services. In June 2022, the SFC extended regulatory
rules to NFT-based collective investment schemes,
warning investors to be mindful of risks. In July 2022,
OSL Digital Securities Limited (OSL) became the first
Type 1 SFC-licensed digital asset broker to distribute
security tokens to professional investors in Hong
Kong in a private security token offering (STO). In
October 2022, the SFC issued the Circular on Virtual
Asset Futures Exchange Traded Funds. This sets out
the requirements under which the regulator would
C r y pto cu rren cy Regu la tion Guide
consider authorizing virtual asset futures ETFs for
public offering. Hash Blockchain was licensed in
November 2022.
Regulator: Hong Kong Monetary Authority (HKMA)
Policy: The HKMA has said that it does not regulate
cryptocurrencies such as bitcoin, which it regards as
a virtual “commodity” and not as legal tender, or as
a means of payment or money. Hong Kong’s banking
laws and regulations therefore do not apply to entities
accepting or dealing in cryptocurrencies.
Recent developments: In January 2022 the HKMA
issued a discussion paper on crypto-assets and
stablecoins, inviting views from the industry and
public on the relevant regulatory approach. In
November 2022, the HKMA published “An Assessment
of the Volatility Spillover from Crypto to Traditional
Financial Assets: The Role of Asset-Backed
Stablecoins.” In January 2023, the HKMA published
“Conclusion of Discussion Paper on Crypto-assets
and Stablecoins”. It plans to introduce licensing
requirements for firms operating in stablecoins by
2024.
Regulator: Hong Kong Financial Services and
Treasury Bureau (FSTB)
Policy: The FSTB has consulted with the market on
changes to crypto exchange licensing rules.
In May 2021, the FSTB said in its consultation
conclusions that all virtual asset (crypto currency)
exchanges should be licensed if they wished to
operate in Hong Kong. It also said “confining the
services of a VA exchange to professional investors....
is appropriate at least for the initial stage of the
licensing regime.” According to Hong Kong law, an
individual must have a portfolio of HK$8 million
($1.03 million) to count as a professional investor.
Victory Securities and Interactive Brokers were the
first two brokers to offer cryptocurrency trading for
professional customers. In October 2022, the FSTB
issued a policy statement on the development of
virtual assets in Hong Kong.
Recent developments: In December 2022, lawmakers
passed an amendment to the Anti-Money Laundering
and Counter-Terrorist Financing Ordinance, which
introduces a new licensing scheme for virtual asset
providers, which will allow retail investors to trade
cryptocurrencies. The deadline for licensing is June 1,
2023.
India
Regulator: Reserve Bank of India (RBI)
Policy: The RBI has repeatedly warned the public
against investing in cryptocurrencies, citing concerns
over consumer protection, market integrity and
money laundering. The RBI banned paying for
cryptocurrencies using systems and portals of Indian
banks in April 2018. In May 2021, the RBI issued a
clarification, informing banks that they cannot warn
customers against trading in cryptocurrencies based
on the April 2018 ban. The move was perceived as a
vote of confidence to crypto by RBI amid reports of
India planning a complete ban on crypto trading. That
said, the RBI has suggested that banks and crypto
platforms need to ensure that these transactions are
not used for fraudulent activities and tax evasion. It
has asked the banks to carry out necessary customer
due diligence processes in line with regulations
governing standards for KYC, AML and CFT. Overall,
the RBI favors a cryptocurrency ban, and it believes
that the emergence of CBDCs will mark an end
to private cryptocurrencies. Cryptocurrencies are
borderless, so they require international collaboration
to prevent regulatory arbitrage.
Recent developments: In February 2022, RBI Deputy
Governor Shri Rabi Sankar likened cryptocurrency to a
Ponzi scheme and called for it to be banned in India.
Regulator: Securities and Exchange Board of India
(SEBI)
Policy: The crypto industry in India is currently
unregulated, so all crypto-related activities are
considered “unregulated activities.” Prime Minister
Narendra Modi’s government had planned to introduce
cryptocurrency legislation, supposedly in 2022.
