Special Report

Cryptos on the rise 2022

A complex regulatory future emerges

Crypto-assets and the vast universe of associated products and services have grown rapidly in recent years and are becoming increasingly interlinked with the regulated financial system. Policymakers appear to be struggling to keep track of risks posed by a sector where most activities are unregulated, or at best lightly regulated.

Financial stability risks could soon become systemic in some countries, according to the International Monetary Fund (IMF).

There is also concern that uncoordinated regulatory actions may facilitate potentially destabilizing capital flows. The IMF estimates cryptos’ market capitalization at $2.5 trillion. This may be an indication of the significant economic value of the underlying technological innovations such as the blockchain, although it might also reflect froth in an environment of stretched valuations.

Cryptos’ potential to transform the traditional financial system means the associated challenges are attracting considerable regulatory attention. The focus is twofold: cryptos’ possible impact on financial stability and the need to protect vulnerable customers.

The principal challenge is the need for an internationally coherent policy approach, including definitions and jurisdictional perimeters, and in terms of exchanges, prevention of market manipulation and systemic risks. Lending and payment risks, banking, payments and anti-money laundering (AML) risks, tax policy and tax evasion risks, securities fraud and scams, together with cyber security, hacking and privacy risk will all need to be addressed.

The increasing regulatory challenges are exacerbated by the growing public awareness, acceptance and use of cryptos. From the U.S. perspective, research published[1] in November 2021 by Pew Research, a nonpartisan think tank in Washington, reported 16% of respondents saying they personally have invested in, traded or otherwise used cryptocurrencies. Newsweek Magazine cited a survey in January 2022 by the crypto firm New York Digital Investment Group, estimating the total number of Americans who own cryptos at 46 million (about 14% of the population).

In the UK, in June 2021, the UK Financial Conduct Authority published its fourth consumer research publication on crypto-assets ownership[2] which found heightened public interest in, and media coverage of, cryptos, with 78% of adults now having heard of cryptocurrencies. Around 2.3 million now own crypto-assets, up from around 1.9 million in 2020.

The UK regulator also found attitudes have shifted, as cryptocurrencies appear to have become more normalized — fewer crypto users regard them as a gamble (38%, down from 47%) and more see them as an alternative or complement to mainstream investments, with half of crypto users saying they intend to invest more in the future.

In the European Union, as of February 2022, the total market capitalization of crypto-assets is reported[3] as having increased eightfold in the last two years to around 1.5 trillion euros now, although around 1 trillion euros below its peak in November 2021. The suggestion is that crypto-assets are beginning to gain mainstream acceptability, with ownership peaking at 6% of Slovakians and 8% of Dutch nationals reported as owning crypto-assets.

This report is a follow-up to Regulatory Intelligence’s “Cryptos on Rise” special report[4] published in 2021. That report highlighted the need for policymakers, regulators and firms all to play their part in ensuring that cryptos are as "safe" as possible, not only in terms of investment risk but also with regards to regulatory certainty and cyber resilience.

The 2022 special report expands beyond cryptocurrencies such as bitcoin. Considering the need to develop a regulatory framework, it investigates other crypto-related instruments, such as central bank digital currencies (CBDCs), non-fungible tokens (NFTs) and stablecoins, and highlights policy work in key countries. It examines some of the misconceptions which persist about cryptos, as well as the ramifications for financial stability and the future of money. It also considers changing structural models for financial institutions emerging from the crypto world, as represented by decentralized autonomous organizations (DAOs).

As with the 2021 report there is a compendium which analyzes the tax, legal and regulatory status of cryptos in various jurisdictions.

Chapter Two

Beyond Bitcoin

Central bank digital currencies

There are some structural similarities between crypto-assets and central bank digital currencies, but CBDCs are best described as the digital equivalent of a country’s fiat currency. As a result, they are often seen as an alternative or competitor to cryptos. The most advanced CBDC thus far is China’s digital yuan. During the 2022 Beijing Winter Olympic Games athletes, coaches and media made digital payments via smartphone apps, payment cards, or wristbands.

From the crypto regulatory landscape in the compendium of this report, it is apparent that many of the early movers on CBDCs also adopt restrictive stances or outright bans on other cryptos. Prime examples include China, Russia, Iran and Venezuela.

The G7 countries have been deliberately cautious about CBDCs’ potential, particularly with regards to retail CBDCs used by the public. The G7 has reiterated that the decision on whether to launch a CBDC is for each country to make, and no G7 jurisdiction has yet done so. In a 2021 survey of central banks[5], the Bank for International Settlements (BIS) found that 86% are actively researching the potential for CBDCs, 60% are experimenting with the technology and 14% are deploying pilot projects.

Retail CBDC

A retail CBDC would be a digital form of central bank money, denominated in the national unit of account, distinct from electronic reserves (which cannot be accessed by individuals) and physical cash. As a direct liability of the central bank, CBDCs would also be distinct from commercial bank money. If issued, CBDCs, as a form of central bank money, could act as both a liquid, safe settlement asset and as an anchor for the payments system.

Not crypto-assets

The G7 is clear that CBDCs are not crypto-assets. Crypto-assets are not issued by a central bank, can be highly volatile, and are not widely used for payments. CBDCs are fundamentally different from privately issued digital currencies such as stablecoins, which are a liability of private entities that seek to maintain stability in their price (typically in relation to stable assets such as fiat currency). CBDCs can be considered in two parts:

  • the CBDC itself, an instrument issued by the central bank that can be transferred as a means of payment or held as a store of value; and
  • the wider “ecosystem” in which a CBDC operates, including the supporting infrastructure that allows CBDC balances to be managed and payments made.

This wider infrastructure could involve both public and private participants (such as banks, digital wallet providers or other payment entities).

Public policy principles

In October 2021 the G7 published[6] a set of 13 public policy principles for possible future retail CBDCs. Principles 1-8 cover foundational issues and principles 9-13 cover the opportunities. The “foundational issues” are those that any CBDC must demonstrate if it is to command the confidence and trust of users. These include the preservation of monetary and financial stability, the protection of users’ privacy, strong standards of operational and cyber resilience, the avoidance of financial crime and sanctions evasion, and environmental sustainability.

The G7 principles also highlight the potential for CBDCs to support safe and efficient transactions. They make it a political priority to harness opportunities and address the monetary and financial stability risks, as well as ensure trust in the financial system. The G7 notes that CBDCs could also advance public policy goals, including digital-economy innovation, financial inclusion and reducing frictions in cross-border payments.

[6] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1025235/G7_Public_Policy_Principles_for_ Retail_CBDC_FINAL.pdf

A divided UK stance

The UK’s stance on CBDC is at best unproven and at worst divided. In January 2022, the parliamentary Economic Affairs Committee published a report which concluded that there is no convincing case for UK to have a CBDC. The committee found that while a CBDC may provide some advantages, it could present significant challenges for financial stability and the protection of privacy.

The committee report[7] builds on a November 2021 joint statement[8] by the Bank of England and HM Treasury, which announced the next steps on the exploration of a UK CBDC. Specifically, the Bank and HM Treasury intend to launch a consultation in 2022 which will set out their assessment of the case for a UK CBDC. The consultation will form part of a “research and exploration” phase and will seek to inform policy development in the next few years.

The committee report adds several challenges and questions to the proposed consultation and evaluation process. The report’s findings, however, make it clear that the UK has some way to go before the case has been made for a UK retail CBDC. It also recommends that the UK government and Bank of England take action to shape international standards which suit the UK’s values and interests, particularly with regards to privacy, security and operational standards.

The U.S. approach to CBDCs

The potential for a CBDC in the United States took a step forward in February when the findings of a project by the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) were released. The project, dubbed “Project Hamilton,” achieved its preliminary goals of using emerging technology to deliver, in theory, high-speed transactions within a resilient infrastructure.

Separately, the Federal Reserve Board in January opened debate[9] on the merits of a CBDC. The “white paper” said creating an official digital version of the U.S. dollar could give Americans more, and speedier, payment options, but it would also present financial stability risks and privacy concerns. The paper, however, made no policy recommendations and offered no clear signal about where the Fed stands on whether to launch a CBDC.

The Federal Reserve’s Board said it would not proceed with creating a CBDC “without clear support from the executive branch and from Congress, ideally in the form of a specific authorizing law.”

Leaders of the Boston Fed/MIT project said the next phase will explore alternative designs and look more closely at other issues such as security and programmability. They will also look at ways to balance privacy issues with concerns about compliance.

“There are still many remaining challenges in determining whether or how to adopt a central bank payment system for the United States,” said Neha Narula, director of MIT’s Digital Currency Initiative.

In March 2022, the White House issued an Executive Order requiring the government to ensure the responsible development of digital assets and to assess the risks and benefits associated with of creating a central bank digital dollar.


A stablecoin is any cryptocurrency designed to have a stable price, typically through being reserved, backed, or pegged to an underlying asset such as a commodity or currency, or through algorithmic mechanisms to its reference asset. The potential use cases for stablecoins are far-reaching and potentially disruptive to the established banking and payments industries.

Regulators are developing their approach to stablecoins. In October 2021, the international Financial Stability Board (FSB) published[10] a progress report on the implementation of the high-level recommendations with regards to the regulation, supervision and oversight of global stablecoin (GSC) arrangements.

The progress report concluded that “cross-border cooperation and coordination” were the highest regulatory priorities, followed by further work regarding when a so-called stablecoin may be appropriately identified as a GSC.

Hong Kong

Individual jurisdictions are developing their own approaches to stablecoins. The Hong Kong Monetary Authority (HKMA) published a discussion paper[11] on crypto-assets and stablecoins inviting views from the industry and public on the relevant regulatory approach.

The paper, which closed for comments at the end of March 2022, sets out the HKMA’s thinking on the regulatory approach for crypto-assets, particularly payment-related stablecoins. The HKMA has considered, among other things, the international recommendations, the market and regulatory landscape locally and in other major jurisdictions, and the characteristics of payment-related stablecoins.

The paper considers five policy options across the entire spectrum, from “no action” to a “blanket ban.” 

United States 

Stablecoins are a likely early crypto priority for U.S. regulators. In November 2021, the President’s Working Group on Financial Markets, a government-industry body, released a report on stablecoins[12] that urged Congress to pass new legislation to “fill regulatory gaps.”

In the meantime, U.S. market regulators are prepared to play a leading role in stablecoin oversight, Gary Gensler, the chair of the Securities and Exchange Commission (SEC), said in announcing the working group’s report.

Similarly, the federal Financial Stability Oversight Council, chaired by Janet Yellen, Treasury secretary, noted in its annual report[13] in December 2021 that it “will further assess and monitor the potential risks of stablecoins and recommends that its members consider appropriate actions within each member’s jurisdiction to address those risks while continuing to coordinate and collaborate on issues of common interest.”

Gensler cited similarities between stablecoins and stable value funds and said the SEC and the Commodity Futures Trading Commission (CFTC) “will deploy the full protections of the federal securities laws and the Commodity Exchange Act to these products and arrangements, where applicable.”

The SEC and CFTC are also likely to play an integral role in the oversight of crypto trading platforms or exchanges. Market structure, potential market manipulation, scams and investment and trading activities will be priorities.

Concerns about investor protection have already been voiced by several prominent members of Congress. The SEC and CFTC will also oversee investor protection and overall policing and enforcement, with input from the Consumer Financial Protection Bureau (CFPB).

Some use cases for stablecoins will “trigger obligations under federal consumer financial protection laws, including the prohibition on unfair, deceptive, or abusive acts or practices,” said Rohit Chopra, chair of the CFPB.

The CFPB has launched a review of stablecoins’ potential to cause harm in three main areas: concentrated market power, systemic risk and consumer abuse.

The banking regulators will play a role in regulating stablecoins because of their potential uses in payments, borrowing, lending and deposit-like functions.


The Monetary Authority of Singapore (MAS) has repeatedly cautioned that investing in cryptocurrencies is risky, and unsuitable for retail investors. Cryptocurrency funds are not authorized for sale to retail investors in Singapore.

In December 2019, MAS issued a public consultation seeking views on the interactions between money, e-money and cryptocurrencies, including stablecoins, and the appropriate regulatory treatment for cryptocurrencies, particularly stablecoins.