Should it go forward, the government is considering
appointing the SEBI to oversee cryptocurrencies.
That said, the SEBI has recommended that the
RBI be in charge of overseeing money laundering
and KYC protocols linked to cryptocurrency. The
SEBI has echoed the concerns raised by the RBI on
cryptocurrencies, and it believes the decentralized
nature makes them hard to regulate. The regulator
has clarified that crypto-assets are a tokenized
version of assets, and all assets cannot be construed
as securities. Therefore, the tokens issued on those
assets also cannot be construed as securities.
Recent developments: In May 2022, the SEBI red-
flagged prominent public figures, including celebrities
and athletes, for endorsing crypto products in
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any kind of advertisement. Terms like securities,
derivatives, commodity derivatives, stock exchange,
clearing corporate and depositories should not be
used in advertisements of crypto products or crypto
exchanges.
Japan
Regulator: Financial Services Agency (FSA)
Policy: Japan was the first country to have a legal
system regulating crypto-asset trading. The Payment
Services Act was enacted in May 2016 and came into
effect in April 2017. Crypto assets such as bitcoin are
recognized as legal tender. The FSA strengthened
regulations on cryptocurrency exchange operators
in 2019 following a massive theft in 2018. In July
2021, the FSA set up a section to oversee digital
and decentralized finance. Crypto-asset exchange
businesses operating in Japan must comply with AML/
CFT and consumer protection laws. The regulator
is creating guidelines for the Act on Prevention of
Transfer of Criminal Proceeds (APTCP) to specify
how requirements of the crypto Travel Rule apply to
Japanese virtual asset service providers. It launched
a public consultation in February 2023, and interested
parties have until March 3, 2023 to respond. The FSA
maintains a list of registered crypto-asset exchanges
on its website.
Recent developments: In May 2022, Nomura
announced it is launching a subsidiary that will give
institutional clients access to cryptocurrencies.
Sumitomo Mitsui Trust also said it will form a new
company to offer digital asset custody services
to institutional investors. In June 2022, Japan’s
parliament passed a law defining stablecoins as digital
currencies and imposed a mandatory link with the yen
and enshrined the right to redeem them at face value.
The legal structure goes into effect in 2023, and the
FSA is expected to clarify the rules for stablecoin
issuers soon. Also in June 2022 the FSA said it wants
to deregulate trust banks, so financial institutions can
treat crypto as trust assets and handle coin deposits.
The FSA intends to amend financial sector-related
legislation to carry out the change and will hold a
one-month consultation on its proposals prior to
enshrining its decision into law. In August 2022, the
FSA started discussions to impose stricter regulations
for cryptocurrencies. In December 2022, Kraken said
it will cease its operations in January 2023, citing
current market conditions and weakness in the crypto
markets. Kraken will deregister from the JFSA as
of January 31, by which time clients would have to
withdraw their fiat and crypto holdings. In January
2023, Coinbase Global halted operations in Japan due
to volatile market conditions. Also in January 2023,
Mamoru Yanase, deputy director-general of the FSA’s
Strategy Development and Management Bureau,
urged regulators globally to subject cryptocurrency
exchanges to bank-level regulations.
Regulator: Japan Virtual Currency Exchange
Association (JVCEA)
Policy: The JVCEA is a self-regulatory organization
(SRO) that governs Japan’s digital currency
exchanges. Its members include all local digital assets
exchanges and international exchanges licensed to
operate in Japan, including Coinbase and FTX.
Recent developments: In July 2022, the FSA said
the JVCEA is too slow at carrying out its affairs. In
October 2022, the JVCEA released plans to implement
a looser screening process for already authorized
exchanges to list virtual coins. This would apply to
tokens that are not new to the Japanese market.
Singapore
Regulator: Monetary Authority of Singapore (MAS)
Policy: MAS does not see a strong case for banning
virtual currency trading. It distinguishes between
utility tokens, payment tokens and security tokens,
and does not regulate the technology itself but its
purpose. In the regulator’s view, utility tokens do not
require as much control as the other types of tokens.
For businesses trading in cryptocurrencies, offering
custody to retail users and several other activities,
applying proper KYC, AML and CFT checks are a legal
requirement. All cryptocurrency service providers
must obtain a license from MAS. In January 2022,
MAS issued guidelines to discourage cryptocurrency
trading by the general public. In July 2022, MAS
Managing Director Ravi Menon said the regulator
will tighten laws for crypto players in the coming
months and take firm action if any entity is found to
be conducting illegal activities. He also said some
crypto players that have come under strain had been
reported as being “Singapore-based,” but these
first have little to do with crypto-related regulations
in Singapore. In October 2022, Menon commented
that the implementation of industry-led blockchain
stablecoin transaction and multi-CBDC platforms
is the solution to costly, slow and inefficient cross-
border payments. Also in October 2022, MAS put
forward proposals in two consultation papers for
new regulatory measures on cryptocurrency trading
and stablecoins. The measures include not allowing
businesses to lend out cryptocurrencies owned by
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retail customers and to ensure customer assets are
segregated from their own assets. Another proposed
requirement is for crypto traders to go through a risk
awareness assessment.
Recent developments: In March 2022,
cryptocurrency platform Hodlnaut received an
in-principle approval (IPA) letter from MAS for a
Major Payment Institution (MPI) License under the
Payment Services Act. In April 2022, Luno Singapore
also obtained an IPA from MAS to provide digital
payment token services (DPTs). MAS also granted
an IPA to Revolut to offer DPT services. In May 2022,
Coinhako was granted an MPI license to offer DPT
services under the Payment Services Act. In June
2022, Crypto.com received preliminary approval for
its application to become a payment institution and
offer various payment services, including DPTs to its
customers based in Singapore. In August 2022, MAS
sent detailed questionnaires to some applicants and
holders of the MAS Digital Payment Token licenses
seeking information about business activity and
holdings. The regulator is considering new measures
that will make it more difficult for retail investors to
trade cryptocurrencies. These may include customer
suitability tests and restricting the use of leverage and
credit facilities. In October 2022, Coinbase received
approval to offer payment services in Singapore. In
November 2022, Coinbase CEO Brian Armstrong
criticized Singapore for wanting to be a Web3 hub
while not allowing retail trading or self-hosted wallets.
MAS released a statement to address misconceptions
in the wake of FTX’s collapse. In addition, Paxos
Global received a license from MAS to offer digital
payment token services.
South America
Brazil
Regulator: Banco Central Do Brasil
Policy: In August 2019, Brazil’s central bank classified
crypto-assets under IMF guidelines. That means
traded crypto-assets are considered as non-financial
products and accounted as goods on the central
bank’s balance sheet. Classifying them as goods
could make them eligible to be used as a payment
mechanism, and they could be reflected in the
country’s trade balance. The central bank authorized
the issuance of blockchain tokens within its regulatory
sandbox. In April 2022, the Brazilian Senate passed
a bill to regulate cryptocurrencies, and the regulation
of crypto exchanges falls under the Banco Central
do Brasil and the CVM. The bill was approved in
November 2022, and it was signed into law by Jair
Bolsonaro, the former president, in December 2022.
Under the new law cryptocurrencies are classified
as a mode of payment for goods and services, but
it does not grant them legal tender status. In August
2022, Fábio Araújo, a director of the Banco Central
Do Brasil, said the central bank does not see any
problem with financial institutions offering bitcoin
and cryptocurrency trading to their customers, but
they should not offer these investments without due
warning about the risks and volatility of the market.
In addition, Roberto Campos Neto, president of the
central bank, commented that banks will be able to
create their own cryptocurrencies backed by deposits
to operate with the digital real that is being created.