The consultation sought views on the defining characteristics of e-money and cryptocurrency, considered the potential ability of stablecoins to function as money, and discussed its relevance in the regulatory class of e-money or cryptocurrency.

The differing regulatory priorities for e-money and cryptocurrency services have different implications for how stablecoins would be regulated if placed in either of these categories.

E-money services are regulated for the safeguarding of customers’ money, whereas cryptocurrency services are regulated for AML risk, with a disclosure requirement to warn customers of the risk of loss. Other issues were also touched on, such as whether a global stablecoin should be regulated differently from other stablecoins and how the stabilization mechanism should be regulated.

The consultation received mixed views over whether a stablecoin was a single-currency or multi-currency stablecoin and whether there was a claim on the issuer of the stablecoin. There were also varying views regarding whether stablecoins should be treated as a payment instrument or an investment product, depending on the assets backing the stablecoins.

MAS intends to continue its work on reviewing the appropriate regulatory treatment for stablecoins, such as the treatment under different legislation, taking into consideration its practical use and risks, and informed by the continuing work of the international standard-setting bodies.

Non-fungible tokens

A non-fungible token (NFT) is a unique digital code stored on a blockchain, a form of distributed or digital ledger. Non-fungible tokens represent rights to the particular asset. The term "non-fungible" distinguishes NFTs from other digital assets that are fungible or interchangeable, such as bitcoin.

The use cases for NFTs are far-reaching as they provide an ability to authenticate virtually anything where there is a need to establish authenticity and ownership. Their popularity thus far has centred on the art and collectibles world — NFTs representing works of art, collectibles, video clips, or other digital media have exploded in price and popularity — but other potential uses include real-estate and auto titles, coupons, transit, or event tickets.

NFT and blockchain technology can also be useful in logistics and supply-chain applications, where metadata and timestamps can authenticate and help track the origins and journeys of commodities.

Critics may see the NFT market as yet another speculative bubble, but proponents point to broader applications in other industrial, legal and commercial uses that could be transformative.

The popularity of NFTs has raised concerns that the marketplace could be fertile ground for illicit activities such as scams, cybercrime, price manipulation, or money laundering. Indeed, many are baffled as to why so much money is spent on items that do not physically exist.

NFTs have been noticeably absent from the regulatory policy debate so far. How far financial regulators ultimately attempt to expand the perimeters of their authority — potentially into this new digital art and collectibles world, or even beyond into commercial applications — remains to be seen.

With such broad technological utility and complexity, regulation will be complex and likely to be challenged in courts. It appears obvious that AML requirements should apply in some areas. Another question is whether an NFT is deemed a financial instrument or security. Many legal experts already agree that if an NFT is fractionalized, thus representing partial ownership, or has royalty streams of income associated with it, it will likely be deemed a security and thus subject to regulatory oversight.

European Union

In September 2021, the European Union introduced a proposal to regulate crypto-assets. The Markets in Crypto-Assets Regulation (MiCA), if adopted, will regulate all issuers and service providers dealing with crypto-assets.

NFTs were explicitly excluded from MICA’s scope. Article 4 (2) of the draft provides that issuers of “crypto-assets that are unique and non-fungible” do not need to publish or register a white paper for them. MICA does state, however, that fractional NFTs should not be considered unique and would therefore be subject to MiCA.

United States

The United States has yet to issue direct guidance on NFTs as their use cases and potential value remain to be clarified. The structure of NFTs and the intellectual property rights, such as rights to use, copy and display, and whether revenue streams are associated, are just some of the legal uncertainties.

There is no direct state regulatory framework or guidance on NFTs, but several states, including New York and Louisiana, which do have virtual currency regulations could attempt to hold NFTs under their purview.

The U.S. Treasury’s anti-money laundering arm has yet to issue guidance specific to NFTs but has published general guidance related to how the Bank Secrecy Act and related regulations relate to virtual currencies that might apply to NFTs.

Established financial services firms and venues are getting into NFTs. In February 2022, the New York Stock Exchange filed an application to register the term “NYSE” for a marketplace for NFTs, appearing to take a step closer to setting up an online trading place for cryptocurrencies and NFTs.

If the NYSE launches a new marketplace, it will compete with SuperRare, Rarible and NFT marketplace OpenSea, which was valued at $13.3 billion after its latest private funding round.

A spokesperson for the NYSE said, however, that it has no immediate plans to launch cryptocurrency or NFT trading.

The NYSE minted its first set of NFTs in April 2021 commemorating the first trades of six “notable” listings. 

Hong Kong

Investors in Hong Kong have shown considerable interest in NFTs. Projects have been launched at a steady pace, attracting enthusiastic bidders. Bricks and mortar marketplaces such as Sotheby’s and Christie’s have auctioned NFTs to buyers in Hong Kong, either as standalone items or as add-ons to luxury items such as watches, as well as facilitating bidding for locally produced NFT art.

NFT activity in Hong Kong has been further buoyed by regulatory uncertainty in mainland China. Financial authorities there have yet to clarify whether a recently implemented ban on all cryptocurrency transactions includes producing, selling or trading NFTs. As a result, some Chinese digital art and entertainment creators have turned to Hong Kong to issue NFTs.

The Securities and Futures Commission (SFC) has stated that virtual assets fall within the legal definition of securities or derivatives and are therefore subject to local securities laws. Cryptocurrency trading platforms such as Binance have withdrawn from Hong Kong after receiving written warnings from the SFC. The regulator’s move to assert jurisdiction over platforms suggests that it firmly considers virtual assets, such as cryptocurrencies and tokens that function as securities, to fall within its jurisdiction.

The natural next question is whether financial regulators will also consider NFTs as a class of virtual assets that fall within their jurisdiction. They have yet to issue regulations specifically concerning NFTs, although recent legislative developments in Hong Kong have tended to apply certain regulatory requirements, such as anti-money laundering and counter-terrorist financing rules, to all classes of virtual assets.

Chapter Three

Oversight in a crypto world

Financial stability and regulatory challenges

The identification, monitoring and management of risks continue to concern and on occasion confound regulators and firms alike. The challenges include operational and financial integrity risks from crypto-asset exchanges and wallets, investor protection, and inadequate reserves and inaccurate disclosure for some stablecoins. Moreover, in emerging markets and developing economies, the advent of crypto can accelerate what the IMF has badged “cryptoization”— when these assets replace domestic currency and circumvent exchange restrictions and capital account management measures.

Financial stability

The FSB raised[14] potentially serious concerns about financial stability in a recent paper. Given the international and diverse nature of the crypto-asset markets, it has advocated that regulatory authorities prioritize cross-border and cross-sectoral cooperation. Financial stability risks could escalate rapidly, and the FSB is clear that a ”timely and pre-emptive evaluation of possible policy responses” is required.

The need for policymaking pre-emption and cooperation is seen as increasingly urgent as, while crypto-assets account for only a small portion of overall financial system assets, they are growing rapidly. Direct connections between crypto-assets and systemically important financial institutions and core financial markets are rapidly evolving, opening the door to the potential for regulatory gaps, fragmentation or arbitrage.

A lack of consistency

The cross-sector, cross-border nature of cryptos limits the effectiveness of national approaches. Countries are adopting different strategies, and existing regulations may not allow for national approaches that comprehensively cover all elements of these assets. Importantly, many crypto service providers operate across borders, making the task for supervision and enforcement even more difficult.

A particular challenge is a lack of consistency between, or absence of, definitions related to new technology applications. There are also legal and jurisdictional questions to be resolved. As an example, the U.S. CFTC and the courts have established that bitcoin is a commodity. The banking regulators see cryptos as a form of payment subject to their purview. The SEC, as the lead U.S. financial services regulator, however, sees things differently.

U.S. Executive Order and SEC take steps toward crypto regulation

In March 2022, the White House issued an Executive Order which emphasized the importance of digital assets and the need for coordination and cooperation between government departments, agencies and regulators. The Order said, “We must reinforce United States leadership in the global financial system and in technological and economic competitiveness, including through the responsible development of payment innovations and digital assets.”

The Order took a holistic approach to addressing risks and harnessing the potential benefits of digital assets. It emphasized six key priorities: consumer and investor protection, financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation.

New proposed rules from the SEC related to alternative trading systems (ATSs) have raised speculation in the crypto industry that the regulatory expansion could include blockchain and cryptocurrency platforms.

The proposal does not specifically reference cryptocurrencies or blockchain. However, a reference to “communication protocol systems” could apply to trading venues of all types, such as unregulated platforms according to several attorneys.

The rule proposal[15] announced in January 2022 may have come as a surprise to the crypto and blockchain industries, some elements of which perceived it as an early shot in what will be a long and complex regulatory battle.

Alternative trading systems are SEC-regulated electronic trading systems that match orders for buyers and sellers of securities. Trading in U.S. government securities on such platforms has grown significantly in recent years. The level of regulatory oversight and investor transparency at these venues has not matched similar platforms for corporate bonds or equity securities.

The proposed rules are intended to protect investors and enhance cybersecurity in ATSs that trade U.S. Treasury securities. They expand on a similar 2020 proposal under Jay Clayton, former SEC chair.

The 650-page document raised about a dozen significant issues, according to Hester Peirce, an SEC commissioner. Peirce cited[16] a reach to “currently unregulated communication protocol systems” and noted that the proposal “goes well beyond government securities, or even fixed-income securities; key parts of the proposal affect trading venues that make any type of security available for trading.”

Critics have said the proposal could include wallets, block explorers that allow users to call smart contracts, and other market participants including virtually every blockchain-based application. The proposal considers definitions such as “orders” “trading interests,” and “communication protocol systems” in place of “exchanges.”

Crypto advertising

Supervisory approaches to the advertising of cryptos to retail investors vary considerably among jurisdictions.


In February 2022, the UK FCA updated its prohibition[17] on the retail marketing, distribution and sale of crypto-asset derivatives and crypto-asset exchange-traded notes. The UK is also consulting on further potential restrictions.

United States

Crypto advertising in the United States is big business. When celebrity Kim Kardashian was paid to ask her 250 million Instagram followers to speculate on crypto tokens by “joining the Ethereum Max Community,” she disclosed that her post was an advertisement. She did not, however, have to disclose that Ethereum Max — not to be confused with the cryptocurrency ethereum — was a speculative digital token created a month before, one of hundreds of such tokens that fill the crypto-exchanges.

On television, meanwhile, potential retail investors in cryptos can watch movie stars pitch them in prime-time slots during major sporting events. Sporting venues have been re-named after crypto trading platforms, most notably Crypto.com, which paid $700 million for the naming rights of the Staples Center, home of the NBA’s Los Angeles Lakers, for a 20-year term. During the 2022 Super Bowl, four cryptocurrency commercials aired. A one-minute advertisement costing nearly $14 million, which featured nothing more than a floating QR code, drove more than 20 million hits to Coinbase’s landing page within one minute, according to Bitcoin Magazine.

Regulators in the United States have thus far focused their attention and enforcement efforts on unregistered securities offerings, and fraudulent scams. However, with investor protection and risk disclosures as core tenets, stricter advertising regulations surrounding cryptos are likely inevitable.


The Spanish securities regulator (CNMV) said in January that would begin to regulate rampant advertising of crypto-assets, including by social media influencers, to ensure investors are aware of risks. New regulations[18] set out requirements for the content and format of promotional messages for crypto-asset campaigns.

Advertisers and companies that market crypto-assets will have to inform the CNMV at least 10 days in advance about the content of campaigns targeting more than 100,000 people.

In November 2021, the CNMV scolded soccer star Andres Iniesta after he promoted the cryptocurrency exchange platform Binance on his Twitter and Instagram accounts, telling him that he should be thoroughly informed about cryptocurrencies before making any investment in them or recommending others to do so.


The Monetary Authority of Singapore in January published guidelines[19] “discouraging” cryptocurrency trading by the general public and giving effect to MAS’ expectations that cryptocurrency service providers should not promote their services to the general public in Singapore.


Also in January 2022, Russia’s central bank proposed to ban the use and mining of cryptocurrencies on Russian territory, citing threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty. Russia has argued for years against cryptocurrencies, saying they could be used in money laundering or to finance terrorism. It eventually gave them legal status in 2020 but banned their use as a means of payment.

The Russian central bank stated that speculative demand primarily determined cryptocurrencies’ rapid growth and that they carried characteristics of a financial pyramid, warning of potential bubbles in the market, threatening financial stability and citizens. The bank has proposed to prevent financial institutions from carrying out any operations with cryptocurrencies and said mechanisms should be developed to block transactions aimed at buying or selling cryptocurrencies for fiat currencies. The proposed ban would include crypto exchanges.

The DFSA advises consumers and potential investors to exercise caution and undertake due diligence to understand the risks involved when buying crypto-assets. Risks include:

  • Fraud: Criminals often use crypto-assets and new technology to perpetrate fraudulent schemes by misleading customers as to the nature of the product on offer and “take the money and run” shortly after the token is issued. Also, fraudsters may entice customers by touting crypto-assets as an investment or an “opportunity” to get into a cutting-edge space without any real benefit behind the offer.
  • Volatility: Crypto-asset valuation and pricing can be difficult because of volatility and lack of real underlying assets, and holders may suffer significant losses if the price of the crypto-asset drops quickly.
  • Liquidity: Illiquid or flat market structures can make it hard to sell or trade crypto-assets. It may also be difficult to exit the market and “cash out.”
  • Information: Information may be missing, inaccurate, incomplete and unclear with respect to the project and associated risks. Documents may be technical and require additional knowledge to understand the characteristics of the crypto-assets and what the holder is (not) getting.
  • Money laundering: Crypto-asset platforms commonly rely on complex infrastructures using several entities (spanning across jurisdictions) to transfer funds and/or execute payments. This can mean that AML/CTF compliance, supervision and enforcement may not be effective. Consumers should exercise caution when dealing with crypto-asset entities, unless they are sure that the entities are properly regulated, to be protected against financial misconduct or wrongdoing.”  -- Extract from Dubai Financial Services Authority statement on crypto-assets, November 2021.
  • Trust: Trust is a particular challenge with regards to the increasingly widespread use of cryptos, especially as cryptos are seen to be eroding or replacing existing monetary norms such as fiat currency. Policymakers are beginning to consider the possible economic and regulatory ramifications of the adoption of digital currencies, together with the potential impact on the international monetary system.

Trust is primarily needed to maintain the societal conventions regarding the use of money. Part of that convention is that central banks provide, and critically are seen to provide, an open, neutral, trusted and stable platform. Private companies use their ingenuity and dynamism to develop new payment methods and financial products and services. This combination has been a powerful driver of innovation and welfare. The successful symbiosis cannot be taken for granted, however, and some recent developments may threaten money’s essence as a public good, if taken too far.

In a speech[20] entitled “Digital currencies and the soul of money,” Agustín Carstens, general manager of the Bank for International Settlements, offers three plausible scenarios for the future of money:

Big Tech stablecoins compete with national currencies and also against each other, fragmenting the monetary system.

The elusive promise of crypto and decentralized finance, or “DeFi,” which claims to offer a financial system free from powerful intermediaries but may deliver something very different.

The realization of the vision of an open monetary and financial system that harnesses technology for the benefit of all.

Carstens is an advocate of the third scenario, with an ideal of incumbent financial institutions, Big Techs and new innovative entrants all competing in an open marketplace that guarantees interoperability, building on central bank public goods. This is also the goal of the BIS Innovation Hub[21].

Gatekeeping the gatekeepers — big tech and banking licenses

The growing interconnectedness between the traditional financial system and cryptos is demonstrated by the potential for, and the implications of, Big Tech firms and other digital asset firms taking stakes in or owning banks and financial services companies.

In January 2022, a paper by the Bank for International Settlements’ Financial Stability Institute assessed[22] the benefits and risks of extending banking licenses to Big Techs and fintechs. The findings are based on publicly available licensing requirements in seven jurisdictions covering Asia, Europe and North America.

The paper compares the merits of bank ownership by tech firms in relation to ownership by commercial or industrial non-financial companies (NFCs).

The perceived benefits of allowing tech firms to operate with a banking license are “compelling but require scrutiny,” the paper says. Unburdened by legacy infrastructure, tech firms can offer superior technology and user-friendly apps that may allow them to reach more consumers and perform various aspects of the banking business (onboarding, deposit-taking, lending, payments) more efficiently than incumbents, including commercial or industrial NFCs that may own banks.

Collectively, their technology-centric approach to the delivery of financial services is expected to advance some authorities’ broader goals of fostering financial inclusion, promoting competition and delivering better outcomes for society. Nevertheless, as part of the authorization process — and subsequently through continuing supervision — authorities need to examine the ability and willingness of tech firms to deliver on their stated objectives.

A particular policy concern is whether the risks of allowing tech firms to own banks can be offset through licensing requirements without undermining the potential benefits they bring to consumers. Policy responses may differ across countries, but they are likely to be guided by three main considerations: the policy priorities of each jurisdiction; the inherent risks posed across and within each group of tech firms; and the applicability of the existing licensing regime in addressing the risks of tech-owned banks.

Warning from history

The UK has a stark warning for policymakers regarding the risks associated with non-financial services owners or controllers of banks, in a report on the Co-operative Bank’s failure in 2013. The report[23] by Sir Christopher Kelly, which considered the events leading to the Co-operative Bank’s capital shortfall, highlights lessons relevant to the policy debate on tech firms owning or controlling banks or other financial services firms.

It found that mistakes had not stemmed from regulatory grey areas or misinterpretations of risk, regulation or compliance. Rather, the Co-operative Group’s board lacked the skills, knowledge or understanding required to manage a bank. It did not know what management information to expect, did not understand the role of the regulator and fundamentally did not understand banking.

The potential relevance to, say, a Big Tech owning a bank is clear. In the words of Kelly, “one of the most surprising features of this whole episode is that the board seemed unaware of its limitations.”

Policymakers will need to ensure there is credible deterrence inherent in the approach to tech firm bank ownership and specifically that any senior manager who is unaware of or ignores their regulatory responsibilities will be vulnerable to investigation and sanction.

Decentralized autonomous organizations

The blockchain-based economy has spawned a new structure of financial institution called the “digital autonomous organization.” This type of organization, based on computerized “smart contracts” recorded on a blockchain, raises significant issues regarding governance and accountability.

Decentralized autonomous organizations 

The emergence of decentralized autonomous organizations (DAOs) represents a revolutionary change in the ways people and businesses can organize. DAOs leverage blockchain technology and are decentralized models of control and governance. They are characterized by transparency, clarity of rule, and process-driven decisions, primarily using smart contracts on distributed ledgers. Once a DAO has been established, via a blockchain, participants take ownership of its token, which allows them to participate in the system. Token holders can propose changes, and can vote on those changes, with the subsequent actions being taken “leaderlessly.” There are no chief executives, chief financial officers or chief technical officers, only code and community.

Close to 5,000 DAOs have been formed to date, and this is expected to grow exponentially. Many involve pooling digital money together to purchase assets, both physical and digital. ConstitutionDAO was established seven days prior to the auctioning of one of the 11 remaining copies of the U.S. Constitution. The intent was to purchase and house it at a protected public location. Participants in the DAO contributed money in ETH (Ethereum token), raising $45 million. Separately, the AssangeDAO raised $53 million for the criminal defense of Julian Assange. These are just two examples of how quickly DAOs can be created, and of how powerful they can be.

Central to a DAO is transparency. Anyone can see which individual (wallet address) owns tokens. Tokens allow for people to vote on proposals. Anyone can create a proposal. Simply stated, and in an ideal setting, it is egalitarian. One challenge to the model, however, is its democratic nature which can make DAOs overly deliberate and result in a slower process compared with more traditional organizations.

The regulatory landscape for DAOs is nearly non-existent at the state level. Wyoming, which has led the United States on regulation for blockchain and cryptocurrency, recently codified rules for DAOs residing in the state. A DAO could, therefore, be created under the laws of the State of Wyoming. No other state enables this yet. Further, there is a movement afoot for corporations in the cryptocurrency sector to dissolve and become DAOs. With potentially hawkish regulation on the horizon for cryptocurrency, DAOs, by their very nature, are code-based, self-running, leaderless entities running via a decentralized network, which permits actions based on how users interact under brassbound, predefined rules. Theoretically, under the current regulatory landscape there is nothing the law can do about such an entity. A corporation converted to a DAO would no longer be in control of the platform, which reverts to a completely new decentralized model, unlike anything regulated currently.

The SEC is reportedly looking into true DAOs such as Uniswap, which operates in the decentralized finance (DeFi) sector as a decentralized exchange (DEX) and is a code-based organization that matches buyers and sellers of cryptocurrency. One area of focus is lending pools, where users will provide their assets for other users to trade, which produces healthy yields, just as banks provide interest on assets. This may fall into the Howey Test investment contract realm.

Financial crime

There is also concern that crypto firms can, and are, being used as conduits for facilitating financial crime. Many such firms, if not most, are outside the regulatory perimeter and have often found stepping into the regulated world challenging. One example of this is Binance, which has suffered multiple setbacks in its attempts to become regulated in several jurisdictions.

New research shows that decentralized finance (DeFi) protocols in particular are becoming an increasingly significant route for money launderers. The January 2022 update[24] from data provider Chainalysis reported that $8.6 billion worth of cryptocurrency was laundered in 2021 — a figure that has fluctuated from $6.6 billion in 2020 to $10.9 billion in 2019.

The 2021 figure represents a 30% increase in money laundering activity compared with 2020, although, as the update points out, “such an increase is unsurprising given the significant growth of both legitimate and illicit cryptocurrency activity in 2021.” Chainalysis also notes that the numbers only account for funds derived from “cryptocurrency-native” crime. This refers to cyber-criminal activity such as darknet market sales or ransomware attacks in which profits are virtually always derived in cryptocurrency rather than fiat currency. It is more difficult to measure how much fiat currency derived from offline crime — traditional drug trafficking, for example — is converted into cryptocurrency to be laundered. 

The U.S. Department of Justice (DOJ) announced recently that it had seized a record $3.6 billion in bitcoin tied to the 2016 hack of digital currency exchange Bitfinex and had arrested a husband-and-wife team on money laundering charges.

The couple allegedly conspired to launder 119,754 bitcoin stolen after a hacker broke into Bitfinex and initiated more than 2,000 unauthorized transactions. DOJ officials said the transactions at the time were valued at $71 million in bitcoin, but with the rise in the currency’s value, the value now is more than $4.5 billion. Bitfinex said in a statement it was working with the DOJ to “establish our rights to a return of the stolen bitcoin.”

This showed that cryptocurrency was “not a safe haven for criminals,” said Lisa Monaco, deputy attorney general.

In another high-profile example last year, former partners and associates of the ransomware group REvil[25] caused a widespread gas shortage on the U.S. East Coast when it used encryption software called DarkSide to launch a cyber attack on the Colonial Pipeline. The DOJ recovered some $2.3 million in cryptocurrency ransom that Colonial paid to the hackers just days later.

Cases like these demonstrate that the DOJ “can follow money across the blockchain, just as we have always followed it within the traditional financial system,” said Kenneth Polite, assistant attorney general of the DOJ’s Criminal Division. This showed that cryptocurrency was “not a safe haven for criminals,” said Lisa Monaco, deputy attorney general.


Overall, cyber-criminals have laundered more than $33 billion worth of cryptocurrency since 2017, with most of the total over time moving to centralized exchanges. For comparison, the UN (United Nations) Office on Drugs and Crime estimates that between $800 billion and $2 trillion of fiat currency is laundered each year — as much as 5% of GDP worldwide, whereas money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021.

The biggest difference between fiat and cryptocurrency-based money laundering is that, due to the inherent transparency of blockchains, it is much easier to trace how criminals move cryptocurrency between wallets and services in their efforts to convert their funds into cash.

For the first time since 2018, centralized exchanges did not receive most of the funds sent by illicit addresses, taking in just 47%. Instead, the illicit funds were routed through DeFi protocols, which received 17% of all funds sent from illicit wallets in 2021, up from 2% the previous year. That translates to a 1,964% year-over-year increase in total value received by DeFi protocols from illicit addresses, reaching a total of $900 million in 2021. Mining pools, high-risk exchanges and mixers also saw substantial increases in value received from illicit addresses. 