Recent developments: In July 2022, Latin America’s
largest bank, Itaú, tokenized its first digital asset. It
was the tokenization of trade finance receivables with
a term of 35 days. The bank plans to tokenize other
types of real-world assets as security tokens and
unveiled digital asset custody solution. Also in July
2022, the central bank requested information about
potential money laundering at Binance’s partners,
Acesso Bank and Capitual. Binance switched partners
to Latam Gateway, which operates the BS2 Bank.
In September 2022, the central bank said bitcoin
negatively impacts Brazil’s trade balance because
crypto-assets do not have customs registration but
purchases and sales by residents in Brazil imply
the conclusion of exchange contracts. In November
2022, Bitso, Ripio and Mercado Bitcoin requested
authorization from the central bank to be payment
institutions. In December 2022, Crypto.com received
approval from the central bank and obtained a
Payment Institution License. Also in December 2022,
the central bank created a working group to study
activities related to crypto-assets including trading,
custody and registration of the assets. A January
2023 press report says the central bank is promoting
a workshop on “The tokenization of finance: from
crypto-assets to central bank digital currencies” to be
held on May 16, 2023.
Regulator: Comissão de Valores Mobiliários (CVM)
Policy: Bitcoin and cryptocurrencies are not officially
recognized as securities. However, there are
situations where they can be characterized as such
depending on the economic context of their issue
and the rights granted to investors – for example,
in a collective investment contract. The CVM is
interested in furthering the adoption of blockchain
C r y pto cu rren cy Regu la tion Guide
technology in Brazil. Its regulatory sandbox acts as a
testing environment for fintech and other companies
to issue tokens or cryptocurrencies with a regulated
environment. In October 2022, the CVM issued new
guidance that defines cryptocurrencies as digitally
represented assets, protected by cryptography
technology, that can be transacted and stored
through DLT.
Recent developments: The CVM selected Vórtx
QR Tokenizadora and QR Capital to set up an
experimental framework for the first regulated
exchange for tokens targeted toward qualified
investors. The work is being done in the CVM’s
regulatory sandbox, and the exchange’s launch
is schedule for May 2022. In April 2022, the CVM
prohibited Toke Invest, which is reportedly tokenizing
real estate assets, from raising money from people
through its website and social networks. In May 2022,
Marcelo Barbosa, president of the CVM, told the
Senate that Binance complied with an administrative
proceeding by removing its futures page and not
offering crypto derivatives to investors. In August
2022, Mercado Bitcoin, Brazil’s largest cryptocurrency
exchange, joined CVM in launching a group to study
cryptocurrency and DeFi. In September 2022, the
CVM barred Singapore-based Bybit from brokering
securities to Brazilian citizens. Bybit was suspended
from the public offering of any securities, directly or
indirectly – including the use of websites, applications
or social networks. The platform will be fined R$1,000
per day for non-compliance. Only B3, the national
stock exchange, may offer securities in Brazil. Also in
September 2022, the CVM requested that Mercado
Bitcoin provide it with information on fixed income
tokens the exchange has issued over the past two
years. In December 2022, the CVM approved a new
set of rules that allow established funds to invest in
cryptocurrency.
Chile
Regulator: Banco Central de Chile
Policy: Cryptocurrencies are currently unregulated in
Chile, and the country does not prohibit the use and
trade of cryptocurrencies. Currently, cryptocurrencies
play a small role in the payment system, but the
central bank said they could alter the functioning of
the financial market and transmission of monetary
policy if their use becomes widespread.
Recent developments: A February 2022 article claims
that a real estate purchase was completed with
cryptocurrency in November 2021.