The increasing concern about DeFi was highlighted in 2021 when the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Suex and Chatex, two DeFi “gateway services” that regularly laundered funds from ransomware operators, scammers, and other cyber criminals.

In a different vein, HM’s Revenue & Customs in the UK is reported to have seized NFTs for the first time in February 2022 as part of a fraud investigation.

That said, the Belgian financial services regulator reported[26] that fraud linked specifically to cryptocurrencies fell 11% between 2020 and 2021.

Cryptos are undoubtedly being used in financial crime, but it still appears that, for instance, cryptocurrencies are substantially less likely to be used for money laundering than fiat currency. That said, the war in Ukraine has raised further questions and concerns about the potential for cryptos to be used in the avoidance of, or non-compliance with, sanctions.

The way forward

Policymakers are all-too aware of the need for a coherent approach to cryptos. “Global crypto regulation should be comprehensive, consistent and coordinated,” according to the IMF.

Specifically, the international regulatory framework should provide a level playing field along the activity and risk spectrum. The IMF believes this should have the following elements:

  • Crypto-asset service providers that deliver critical functions should be licensed or authorized.      This would include storage, transfer, settlement and custody of reserves and assets, among others, as with existing rules for financial service providers.
  • Requirements should be tailored to the main use cases of crypto-assets and stablecoins.
  • Authorities should provide clear requirements on regulated financial institutions concerning their exposure to and engagement with crypto. 

Firms and their risk and compliance officers must engage with policymakers and regulators to ensure the best possible supervisory approach. Fast-moving digital transformation and adoption, even in limited terms, of innovative new technology, products and solutions will require skill sets to keep pace.

In addition to crypto, respondents to Regulatory Intelligence’s Fintech, regtech and role of compliance report for 2022[27] highlighted a swath of other technological skills, including artificial intelligence and machine learning, cyber resilience and digital ledger technology, as being future knowledge requirements for risk and compliance functions.

A positive and transformative force?

Cryptos have huge potential to be a positive and transformative force for the future of financial services. The point was made in a November 2021 speech[28] by Carolyn A Wilkins, an external member of the Financial Policy Committee at the Bank of England.

Wilkins said she saw crypto-assets as the bedrock of the emerging financial ecosystem. The opportunities and risks extend well past the crypto-assets themselves to encompass a rapidly expanding range of financial services, from lending to insurance, she said. The future of this new frontier will depend critically on the regulatory response to these new activities and how fast the traditional financial system modernizes, and there will need to be major investment in domestic and cross-border payments, as well as digital governance, she said.

Tipping point

In many countries, cryptos appear to be at a legal and regulatory tipping point. Concerns about financial stability and vulnerable customers, together with the apparently persistent misperceptions about financial crime, are driving policymakers to consider significant action. Policymakers must, however, balance these considerations with the benefits which could be derived from the more widespread adoption of cryptos.

Other countries, meanwhile, are welcoming cryptos with seemingly few regulatory concerns. Cryptos’ borderless nature makes this even more challenging, as is evidenced by the near-overnight relocation of miners and crypto firms out of China. Most countries are reluctant to stifle innovation, but it would be politically unacceptable to deliberately risk either wholesale financial stability or widespread retail customer detriment.

There is an urgent need for a coherent approach to the regulation and oversight of cryptos; otherwise, there is a danger that they will fail to achieve their potential, and the world will lose the considerable benefits they could bring.

Chapter Four

Compendium: Cryptocurrency regulations by country

In 2021 digital assets moved from the fringes of the economy and began to enter the mainstream, prompting more widespread public adoption. Commercials for crypto trading platforms blanket network television in the United States and the sector has become a focus of everyday conversation.

In November 2021, with bitcoin prices peaking around the $60,000 level, the total value of all cryptocurrencies surpassed $3 trillion, an increase from approximately $500 billion in December 2020. Today there are more than 16,000 individual cryptocurrencies in circulation, led by bitcoin. Total daily trading volumes are now estimated to be more than $275 billion on more than 400 platforms.

2021 was a transformative year for digital assets, and the stage is set for regulators to build a framework to govern this massive new market. Thus far, the regulatory response is best described as ad-hoc, rhetorical or driven by enforcement in some instances. The challenge in such a new and disruptive area will likely take years to finalize. Adding to the challenge is the ambiguous nature of digital assets themselves and the lack of standardized definitions, thus creating questions of overlap and jurisdiction.

The regulation of this new sector will require international coordination and engagement with the industry as it presents an opportunity for progress. An overly restrictive approach could stifle innovation and drive the industry to more welcoming jurisdictions, as the new digital universe is inherently global and borderless.

The regulatory framework is evolving rapidly and changing quickly. Some jurisdictions have imposed outright bans while others are staunch advocates.

Complete restrictions are rare and difficult to enforce, but regulators are scrambling to clarify rules to keep pace with crypto’s popularity.

Many market participants are desperately seeking a more defined regulatory framework and thus, certainty. This will mean new rules, regulations, or at a minimum official guidance. The race to regulate is now underway.

Crypto-assets, cryptocurrencies, central bank digital currencies and non-fungible tokens make up the new “crypto” universe, and each provides unique benefits, as well as regulatory challenges and complexities. This compendium to the report provides a summary of the regulatory picture in each jurisdiction. The summary below is grouped by region and focuses primarily on cryptocurrencies such as bitcoin. It provides an overview for each country, the regulatory state of play and links to the primary financial regulatory authorities or other relevant information.

Much of the regulatory framework is still developing, and regulations and restrictions also vary depending on uses such as payments, investments, derivatives, and tax status. Most countries have generally found ways to tax gains or income derived from cryptocurrencies, and some have more specific obligations than others. Few pure “tax havens” remain.

North America


Canada has approved bitcoin exchange-traded funds (ETFs). Canadian Securities Administrators (CSA)[29] and the Investment Industry Regulatory Organization of Canada (IIROC)[30] have issued guidance requiring crypto trading platforms and dealers in Canada to register with the local provincial regulators. In 2021 Canada adopted a clear registration regime for trading platforms that offer custodial services to Canadian clients. Several firms have registered under the new rules. Canada has also provided guidance on advertising and marketing of cryptos. The Ontario Securities Commission has actively enforced the regulations against several unregistered foreign trading platforms.

The Canada Revenue Authority (CRA) generally treats cryptocurrency like a commodity for purposes of the Income Tax Act.


Cryptocurrencies are prohibited in Mexico. The government and the financial authority, CNBV, enacted a set of fintech laws[31] in March 2018 that developed a regulatory framework and “sandbox” for virtual assets. The country has, however, taken a conservative approach to virtual assets with their relationship to existing financial system.

In June 2021 financial authorities said crypto-assets are not legal tender and not considered currencies under existing laws, warning that financial institutions that operate with them are subject to sanctions. “The financial authorities reiterate their warnings ... on the risks inherent in the use of so-called ‘virtual assets’ as a means of exchange, as a store of value or as another form of investment,” the statement said.

“The country’s financial institutions are not authorized to carry out and offer to the public operations with virtual assets, such as bitcoin, Ether, XRP and others in order to maintain a healthy distance between them and the financial system.”

Despite the restrictions, some of population has embraced cryptocurrencies. Mexico’s largest crypto exchange, Bitsos, has more than one million users on its platform.

Mexico’s Federal AML Law was amended in March 2018 to include transactions with “virtual assets” and considers them vulnerable activities under Financial Action Task Force (FATF) purposes.

The tax framework for cryptocurrencies is expected to change as there is no official position.

[29] https://www.securities-administrators.ca/news/canadian-securities-regulators-outline-regulatory-framework-for-compliance-for-crypto-asset-trading-platforms/

[30] https://www.iiroc.ca/news-and-publications/notices-and-guidance/joint-csaiiroc-staff-notice-21-329-guidance-crypto-asset-trading-platforms-compliance-regulatory

[31] http://www.diputados.gob.mx/LeyesBiblio/ref/lritf.htm

United States

The regulatory framework for cryptocurrencies is evolving despite overlap and differences in viewpoints between agencies. Although the Securities and Exchange Commission[32] (SEC) is widely seen as the most powerful regulator, Treasury’s FinCEN[33], the Federal Reserve Board[34] and the Commodity Futures Trading Commission[35] (CFTC) have issued their own differing interpretations and guidance. An Executive Order from the White House[36] released in March directs the agencies to coordinate their regulatory efforts.

The SEC often views many cryptos as securities, the CFTC calls bitcoin a commodity, and Treasury calls it a currency. To iron out the regulatory differences, confusion about definitions, and jurisdiction, the President’s Working Group and the Financial Stability Oversight Council will play important roles in the development of a future regulatory framework.

The Internal Revenue Service (IRS) defines cryptocurrencies as “a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value” and has issued tax guidance[37] accordingly. The IRS requires investors to disclose yearly cryptocurrency activity on their tax returns.

The United States is home to the largest number of crypto investors, exchanges, trading platforms, crypto mining firms and investment funds.

Central and South America


In Argentina, investing in cryptocurrencies is legal. It has become a large industry and accounts for a considerable portion of the country’s savings and assets. The government has issued regulations regarding cryptocurrencies related to taxation and AML/CFT. The government has proposed legislation which would create a legal and regulatory framework for crypto-assets as a means of payments, investments and transactions.

Argentina agreed with the IMF that it would adopt a program of fiscal, monetary and financial stability as it refinanced external debt in January. The promise may lead to higher taxes on cryptos.

The Argentina Securities and Exchange Commission[38] (CNV) will be the regulatory body with oversight responsibilities. It plans to maintain a national registry of operations, with transactions reported to the Financial Information Unit for compliance with AML requirements.

Argentina’s Federal Administration of Public Income and central bank have requested more information from domestic crypto exchanges and banks. Gains from cryptos are generally taxable at a 4% to 6.5% rate on gross income for each digital currency transaction.

[32] https://www.sec.gov/files/digital-assets-risk-alert.pdf

[33] https://home.treasury.gov/news/press-releases/sm1216

[34] https://www.federalreserve.gov/econres/notes/feds-notes/tokens-and-accounts-in-the-context-of-digital-currencies-122320.htm

[35] https://www.cftc.gov/PressRoom/PressReleases/8291-20

[36] https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/

[37] https://www.irs.gov/newsroom/irs-virtual-currency-guidance

[38] https://www.argentina.gob.ar/cnv


The Bolivian government banned the use of cryptocurrencies such as bitcoin in 2014, in the belief that it would facilitate tax evasion and monetary instability. “It is illegal to use any kind of currency that is not issued and controlled by a government or an authorized entity,” Bolivia’s central bank[39] (BCB) said.

Bolivia has refrained from cracking down on or criminalizing the holding or trading cryptos, but it has not allowed businesses and brokers seeking to provide crypto-related services in the country. The BCB has publicly said, “…crypto-assets may not be operated through the Bolivian financial system. They do not operate with the authorization of the BCB or the Financial System Supervision Authority.” The BCB has said the measures were necessary to protect the public from “risks, frauds and swindles.”


In 2021 as the Brazilian real struggled, many Brazilians turned to cryptos. According to CoinMarketCap, approximately 10 million Brazilians now participate in the crypto market. Legislators in Brazil have proposed a series of regulations in the past several years and created a regulatory “sandbox.” Brazilian lawmakers have also passed legislation[40] requiring “virtual asset service providers to follow rules of communication of financial transactions, with identification of customers and recordkeeping.”

The Brazilian Securities and Exchange Commission[41] (CVM) has approved several crypto ETFs. The government has declared that bitcoin is an asset and therefore is subject to capital gains taxes. Brazil has said that existing AML laws extend to virtual currencies in certain contexts.

The Special Department of Federal Revenue of Brazil[42] has published a document on cryptocurrency taxes in the country.

The Central Bank of Brazil[43] said a CBDC, the digital real, could be launched as early as 2023.


Lawmakers in Chile are working to develop a regulatory and oversight framework for cryptocurrencies and to potentially recognize bitcoin as legal form of payment[44]. The government is also working on a CBDC. With a growing number of cryptocurrency exchanges in the country, and in the absence of a legal framework, the Central Bank and the Financial Market Commission[45] has said that existing regulations are applicable to cryptocurrencies.