Colombia
Regulators: Government of Colombia, Banco de
la República and Superintendencia Financiera de
Colombia (SFC)
Policy: Cryptocurrencies on a government level
has been limited to a regulatory sandbox that
exchanges are running with banks. In February
2022, the Colombian government issued new
regulations that force exchanges and individuals
to report cryptocurrency transactions to the UIAF,
the country’s AML watchdog. The law establishes
penalties for non-compliance. In July 2022, the SFC
released draft rules for crypto companies that want
to operate in Colombia. The public will be able to
comment on the proposed regulations, which propose
a risk management system for money laundering and
terrorism financing as well as cybersecurity guidelines
and ways to trace crypto transactions.
Recent developments: In February 2022, Bitso, a
Mexican cryptocurrency exchange, became part
of Colombia’s regulatory sandbox for virtual asset
providers. Bitso’s crypto services will be available
to customers of Banco de Bogota, who have an
account with the exchange. In August 2022, the SFC
announced it successfully completed a pilot test
and is ready to start issuing crypto bonds. The test
was carried out in the SFC’s sandbox. This was the
first operation of this type in Latin America and the
Caribbean in which blockchain technology was used
for the registration, issuance, custody, negotiation,
registration of payments, fulfillment and cancellation
of the bond. The SFC has been working on these pilot
tests with Binance, the Banco de la República and
several financial entities, including Banco Davivienda
since 2021.
El Salvador
Regulator: Banco Central de Reserva
Policy: In June 2021, President Nayib Bukele declared
that bitcoin would become legal tender in El Salvador.
A few days later, the Bitcoin Law was passed, effective
in September 2021. Businesses would be required to
accept bitcoin for all payments. In August 2021, the
central bank released two documents detailing how
banks should deal with bitcoin. Financial entities must
apply to the central bank to offer digital wallets, the
guidelines stated. Applications must detail the type
of product being offered, and include target market
details, risk assessments, charges to customers,
education provisions for customers and compliance
procedures. KYC verification is required for all
C r y pto cu rren cy Regu la tion Guide
customers. Two-way bitcoin-to-dollar convertibility
must be provided, and the bank is allowed to charge
a fee. The central bank posts a list of registered
cryptocurrency service providers on its website.
Recent developments: In January 2022, the IMF
urged El Salvador to remove bitcoin as legal tender,
stressing that it would be difficult to get a loan
from the institution. A March 2022 press report
said President Bukele is hoping to launch bitcoin-
backed bonds to raise $1 billion through international
cryptocurrency traders, but plans have been
postponed due to unfavorable conditions. Press
reports in June 2022 maintain that the government’s
crypto coffers have been cut in half, and bitcoin
adoption nationwide is not taking off. Moreover, the
country needs cash fast to meet its debt payments
of more than $1 billion in the next year. This comes
as the price of bitcoin has fallen more than 70% from
its November 2021 peak, and more than 55% from
the time Bukele announced his plan. In July 2022, El
Salvador’s finance minister defended the country’s
strategy to adopt bitcoin as legal tender even as
critics urge the nation to ditch the experiment as the
cryptocurrency world suffers through a bear market.
In September 2022, Carlos Acevedo, former president
of the central bank, commented that El Salvador’s
bitcoin legalization has not been successful because
it failed to meet the government’s objectives such
as financial inclusion and lower cost remittances.
Between January and November 2022, only 1.6%
of the $6,981.67 million in remittances received in
El Salvador came through cryptocurrency wallets.
Bitcoin remittances in the third quarter of 2022 fell 6%
compared to the second quarter.
Middle East
Abu Dhabi
Regulators: The Financial Services Regulatory
Authority (FSRA) and Abu Dhabi Global Market
(ADGM)
Policy: ADGM claims to be the first jurisdiction to
introduce a comprehensive regulatory framework
for the regulation of spot virtual asset activities
undertaken by multilateral trading facilities, brokers,
custodians, asset managers and other intermediaries.
The FSRA’s regulatory framework addresses the full
range of associated risks, including those relating
to market abuse and financial crime, consumer
protection, technology governance, custody
and exchange operations. To foster institutional
involvement within virtual asset markets, the FSRA
focuses on proper governance, oversight and
transparency within this space. In February 2020,
the FSRA enacted some amendments to its rules
and regulations. It changed the terminology of
“crypto asset” to “virtual asset” to be aligned with
the terminology used by the FATF. It also moved
the applicable rules and regulations from a bespoke
category of “Operating a Crypto Asset Business” to
the respective underlying Regulated Activities (e.g.