The Chilean Internal Revenue Service (SII) is the only institution so far to have issued legislation on cryptocurrencies in Notice no 963, issued on May 14, 2018,[46]. The SII released a determination on the taxation of income obtained from buying and selling cryptocurrencies. It said that Tax Form 22 would require the declaration “from the sale of foreign currencies of legal course or assets digital/virtual, such as cryptocurrencies (for example, bitcoins).”

[39] https://www.bcb.gob.bo/

[40] https://www.camara.leg.br/noticias/811726-comissao-aprova-pena-maior-para-lavagem-de-dinheiro-com-moedas-virtuais

[41] https://www.gov.br/cvm/en

[42] http://normas.receita.fazenda.gov.br/sijut2consulta/link.action?visao=anotado&idAto=100592

[43] https://www.bcb.gov.br/en/pressdetail/2397/nota

[44] https://www.senado.cl/appsenado/templates/tramitacion/index.php?boletin_ini=14708-03


The Colombian government has prohibited banks from providing financial services to cryptocurrency companies. The country’s restrictive approach has created a challenge for the industry as firms may not use banking institutions.

The Banco de la República[47], the country’s monetary, exchange and credit authority, and the Superintendencia Financiera de Colombia (SFC)[48], the government agency responsible for overseeing financial regulation and market systems, released statements on cryptos. The authorities said cryptos are not legal tender or valid investments for supervised entities, and that firms are not authorized to advise or manage them.

The Superintendency of Corporations in Colombia[49] has stated that companies can legally purchase cryptos such as bitcoin, although such “intangible assets” are unregulated. The country’s tax authority, the Directorate of National Taxes and Customs (DIAN)[50], said “virtual currencies are not money for legal purposes. However, in the context of mining activity, insofar as they are received in exchange for services and/or commissions, they correspond to income and, in any case, to goods that can be valued and generate income for those who obtain them as from be part of your patrimony and take effect in tax matters.”

There is no specific legislation or prohibition on the use of cryptocurrencies, but warnings from the government have led banks to deactivate cryptocurrency-related accounts and created an environment which makes it impossible for cryptocurrency-oriented companies to operate.


In January 2018, the Central Bank of Ecuador[51] informed citizens that bitcoin “is not a means of payment authorized for use in the country.” It clarified that bitcoin is not backed by any authority as its value is based on speculation. Financial transactions are not controlled, supervised, or regulated by any entity in the country, and this presents a financial risk to those who use it.

Despite this warning, the central bank has said that “the purchase and sale of cryptocurrencies — such as bitcoin — through the internet is not prohibited.”

In January 2022, Guillermo Avellan, the manager of the Central Bank of Ecuador, said there are plans to issue regulations later this year, which would bring clarity and contribute to the prevention of financial crimes such as money laundering.

[45] https://www.cmfchile.cl/portal/principal/613/w3-article-25729.html

[46] https://www.sii.cl/normativa_legislacion/jurisprudencia_administrativa/ley_impuesto_renta/2018/ja963.htm

[47] https://www.banrep.gov.co/es/publicaciones/documento-tecnico-criptoactivos

[48] https://www.superfinanciera.gov.co/jsp/index.jsf

[49] https://www.supersociedades.gov.co/nuestra_entidad/normatividad/normatividad_conceptos_juridicos/OFICIO_100-237890_DE_2020.pdf

[50] https://www.dian.gov.co/Prensa/ComunicadosPrensa/009-DIAN-realiza-acciones-de-fiscalizacion-a-operacion-con-criptoactivos-BITCOIN.pdf

[51] https://www.bce.fin.ec/index.php/boletines-de-prensa-archivo/item/1028-comunicado-oficial-sobre-el-uso-del-bitcoin

El Salvador

El Salvador has established itself as a pioneer in cryptocurrencies with its 2021 adoption[52] of bitcoin as legal tender in the country. President Nayib Bukele has fully embraced bitcoin with promises of no income tax on cryptos and plans to build a geo-thermal powered city to try to attract bitcoin mining.

The International Monetary Fund, has urged El Salvador to reverse course, citing concerns about the country’s financial stability. The move to legal tender status is widely seen as a risky experiment, with credit rating agencies downgrading the country’s debt ratings. The move has also raised concerns related to AML and KYC compliance.


In December 2022, a new cryptocurrency law was introduced which seeks to define crypto-assets and regulate crypto transactions. The proposed law, “Crypto-asset Marketing Framework,” was introduced in the Peruvian Congress under the number N° 1042/2021-CR[53], The law is seen as a first step to establish regulatory clarity for virtual asset service providers and others involved in blockchain and cryptography. The law proposes the creation of a public register and provides that registrants must operate lawfully in the country. It also considers the use of crypto-assets to create and incorporate companies and proposes that the assets could be considered property or intangible assets.

Thus far, the government has warned that no supervision is provided by the Securities Agency[54] (SMV), the Banking, Insurance and Pension Fund Manager Agency[55] (SBS), or the Peruvian Central Reserve Bank[56] (BCRP).

The BCRP has said that these financial assets are not legal tender, nor are they supported by central banks, so they fail fully to meet the functions of money as a medium of exchange, unit of account and store of value.

[52] https://www.asamblea.gob.sv/sites/default/files/documents/decretos/8EE85A5B-A420-4826-ABD0-463380E2603B.pdf

[53] https://wb2server.congreso.gob.pe/spley-portal-service/archivo/OTM0MA==/pdf/PL0104220211220

[54] https://www.smv.gob.pe/

[55] https://www.sbs.gob.pe/

[56] https://www.bcrp.gob.pe/en


There is no specific legislation on cryptocurrencies. The Uruguayan Chamber of FinTech[57] has, however, announced the formation of a cryptocurrency committee to analyze what future regulations might look like. The country is widely viewed as bitcoin- and blockchain-friendly with no regulations specifically banning or permitting the use of cryptocurrencies.

On October 1, 2021, the Central Bank of Uruguay issued a statement about virtual assets and outlined a process for regulating cryptos. Peru has actively embraced the industry with a view of achieving a regulatory approach that is in line with international organizations.

The central bank clarified that the assets are not considered legal tender and that a regulatory framework would be very different from that of El Salvador.


Prior to 2018, law enforcement arrested and seized assets of bitcoin miners but has now declared cryptocurrencies such as bitcoin legal. The Superintendency of Crypto-assets and Related Activities of Venezuela (SUPCACVEN) is the governmental agency in charge of regulations, control and protection of crypto-assets.

On September 21, 2020, Venezuela legalized bitcoin mining. Miners must, however, be registered and all activities must be overseen through the “National Mining Pool,” with the government in charge of distributing the rewards from such activities.

The government has also created its own cryptocurrency called the Petro, which is backed by the value of Venezuelan oil.



The Financial Market Authority (FMA) has warned[58] investors that cryptocurrencies are risky and that the FMA does not supervise or regulate virtual currencies, including bitcoin, or cryptocurrency trading platforms. The FMA’s regulations follow Austria’s implementation of the Fifth Money Laundering Directive (AMLD5), defining crypto-assets as “financial instruments.” The FMA regulations provide registration requirements with respect to the issuance and selling of virtual currencies as well as transferring them, trading and exchange platforms for them as well as providers of custodian wallets.

Cryptocurrencies are legal but are not considered as legal tender. The Austrian Ministry of Finance[59] classes cryptocurrencies as “other (intangible) commodities.” As part of a nationwide tax overhaul, Austria will apply a 27.5% capital gains tax on digital currencies, bringing the treatment of cryptos into line with that of stocks and bonds, to “streamline” conditions between asset classes.

As a member of the EU, regulations and guidance issued by the European supervisory authorities (the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA)) apply. Virtual currencies are defined by the European Central Bank (ECB) as “a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money.”

[57] https://fintech.org.uy/

[58] https://www.fma.gv.at/en/bitcoins/

[59] https://www.bmf.gv.at/en.html

Bailiwick of Guernsey

The territory of Guernsey within the British Isles is known as a Crown Dependency but is not part of the United Kingdom; rather, it is a self-governing possession of the British Crown. The Guernsey Financial Services Commission (GFSC) is the body responsible for the regulation of the finance sector.

The GFSC has warned of the risks associated with cryptos, although it has taken a light regulatory approach. According to the GFSC website[60], “Virtual or crypto currencies could interact with our regulatory laws in a number of ways and therefore any application would need to be assessed on its individual merits. We will assess any application by the same criteria we use for other asset types or structures, which means we would look to ensure that key controls are appropriate — for example, around custody, liquidity, valuation of assets and investor information.”

The GFSC has said it will assess applications on individual merits against the criteria used for asset types or structures, because cryptocurrencies, “could interact with regulatory laws in a number of ways.” Applicants must demonstrate how they will comply with AML/CTF laws and rules. The GFSC has also said it would be cautious about approving applications for ICOs, and also about the establishment of any kind of digital currency exchange within the jurisdiction.

Guernsey has announced plans for crypto-asset regulations later this year. The laws are expected to include a licensing regime for VASPs. Guernsey has approved a bitcoin fund.

[60] https://www.gfsc.gg/faqs-0

Bailiwick of Jersey

The territory of Jersey within the British Isles is known as a Crown Dependency but is not part of the United Kingdom; rather, it is a self-governing possession of the British Crown. In 2016 amendments to the Proceeds in Crime Law categorized virtual currency as a form of currency.

Financial services business such as exchanges are subject to Jersey’s AML requirements and must comply with the island’s laws, regulations, policies and procedures related to AML/CTF.

Virtual currency exchanges are a supervised business and are required to register with, and fall under the supervision of, the Jersey Financial Services Commission[61] (JFSC).

Mining of cryptos on a small scale in Jersey is not taxable[62], although the exchange of cryptocurrencies to and from conventional currencies and other cryptocurrencies will be liable to income tax, if it is considered to be “trading.”


The Belgian Financial Services and Markets Authority[63] and the National Bank of Belgium are the primary regulatory bodies for financial services in Belgium. The regulators have published guidance and warnings to the public that cryptocurrencies are not legal tender and have also issued statements regarding scams and investor protection. Belgium has, however, fostered a strong fintech community involved in digital assets and blockchain. The minister of justice has announced plans to establish a legal framework related to cryptos.

In February 2022 Belgium announced new rules[64] for certain virtual asset service providers. The rules, which take effect in May 2022, will require service providers “to meet a series of conditions, including ones relating to their professional integrity and compliance with the anti-money laundering legislation.”

Gains on cryptocurrencies are taxable by as “miscellaneous income.”

As a member of the EU, regulations issued by the EBA, EIOPA and ESMA apply. Virtual currencies are defined by the ECB as “a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money.”


The Bulgarian National Bank[65] and the Bulgarian Commission for Financial Supervision[66] have not defined cryptocurrencies as financial instruments or electronic money. Cryptocurrencies and bitcoin mining are not illegal and not regulated.

Bulgarian regulators have issued various standard warnings to the public and potential investors about risks associated with digital assets and initial coin offerings, and has not defined cryptocurrencies as financial instruments or legal tender for payments.

The Bulgarian National Revenue Agency[67] has issued a statement to define tax treatment for businesses and individuals and declare activities. Gains on cryptocurrency gains are taxed at 10%.

As a member of the EU, Bulgaria is one of only eight countries that has not adopted the euro, although national bank officials have said they intend to adopt the euro in 2024. Other EBA, EIOPA and ESMA regulations and guidance apply.

[61] https://www.jerseyfsc.org/

[62] https://www.gov.je/TaxesMoney/IncomeTax/Technical/Guidelines/Pages/CryptocurrenciesTreatment.aspx

[63] https://www.fsma.be/en

[64] https://www.fsma.be/en/news/cryptocurrencies-new-rules-certain-service-providers

[65] https://www.bnb.bg/

[66] https://www.fsc.bg/en/

Czech Republic

In the Czech Republic, cryptocurrency is largely unregulated and is regarded as a commodity rather than a currency. It is not an official means of payment.

The Czech National Bank[68] permits Czech banks to offer crypto-related services as long as they comply with AML regulations. The Czech Republic has said cryptocurrencies present no danger to the banking system and has deferred to EU directives. The Czech Republic has, however, implemented a stricter legal model than AMLD5 requiring that every cryptocurrency-related firm be regulated by the Czech government. AML regulations apply to anyone that provides cryptocurrency services, including “those who buy, sell, store, manage, or mediate the purchase or sale of cryptocurrencies or provide other services related to such currencies as a business.”