Providing Custody, Operating a Multilateral Trading
Facility, Dealing in Investments). In April 2022, the
FSRA issued a discussion paper to seek comments
on policy considerations for DeFi. In September 2022,
the FSRA published its “Guiding Principles” on its
approach to digital asset regulation and supervision.
Developments: In July of 2019, Matrix Exchange
received an In-Principle Approval (IPA) from the
Financial Services Regulatory Authority under the Abu
Dhabi Global Market (ADGM). The approval cleared
Matrix Exchange to function as a fully-fledged crypto
asset exchange run by the ADGM. In April 2022, ADGM
licensed Kraken to operate a regulated virtual asset
exchange platform in the financial free zone. Kraken,
is the first global virtual assets exchange group in the
UAE, to receive a full financial license from ADGM. In
April 2022, Binance received in-principle approval (IPA)
to operate as a broker-dealer in Abu Dhabi. Binance
is already approved in Bahrain and is in talks to gain
approval in Dubai. In June 2022, Access Abu Dhabi and
the Abu Dhabi Investment Office (ADIO) partnered with
Web3 identity platform and NFT domain name provider
Unstoppable Domains to provide free crypto domains
to all women residing in the UAE capital. The objective
is to provide opportunities for more women to learn
about and ultimately participate in Web3. In August
2022, Abu Dhabi formed the Abu Dhabi Blockchain
and Virtual Assets Committee (ADBVAC). Its remit
is to develop a regulatory framework for virtual and
blockchain assets that complies with AML and counter-
terrorist financing rules and helps build an ecosystem
that is safe, sound and transparent. In September
2022, eToro was granted in-principle permission to roll
out services. In November 2022, the ADGM launched
the Abu Dhabi Crypto Hub, a web-based interactive
platform that provides users access to information and
connects with the financial center’s existing virtual
asset firms. Binance received a Financial Services
Permission from the FSRA. Additionally, Capex.com
gained an in-principle crypto license. In January 2023,
Venom Foundation announced the launch of the Venom
C r y pto cu rren cy Regu la tion Guide
Ventures Fund, focused on investing $1 billion in top-
tier blockchain projects and Web3 DApps. In February
2023, Kraken shut its Abu Dhabi office less than a year
after winning a local license.
Dubai
Regulators: Dubai Financial Services Authority (DFSA)
and Dubai Virtual Assets Regulatory Authority (VARA)
Policy: In March 2022, Dubai adopted its first law
governing virtual assets and established a regulator,
the Dubai Virtual Assets Regulatory Authority, to
oversee the sector. In August 2022, VARA announced
new regulatory guidelines on the marketing,
advertising and promotions of virtual assets. In
November 2022, the DFSA’s Crypto Token regime
came into force. In February 2023, VARA issued its
“Full Market Product Regulations,” which include four
compulsory rulebooks and activity-specific rulebooks
for operating virtual asset services providers.
Recent developments: In April 2022, luxury real
estate developer Damac said it will accept payments
in bitcoin and ether. In addition, Crypto.com and
Bybit have set up offices in Dubai. Also in April 2022,
Three Arrows Capital said the firm’s headquarters
was moving to Dubai to launch a new $5 billion
fund because Dubai is a friendlier environment
than Singapore. However, in June 2022, the DFSA
confirmed that Three Arrows Capital is not an
authorized firm and is not regulated by the DFSA.
In July 2022, Huobi Group was granted minimal
viable product (MVP) provisional approval while it
undertakes the process of applying for a license. This
will enable Huobi to offer virtual exchange products
and services within the parameters set by VARA’s
specialized “test-adapt-scale” model. In September
2022, Blockchain.com was granted a provisional
approval to operate in Dubai, and Binance secured a
minimal viable product license. In November 2022,
VARA cancelled FTX’s license. Also in November 2022,
Komainu, a regulated digital asset custody provider,
received a minimal viable product license from VARA.