Gains on cryptos are taxed at rates between 15 and 19%.


The Danish Financial Supervisory Authority[69] is the main regulator in Denmark. Cryptocurrency regulation is, however, influenced by EU law. An amendment in January 2020 to the Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism[70] defines a virtual currency as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.”

There is no regulation of mining for virtual currencies in Denmark.

Denmark amended the AML Act in 2020 to implement AMLD5, which is designed to bring virtual currencies within the scope of the 4MLD.

The Danish central bank, the Nationalbanken[71], is researching the development of a digital currency, the “e-krone.”

[67] https://www.iota-tax.org/organization/national-revenue-agency

[68] https://www.cnb.cz/en/public/media-service/speeches-conferences-seminars/presentations-and-speeches/Cryptoassets-Central-Banks-and-the- Current-Monetary-System-pdf-754-kB/

[69] https://www.dfsa.dk/

[70] https://www.dfsa.dk/Rules-and-Practice/AML_act_guide

[71] https://www.nationalbanken.dk/en/publications/Pages/2017/12/Central-bank-digital-currency-in-Denmark.aspx


Estonia has been an early crypto frontrunner, with more than 1,300 crypto exchanges. In January 2021 the Ministry of Finance in Estonia proposed regulations for virtual currency service providers. The new regulations require “virtual currency service” firms to have their registered office, management and place of business located in Estonia. Such firms include wallets and trading platforms.

Although virtual currencies are not subject to securities regulation in the EU, the new draft rules attempt to address some of the regulatory issues and tighten regulation on virtual asset service providers. Firms will be subject to the supervision of the Financial Supervision Authority[72], which will require minimum capital standards, IT standards, audits and reporting. All license holders are required to re-apply for a new license.

In December 2021, Estonia’s minister of finance published an informational page[73] addressing commonly asked questions about the proposed bill. “The legislation does not contain any measures to ban customers from owning and trading virtual assets and does not in any way require customers to share their private keys to wallets,” the minister said.

The proposed bill is seen as Estonia’s answer to the FATF guidance on regulating VASPs.

Income derived from cryptocurrencies in Estonia is taxable by the county’s Tax and Custom Board[74].


In May 2019, Finland’s Financial Supervisory Authority[75] (FSA) began regulating virtual currency exchange providers, wallets and issuers of virtual currencies. Registration is required to ensure compliance with statutory requirements surrounding reliability of the provider, protection of client money, segregation of assets, marketing and compliance with AML/CFT regulations.

The FSA has warned consumers of the risky, volatile and speculative nature of the investments.

The Finnish FSA has published stricter rulings regarding crypto marketing saying “Only registered virtual currency providers can market virtual currencies and related services in Finland. The marketing of virtual currencies in Finnish and in Finland is only allowed for entities registered as virtual currency providers in Finland.”

The list of supervised entities[76] operating in the cryptocurrency and digital currency sector is small, with fewer than 10 companies registered; although, the FSA does not advise on or restrict Finnish customers visiting foreign websites.

Finland has joined the European Blockchain Partnership[77] and agreed to AMLD5.

[72] https://www.fi.ee/en/finantsinspektsioon/financial-innovation/virtual-currencies-and-ico/information-entities-engaging-virtual-currencies-and-icos

[73] https://www.fin.ee/en/faq-how-will-new-estonian-draft-legislation-affect-virtual-assets-and-crypto#can-i-be-fined-for-o

[74] https://www.emta.ee/eng/private-client/declaration-income/other-income/taxation-private-persons-virtual

[75] https://www.finanssivalvonta.fi/en/publications-and-press-releases/supervision-releases/2019/virtual-currency-providers-to-be-supervised-by-the-fin-fsa--briefing-for-virtual-currency-providers-on-15-may/

[76] https://www.finanssivalvonta.fi/en/registers/supervised-entities/

[77] https://digital-strategy.ec.europa.eu/en/news/european-countries-join-blockchain-partnership


In April 2019, the French National Assembly adopted the Plan d’Action pour la Croissance et la Transformation de Enterprises[78] (PACTE – Action Plan for Business Growth and Transformation) that will establish a framework for digital asset services providers. France’s Financial Market Authority[79] (AMF) has adopted new rules and regulations for cryptocurrency service providers and ICOs, related to the (PACTE). Ordinance № 2020-1544[80], was issued on December 9, 2020, to compliment France’s cryptocurrency regulations.

In June 2021, the regulations were finalized and went into effect. Firms are now subject to mandatory registration and subject to stricter KYC regulations. The rules established new AML/CFT rules related to digital assets. They imposed new requirements on crypto exchanges and prohibit anonymous accounts, expand AML/CFT and KYC obligations to better harmonize the French AML framework with Financial Action Task Force[81] (FATF) principles and respond to new risks associated with digital assets.

Lawmakers in France have recently debated changing the tax structure related to cryptos. Cryptos are taxed similar to movable property. Occasional traders are charged a flat tax of 30% while miners and professional traders are taxed 45%.


The German government was one of the first countries to provide legal certainty to financial institutions, allowing them to hold crypto-assets. Regulations stipulate that citizens and legal entities can buy or trade crypto-assets as long as it is done through licensed exchanges and custodians. Firms must be licensed with the German Federal Financial Supervisory Authority[82] (BaFin).

BaFin views and classifies cryptos as “units of account” within the meaning of the German Banking Act. They are therefore not legal tender, money, or foreign exchange notes or coins. The regulators have agreed, however, that they are deemed “crypto-assets” in accordance with the definition of financial instruments.

Germany has signed up to requirements under AMLD5. It has established licensing requirements for custody services. Crypto-assets are, however, based on agreement and accepted as a means of exchange or payment or as an investment, and can be transferred, stored, and traded electronically.

The German Federal Central Tax Office considers cryptocurrencies as private money for tax purposes. For individuals, gains of less than 600 euros held for less than a year are considered tax-free. Sales of cryptos held for more than a year are tax-exempt in Germany. If neither of the conditions are met, the gains are taxed subject to ordinary income rates.

[78] https://www.gouvernement.fr/en/pacte-the-action-plan-for-business-growth-and-transformation

[79] https://www.amf-france.org/en

[80] https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000042636234

[81] https://www.fatf-gafi.org/

[82] https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Merkblatt/BA/mb_Hinweise_zum_Erlaubnisantrag_fuer_das_Kryptoverwahrgeschaeft_en.html


In the midst of the Greek debt crisis in 2015 bitcoin exploded in popularity in the country. Crypto regulation centers around Europe-wide directives. The Bank of Greece has issued and adopted European warnings and the country joined the European Blockchain Partnership.

The Hellenic Capital Market Commission[83] views cryptocurrencies as portfolio assets and not currency. It requires providers of digital wallets, custody services and exchange services between cryptos and fiat currencies such as ATMs to be registered. The registry is seen as an important first step in the country’s regulatory efforts. As an EU member state, Greece has agreed to follow any EU initiatives and to AMLD5.

The Bank of Greece set up an Innovation Hub or “sandbox” to enable fintech activities and became a member of the European Forum for Innovation Facilitators (EFIF) in April 2019.

There is no dedicated tax regime for blockchain or cryptocurrencies, although taxation for mining is considered income from commercial enterprises and the profits that will arise after deducting the operating expenses are taxed according to the general provisions and the applicable tax rates. Holders of cryptocurrencies are taxed at a rate of 15% plus a progressive increase as income from capital gains.


As an autonomous Danish dependent territory under the Kingdom of Denmark, financial services, banking, and crypto laws and regulations in Greenland are within the scope of the Danish regime.


The National Bank of Hungary, the Magyar Nemzeti Bank (MNB),[84] has issued a public statement warning citizens who use or invest in cryptocurrencies such as bitcoin about their unregulated nature and associated risks. The MNB published a report[85] on fintech and digitalization in April 2020 that included an analysis of the fintech sector, profitability and services across the fintech market.

Cryptocurrencies are not recognized as legal tender and regulations are underdeveloped in Hungary as there are no laws specifically regulating crypto activities. Hungary has, however, joined the European Blockchain Partnership and agreed to AMLD5.

Taxes on crypto mining and trading were lowered in 2022 to 15% of income. Exchanges from crypto to crypto are not taxable events. The taxes apply only when cryptos are converted to fiat currency. The 15% rate is favorable compared with the rest of Europe.

[83]  http://www.hcmc.gr/el_GR/web/portal/mlaundering1

[84]  https://www.mnb.hu/foreign-warnings

[85] https://www.mnb.hu/letoltes/fintech-es-digitalizacios-jelente-s-final-eng.pdf


The Central Bank of Ireland[86] has issued warnings on the risks associated with cryptocurrencies such as bitcoin and Ether. It points out that they are unregulated, with a particular warning about ICOs. Cryptos are not considered as money or as equivalent to fiat currency in Ireland, and they are not backed by either the Irish government or the Central Bank. Ireland has taken a “wait-and-see” approach with regards to implementing domestic crypto regulation; rather, it has followed guidance from international regulators, most notably EU supervisory authorities.

Ireland’s Department of Finance has proposed the creation of a new blockchain working group to help create a coordinated approach to crypto regulation. The group published a report, “Virtual Currencies And Blockchain Technology.”[87] Ireland has joined the European Blockchain Partnership and agreed to AMLD5.

Ireland’s Office of the Revenue Commissioners released a manual[88] on the tax treatment of various transactions under cryptocurrencies. It clarified that ordinary tax rules apply, and that cryptocurrency mining would generally not be subject to VAT. Generally, profits and losses from crypto transaction are taxable as normal income. There is some uncertainty as to capital gains tax and whether they are held as “investments” under “Badges of Trade” and related case law.

Isle of Man

The Isle of Man within the British Isles is known as a Crown Dependency but is not part of the United Kingdom; rather, it is a self-governing possession of the British Crown. The Isle of Man is considered one of the most attractive locations for crypto companies because of its secure data centers, low-cost electricity and its friendly regulatory and tax environment.

The Isle of Man Financial Services Authority (FSA) and the Digital Isle of Man, an executive agency within the government’s enterprise department, published guidance[89] aimed at giving companies greater clarity when setting up blockchain-related business in the jurisdiction.

Cryptocurrencies such as bitcoin are considered securities and fall outside regulatory oversight. Companies involved with the assets must, however, register with the FSA and comply with AML/CTF requirements. Tokens or cryptocurrencies that offer a store of value or access to services and are not a form of e-money would be unregulated.

[86] https://www.centralbank.ie/consumer-hub/consumer-notices/consumer-warning-on-virtual-currencies

[87] https://www.gov.ie/en/publication/d59daf-virtual-currencies-and-blockchain-technology/?referrer=http://www.finance.gov.ie/wp-content/up­loads/2018/03/Virtual-Currencies-and-Blockchain-Technology-March-2018.pdf

[88] https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

[89] https://www.iomfsa.im/media/2720/regulatory-perimeter-for-tokens.pdf


In February 2022, Italy published[90] new AML rules for crypto firms which outline registration and reporting requirements for VASPs that align with the EU AMLD5 and the Financial Action Task Force (FATF) guidelines for crypto firms.

The new rules also require virtual asset service providers to register in a special roster for crypto firms. Registration is required if firms offer any digital asset-related services in the country.

Italy joined the European Blockchain Partnership (EBP) along with 22 other countries in April 2018. The EBP was established to enable member states to work together with the European Commission on blockchain technology.

Cryptocurrencies and blockchain are regulated at the legislative level in Italy under Legislative Act no. 90. The decree in 2017 grouped cryptocurrency exchanges with foreign currency exchanges. Although the decree states that cryptocurrencies are not issued by the central bank and are not correlated with other currencies, it is a virtual currency used as a medium of exchange for goods and services.


Latvia’s Financial and Capital Market Commission[91] has warned investors that in Latvia there is no regulatory framework for cryptocurrencies. Nor are there any particular prohibitions or obligations to obtain special licenses. Furthermore, bitcoin and other cryptos are not classified as currency of any state.

Commercial activities related to the purchase and distribution of bitcoins or similar cryptocurrencies are not considered financial instruments or money issuance, nor are they payment services. Those conducting crypto activities are not licensed or registered with the Commission.

In the past several years Latvia has launched an effort to improve its AML regulations. In 2019 it expanded the role of the Financial and Capital Market Commission to cover AML/CTF and impose beneficial ownership requirements on local limited companies, foundations, unions and other enterprises.

The Latvian Finance Ministry imposes a 20% tax on capital gains from cryptocurrencies.

Latvia has signed a declaration joining the European Blockchain Partnership.


The Bank of Lithuania defined[92] cryptocurrencies in 2017. Also known as virtual currencies, cryptocurrencies such as bitcoin are unregulated and are not guaranteed by the central bank.

Lithuania requires crypto firms to register with the country’s Center of Registers. Registrants must adopt comprehensive KYC and AML procedures and are expected to inform the Financial Crime Investigation Service (FCIS) about large transfers. Companies that are registered as virtual currency exchange operators are not supervised as financial service providers. They have no right to provide any financial services, including investment services. The list of financial institutions authorized to provide investment services is published on the Bank of Lithuania website[93].

A June 2020 report[94] from Moneyval — the Council of Europe’s committee of experts on the evaluation of AML/CFT measures — found Lithuania had made progress toward eliminating gaps in its regulation and supervision of cryptocurrency and claimed to have gone beyond requirements in AMLD5.

In July 2021, the Bank of Lithuania warned[95] an exchange operator about unlicensed investment services in the country and ordered that publicly available information must not be misleading.

The Lithuania State Tax Inspectorate considers cryptos as “property” and levies a 15% rate on the gains. Income from mining activities is only considered as income upon the sale of the cryptos after mining.

[90] https://www.gazzettaufficiale.it/atto/serie_generale/caricaDettaglioAtto/originario?atto.dataPubblicazioneGazzetta=2022-02-17&atto.codiceRe­dazionale=22A01127&elenco30giorni=false

[91] https://www.fktk.lv/en/

[92] https://www.lb.lt/uploads/documents/files/Pozicijos%20del%20virtualiu%20valiutu%20ir%20VV%20zetonu%20platinimo%20EN.pdf

The Netherlands

The Dutch Central National Bank De Nederlandsche N.V. (DNB)[96] requires crypto firms to register with it. Dutch regulations require VASPs to provide identifying information on themselves and their customers. The DNB also supervises crypto service providers’ compliance with the Sanctions Act 1977.

The DNB defines cryptos as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.”

In May 2020 the Dutch Implementation Act amended Dutch AML rules and implemented 5MLD.

The Netherlands does not impose taxes on capital gains, but rather imposes a deemed interest on the value of all assets minus all liabilities. The deemed interest is taxable against a flat rate of 31% (in 2021, 30% in 2020).

[93] https://www.lb.lt/en/sfi-financial-market-participants

[94] https://www.fatf-gafi.org/media/fatf/documents/reports/fur/Moneyval-1st-Follow-Up-Report-Lithuania.pdf

[95] https://www.lb.lt/en/news/bank-of-lithuania-issued-warning-regarding-binance-uab-and-other-crypto-asset-service-providers

[96] https://www.dnb.nl/en/sector-information/supervision-sectors/crypto-service-providers/registration-of-crypto-service-providers/


Cryptocurrencies are legal . They are defined as an asset and not any type of money. Norway has been an attractive location for blockchain start-ups.

The Financial Supervisory Authority of Norway “Finanstilsynet”[97] and the country’s Ministry of Finance has established money laundering regulations which apply to “Norwegian providers of virtual currency exchange and storage services.”

The legislation requires firms such as storage services and exchanges that convert cryptos to fiat currency to comply with AML rules, but it does not impose regulatory obligations on other crypto services.

“Finanstilsynet will ensure that virtual currency exchange and storage providers comply with the money laundering rules. However, FSA does not have any tasks monitoring other areas of these providers, such as investor protection,” the regulator said.

In June 2021, Finanstilsynet published a warning[98] which said, “Most cryptocurrencies are subject to extreme price fluctuations. The risk of loss is high… Price formation is in many cases not transparent.” It also warned of significant criminal activity. “Scammers use spam, computer viruses, fake drawings and a variety of other techniques to deceive consumers,” the warning stated.

Bitcoin profits are subject to wealth tax and use of cryptos falls under sales tax regulations

The Central Bank of Norway is exploring the development of a CBDC.


Like many other countries in Europe, Poland has not regulated cryptos outside EU requirements. The National Bank of Poland and the Polish Financial Supervision Authority[99] (KNF) have warned of the risks associated with cryptocurrencies. The KNF has said that the cryptocurrency market is not a regulated or supervised market. “The KNF does not authorize, supervise or exercise any other supervisory powers in relation to the trade in cryptocurrencies. Some entities operating in the cryptocurrency market are authorized to provide payment services, in particular to settle payments made with legal tender (fiat money) in exchange for the cryptocurrencies being bought or sold.”

Poland’s AML regime adopted AMLD5, which had a significant impact on the approach to crypto businesses. The main goal was to increase transparency and protection from suspicious transactions. As of October 31, 2021, companies were required to register with the Ministry of Finance. Registration is not connected with any controlling aspect, however, and does not grant authority to operate or provide legal security.

Poland has signed a declaration joining the European Blockchain Partnership.

Cryptocurrencies are not considered legal tender. Gains on digital assets are subject to capital gains taxes and VAT. Polish tax rates on cryptos are 19% plus an additional 4% for those with income in excess of PLN 1 million.

[97] https://www.finanstilsynet.no/en/

[98] https://www.finanstilsynet.no/nyhetsarkiv/nyheter/2021/forbrukere-og-kryptovaluta/

[99] https://www.knf.gov.pl/en/news?articleId=71711&p_id=19#:~:text=In%20the%20light%20of%20the,to%2C%20the%20trade%20in%20cryptocurrencies.


Despite having issued warnings about the risks related to cryptos, Portugal is widely seen as the most crypto-friendly country in Europe. The legal status of cryptocurrency in Portugal was officially clarified in a statement[100] by the Portuguese tax authorities and was subsequently reaffirmed by the Journal de Negocios[101]. Portugal does, however, follow EU regulation as has agreed to AMLD5.

In April 2020, the Portuguese government published a Digital Transition Action Plan[102] which included 12 pillars, the most important of which were the digital empowerment of people, the digital transformation of companies, the digitization of the state. The plan also established a flexible regulatory environment for technology testing and development.

A 2016 law ruled that because cryptocurrencies are not considered currencies, they are not legal tender and are therefore untaxable. The country’s non-habitual tax regime (NHR) has attracted many crypto traders as it allows for exemptions and reductions in tax for a 10-year period for individuals of high cultural or economic worth. “An exchange of cryptocurrency for ’real’ currency constitutes an on-demand, VAT-free exercise of services,” the Portuguese tax authorities have said.


Like its neighbor Portugal, Spain was a notable early hot spot for cryptocurrencies among EU members, with merchants accepting payments and bitcoin kiosks in the streets. Despite having no formal legal status, virtual currencies in Spain are taxable as income and under VAT.

In 2021 the Spanish Securities and Exchange Commission, the Comision Nacional del Mercado de Valores (CNMV) and the Bank of Spain issued a joint statement warning of the risks and volatility associated with cryptos. The joint statement[103] also highlighted that, from a legal standpoint, cryptocurrencies are not a means of payment and are not backed by a central bank or other customer protection mechanisms or authority.

Spain issued Royal Decree Law 5/2021[104] which included a provision giving the CNMV power to regulate advertising related to cryptocurrencies. In January 2022, the CNMV published a circular[105] saying it would begin to regulate rampant advertising of crypto assets, including by social media influencers, to make sure investors are aware of risks.

[100] https://www.audico.pt/wp-content/uploads/2019/08/57_INFORMACAO_14436.pdf

[101] https://www.jornaldenegocios.pt/economia/impostos/detalhe/troca-e-remuneracao-de-criptomoeda-isentas-de-iva?ref=Economia_outros

[102] https://eportugal.gov.pt/en/noticias/governo-lanca-plano-de-acao-para-a-transicao-digital

[103] https://www.cnmv.es/portal/verDoc.axd?t=%7B52286f9f-c592-4418-9559-b75bf97115d2%7D

[104] https://www.boe.es/buscar/act.php?id=BOE-A-2021-3946


The Financial Supervisory Authority (FSA) and the central bank have publicly declared that bitcoin is legal but not an official form of payment or legal tender. From a tax perspective they are viewed as an asset, not a currency or cash.

The FSA has warned[106] of the risks associated with cryptos and investment products with cryptos as underlying assets such as exchange-traded products (ETPs). Sweden has imposed registration requirements that mean custodians, wallet providers and exchanges must comply with the Swedish Currency Exchange Act. The act requires certain types of financial institutions (which are otherwise largely unregulated and unsupervised) to comply with AML provisions.

The scope of the Currency Exchange Act now includes custodian wallet providers and providers of virtual currency exchange services in accordance with the implementation of AMLD5.

Mining activities are not regulated under Swedish law. There are no licensing or registration requirements specifically applicable to virtual currency mining activities.

Sweden’s Central Bank, the Riksbanken, has been a leader in developing a CBDC, the e-krona.

Swedish income tax law has different categories of income such as employment income, self-employment income, business income and investment income. Capital gains are treated as investment income. Sweden imposes capital gains tax on cryptocurrencies at a flat rate of 30%. Losses are deductible up to 70%. Income tax is based on a progressive model with average rates around 32%.


Switzerland is known as one of the most cryptocurrency-friendly nations in the world. Switzerland’s financial markets regulator, the Swiss Financial Market Supervisory Authority[107] (FINMA) has defined licensing requirements for cryptocurrency businesses of all types including bitcoin kiosk operations, and has created requirements for blockchain companies.

Cryptocurrency businesses are subject to AML regulations and licensing requirements under FINMA. FINMA’s regulatory environment complies with the FATF’s digital asset regulation issued in June 2019.

Switzerland further improved its regulations surrounding tokens with the July 2021 implementation of the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology[108] (the DLT Act).

In Switzerland capital gains arising from a “private wealth asset” are exempt from income tax. This applies to capital gains from cryptos. Realized gains arising from the disposal of cryptocurrency are therefore not subject to tax. Losses arising from the disposal of cryptocurrency assets are not tax-deductible. Under Swiss tax law, cryptocurrencies are considered items that can be valued and traded. They are therefore assets that are subject to wealth tax. Tax rates vary.

[105] http://www.cnmv.es/Portal/verDoc.axd?t=%7b1cbaf61c-57c2-4830-bd6a-071f806795e2%7d

[106] https://www.fi.se/en/published/press-releases/2021/fi-warns-consumers-of-risks-connected-to-crypto-asset-products/

[107] https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/faktenblaetter/faktenblatt-virtuelle-waehrungen.pdf?la=en


In the midst of a financial, currency and debt crisis, Turkey’s regulatory environment surrounding cryptos is a very mixed picture. Although it is not “illegal” to own cryptos, authorities have demanded user information from crypto trading platforms and regulators frequently cite crypto as a form of evasion for capital controls and taxes.

In April 2021, Turkey’s Central Bank[109] banned the use of cryptocurrencies saying they may be used, directly or indirectly, to pay for goods and services.

In May 2021, President Erdoğan issued a decree that added[110] cryptocurrency exchanges to a list of institutions that must operate under AML/CTF regulations. Despite the harsh rhetoric, bans on use in payments, and lack of any regulatory supervisory authority, public interest by Turkey’s citizens has soared as they are increasingly adopting and using cryptocurrencies.

The Financial Crimes Investigation Board (MASAK) oversees crypto service providers on AML and compliance issues. The Capital Markets Board (SPK) governs the crypto market, including ICOs and token offerings.

MASAK published[111] a guide for crypto asset service providers and President Erdogan have announced that a bill regulating digital assets is forthcoming.

Turkey is developing a digital central bank currency.


Ukraine is one of the top countries in usage of cryptocurrencies. In September 2021, the Ukrainian Parliament adopted a draft Law No. 3637 “On Virtual Assets” which introduced a basic regulation regarding all virtual assets. The law establishes general provisions regarding ownership, conduct of businesses, their circulation, and liabilities. The law uses the term “virtual asset” as which covers any type of crypto asset. Under the law, a virtual asset means a set of electronic data which has certain value and exists in the system of virtual assets circulation.