Israel
Regulators: Bank of Israel and Israel Securities
Authority (ISA)
Policy: In March 2022, the Bank of Israel published
draft regulations potentially opening the country’s
financial system to crypto companies. In May 2022,
Ilan Gildin, chief economist and strategic advisor
at the ISA, participated in a panel on DeFi at the
Israel Crypto Conference. He said Israel’s financial
authorities had been preparing a comprehensive
and holistic regulatory framework for digital assets.
The document was coming soon, he shared, and
the authorities are looking to foster the growth of
Israel’s crypto industry in a responsible and compliant
way. In November 2022, Shira Greenberg, the chief
economist at the Ministry of Finance, published
a report on digital assets with recommendations
regarding regulation. In January 2023, the ISA moved
to establish a new legal structure that puts digital
assets under the its supervision. The proposal is open
for public comment until February 12, 2023.
Recent developments: In February 2022, Israel’s
Defense Ministry seized 30 crypto wallets from 12
accounts allegedly used to fund Hamas. In March
2022, Bank Leumi became the first Israeli bank to
enable cryptocurrency trading on its digital platform
Pepper Invest, pending regulatory approval. In March
2023, the ISA will co-sponsor a hackathon to explore
blockchain solutions to innovate and tackle challenges
in infrastructure and architectures underlying the
securities and sovereign debt markets in Israel.
Africa
Nigeria
Regulator: Central Bank of Nigeria (CBN)
Policy: In March 2021, the CBN clarified a statement
it issued in February that seemed to order financial
institutions to shut down all accounts associated
with cryptocurrency trading. The central bank said it
reiterated an already imposed 2017 ban on institutions
facilitating cryptocurrency transactions. The CBN did
not place restrictions from use of cryptocurrencies,
and it is not discouraging people from trading in
them. In January 2023, the central bank published
its Nigeria Payments System Vision 2025. The report
says stablecoin implementations are likely to be a
successful payment mechanism in Nigeria, and there
could be a role for ICOs in fundraising for capital
projects, peer-to-peer lending or crowd-funding.
However, there must be a regulatory framework
developed for them.
Recent developments: In April 2022, the CBN fined
six top banks a total of N1.3 billion ($3.1 million) for
violating its directive against facilitating transactions
in cryptocurrencies. Access Bank got the biggest fine
C r y pto cu rren cy Regu la tion Guide

of N500 million, followed by FCMB with N400 million

and Stanbic IBTC with N200 million. United Bank for
Africa and Wema Bank were fined N100 million each,
and Fidelity Bank N14.28 million.

South Africa
Regulator: South African Reserve Bank (SARB) and
the Financial Sector Conduct Authority (FSCA)

Policy: The SARB views cryptocurrency as a financial

asset, and it plans to regulate it as a financial asset.
Crypto exchanges would have to comply with
exchange control laws such as AML and CFT rules. In
August 2022, the SARB published new guidelines that
allow financial institutions to deal with funds linked to
digital assets, and they were advised that they should
not indiscriminately block all crypto clients. The
central bank said that banks in the country “may act
as a conduit for funds” tied to crypto-asset service
providers and “may play a role in customers wishing to
purchase” or “receive payouts in fiat currency” in their
bank accounts for the sale of crypto.

Recent developments: In May 2022, Deputy Governor

Kuben Naidoo told Reuters that regulation of crypto-
assets is in the offing and might come into force
within nine to 15 months. In October 2022, the FSCA
said a crypto-asset, which it referred to as “a digital
representation of value”, must be regulated in South
Africa from the date of publication. The authorities
plan to introduce regulations including applying
foreign exchange controls and licensing of crypto
trading companies.

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