The law stipulates and distinguishes cryptos as assets and that they are not to be used as instruments of payments. It further distinguishes between “secured” or “unsecured” virtual assets. Secured virtual assets are secured by fiat currency and unsecured are any other type of virtual asset. Secured assets presumably would include stablecoins and unsecured would include other cryptos such as bitcoin.

The bill was passed[112] in February 2022 and signed into law by President Volodymyr Zelensky in March 2022. After the Russian invasion of Ukraine, the country received more than $100 million in crypto donations to support the country’s defense effort.

[108] https://www.newsd.admin.ch/newsd/message/attachments/60601.pdf

[109] https://www.tcmb.gov.tr/wps/wcm/connect/en/tcmb+en

[110] https://www.reuters.com/technology/turkey-adds-crypto-firms-money-laundering-terror-financing-rules-2021-05-01/

[111] https://panel.cetinkaya.com/dcdc07d0-3637-461c-b59a-c68460d5bb20_Masak%20Guide%20Translation%20PDF.pdf

United Kingdom

The UK Financial Conduct Authority[113] (FCA), HM Treasury and the Bank of England make up the country’s Crypto-assets Taskforce.

The FCA has created regulations to cover KYC, AML and CFT tailored for crypto-assets. It has also created regulations to cover VASPs, but has been careful to not stifle innovation.

Crypto exchanges must register with the FCA unless they have applied for an e-money license. Cryptocurrencies are not considered legal tender and taxes are levied based on activities. The FCA has banned the trading of cryptocurrency derivatives.

The Law Commission published a call for evidence[114] on digital assets in April 2021. The request seeks input from stakeholders ahead of publication of a consultation paper on digital assets which will make proposals for new legislation.

In February 2022, the UK government and the FCA published complementary reform proposals to bring financial promotions for some “qualifying crypto-assets” into HM Treasury’ financial promotions regime and into the FCA financial promotions rules.

There is no specific UK regulatory regime that captures the activities of crypto miners.

Although there is no specific UK tax legislation applicable to cryptos, HM Revenue and Customs has set out its view of the treatment based on normal principles. Receipt of cryptos from an employer are treated as “money’s worth” and are taxed as income based on the value of the assets at the time of receipt. Where cryptos are held as personal investments, capital gains tax applies upon disposal. In cases where frequent trading is involved, income tax rather than capital gains may apply.

[112] https://www.kmu.gov.ua/en/news/parlament-uhvaliv-zakon-pro-virtualni-aktivi-zgidno-z-propoziciyami-prezidenta

[113] https://www.fca.org.uk/news/press-releases/fca-provides-clarity-current-cryptoassets-regulation

[114] https://www.lawcom.gov.uk/project/digital-assets/#digital-assets-call-for-evidence

Pacific region, Asia, and Australia


In 2018 new laws for digital currency exchange providers were implemented by the Australian Transaction Reports and Analysis Centre (AUSTRAC)[115], the financial intelligence agency and AML/CTF regulator.

Firms are required to register and implement KYC policies, report suspicious transactions and comply with AML legislation.

In December 2021, Australia said it will create a licensing framework for cryptocurrency exchanges and consider launching a retail CBDC as part of an overhaul of its payment industry. Josh Frydenberg, the Treasurer, said the government would begin consultation in early 2022 on establishing a licensing framework for digital exchanges, allowing the purchase and sale of crypto-assets by consumers in a regulated environment.

The government would also consult on regulating businesses that hold crypto-assets on behalf of consumers, and on the feasibility of a central bank digital currency, Frydenberg said.

Taxes on cryptos in Australia[116], generally are subject to capital gains taxes which range from 19 to 45%.


The Bangladesh Central Bank issued warnings in 2014 and 2017 related to transactions in cryptocurrencies and warned violations could be punishable by up to 12 years in jail under existing money laundering and terrorist financing regulations. Despite prohibitions on the use of cryptocurrencies, Bangladesh has proposed a national blockchain strategy,[117] perhaps signaling a change in the future. Concerns about a foreign flight of local capital are a major concern hindering cryptos, however.

Despite an international reputation for being hostile to cryptos, some attorneys argue that the acts of parliament fall short of criminalizing or even banning cryptos. Despite the restrictions, there are no verified reports of arrests, charges or convictions, related to the use of cryptos.


The People’s Bank of China[118] banned financial institutions from dealing in cryptocurrencies in 2013 and later expanded the ban to cover crypto exchanges and ICOs. China was the epicenter for mining because of low electricity costs. At its peak it was estimated that more than 65% of bitcoin mining was taking place in China.

The government considered a ban on crypto mining, but in 2019 reconfirmed that it would remain legal. In May 2021, China’s Financial Stability and Development Committee, the financial regulatory agency under Vice-Premier Liu He, said the Chinese government would “crack down on bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to the society.”

Most experts now estimate Chinese mining to be, in effect, near zero.

Despite the PBOC’s embrace of blockchain technology and efforts to be on the forefront of developing the central bank’s digital currency, the digital yuan, the ban on mining and all other crypto-related activities was one of the most noteworthy events in cryptos in 2021.

[115] https://www.austrac.gov.au/new-australian-laws-regulate-cryptocurrency-providers

[116] https://www.ato.gov.au/General/Other-languages/In-detail/Information-in-other-languages/Cryptocurrency-and-tax/

[117] https://bcc.portal.gov.bd/sites/default/files/files/bcc.portal.gov.bd/page/bdb0a706_e674_4a40_a8a8_7cfccf7e9d9b/2020-10-19-15-03-391a6d­9d1eb062836b440256cee34935.pdf

[118] http://www.pbc.gov.cn/english/130437/index.html

Hong Kong

Hong Kong has long been vying to establish itself as a fintech innovation hub. The Hong Kong Securities and Futures Commission (SFC)[119] has, however, enacted a strict regulatory framework and licensing requirements for VASPs.

It has also proposed a ban on crypto trading for retail investors under which only professional investors who have more than HK$8 million in assets would be allowed to trade.

Hong Kong’s regulation of crypto has been unclear in recent years. China’s ban on cryptos has caused uneasiness in Hong Kong, with many fintech and crypto firms leaving or downsizing operations in the region.

Hong Kong began to take steps to close legal loopholes which have allowed crypto exchanges to operate. In January 2022, however, the Hong Kong Monetary Authority (HKMA) issued two papers: one on stablecoins[120] and another on crypto-related exchange-traded funds[121].

Bitcoin is defined as a virtual commodity and not legal tender. There are no capital gains taxes and AML/CFT laws apply to every individual or business in Hong Kong, irrespective of activity and are in accordance with FATF requirements.


In Indonesia virtual currencies are not considered legal tender. In 2019 the Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) approved regulation no. 5/2019,[122] which legally recognizes and regulates bitcoin and other cryptocurrencies as commodities. Derivative transactions and cryptocurrency exchanges are also subject to regulatory requirements of Bappebti.

The regulation defines a crypto-asset as “an intangible commodity in the form of a digital asset that uses cryptography, a peer-to-peer network and distributed-ledger technology to regulate the creation of new units, verify transactions and ensure transaction security without the involvement of a third-party intermediary.”

Bank Indonesia, the country’s central bank, has banned the use of cryptocurrencies as a payment tool.

Indonesia has also banned financial firms from facilitating crypto sales. Indonesia’s Financial Services Authority (OJK) said it has “strictly prohibited financial service institutions from using, marketing and/or facilitating crypto asset trading,” the regulator said in a statement[123] posted on Instagram.

The ministry is facilitating the establishment of a separate bourse for digital assets, called the Digital Futures Exchange, which officials say will be launched in the first quarter of 2022.

It warned that the value of crypto-assets often fluctuates and that people buying into the digital assets should fully understand the risks.

The warning follows similar concerns by the central banks of Thailand[124] and Singapore[125].


Japan has one of the most progressive and developed regulatory regimes for cryptocurrencies. Cryptocurrency exchanges must be registered and comply with traditional AML/CFT and other regulations. They are regulated under the Payment Services Act (PSA), which defines “cryptocurrency” as a property value and not a legal tender. The PSA defines “crypto-assets” as payment methods that are not denominated in fiat currency and can be used to pay unspecified persons.

In December 2017, Japan’s National Tax Agency[126] ruled that gains on cryptocurrencies should be categorized as “miscellaneous income” and taxed accordingly. There have been several new regulations and amendments to the PSA, and to the Financial Instruments and Exchange Act[127] (FIEA), introducing the term “crypto-asset,” and regulating crypto derivatives trading. Cryptocurrency custody service providers (that do not sell or purchase crypto-assets) fall under the scope of the PSA, while cryptocurrency derivatives businesses fall under the scope of the FIEA.

In April 2020, Japan was the first country to create self-regulatory bodies, the Japanese Virtual Currency Exchange Association[128] (JVCEA) and the Japan STO Association[129]. The JVCEA and the STO Association promote regulatory compliance and play a significant role in establishing best practices and ensuring compliance with regulations.

In Japan, gains associated with cryptos are considered miscellaneous income. Tax rates on crypto gains vary and depend on individual income. Rates can be as high as 55%.

[119] https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=19PR105

[120] https://www.hkma.gov.hk/media/eng/doc/key-information/press-release/2022/20220112e3a1.pdf

[121] https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/intermediaries/supervision/doc?refNo=22EC10

[122] http://bappebti.go.id/resources/docs/peraturan/sk_kep_kepala_bappebti/sk_kep_kepala_bappebti_2019_02_01_w9i365pf_id.pdf

[123] https://www.instagram.com/p/CZIgoP2PjI2/

[124] https://www.reuters.com/markets/funds/thai-central-bank-says-doesnt-support-digital-assets-payments-2021-12-01/

[125] https://www.reuters.com/technology/singapore-cbank-issues-guidelines-discourage-crypto-trading-by-public-2022-01-17/

[126] https://www.nta.go.jp/english/

[127] https://www.fsa.go.jp/en/policy/fiel/

[128] https://www.asahi.com/articles/ASL4R3VLKL4RULFA00M.html

[129] https://www.fsa.go.jp/news/r1/shouken/20200430.html


The Securities Commission Malaysia (SC) issued guidelines on the regulation of various digital currency platforms operating in the country. The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019[130] ruled that digital tokens are “securities” for purposes of securities laws.

Digital currency is defined as “a digital representation of value recorded on a distributed digital ledger that functions as a medium of exchange and is interchangeable with any money, including through the crediting and debiting of an account.” All exchange offerings and digital asset custodians are required to register and “assess and conduct the necessary due diligence on the issuer, review the issuer’s proposal and the disclosures in the whitepaper, and assess the issuer’s ability to comply with the requirements of the Guidelines and the SC’s Guidelines on Prevention of Money Laundering and Terrorism Financing.”

The position on the taxation of cryptos in Malaysia is unclear. The Inland Revenue Board of Malaysia (IRB) has not issued definitive guidelines on the taxation of cryptos.

With regards to cryptocurrency transactions, the IRB has cited Section 3 of the Income Tax Act 1967 and indicated that the provision can be applied to active cryptocurrency traders.

The IRB has said further that several factors may determine whether profits from crypto activities would be subject to income tax.

New Zealand

The Financial Markets Authority of New Zealand (FMA)[131] has determined that additional obligations will apply to certain activities considered “financial services” include exchanges, wallets, deposits, broking and ICOs involving crypto-assets that are classed as “financial products” under the FMC Act of 2013[132].

However, the FMA said in September 2021, “Cryptocurrencies are not legal tender (money that must be accepted as payment) in most countries and do not exist physically as notes and coins. They are also not viewed as financial products so are not regulated in New Zealand.”

The Inland Revenue Department[133] of New Zealand considers cryptocurrencies as “property,” with gains and losses taxable as income.

[130] https://www.sc.com.my/api/documentms/download.ashx?id=8c8bc467-c750-466e-9a86-98c12fec4a77

[131] https://www.fma.govt.nz/compliance/role/cryptocurrencies/

[132] https://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4090578.html

[133] https://www.ird.govt.nz/cryptoassets/taxing


The Philippine Central Bank, the Bangko Sentral ng Pilipinas (BSP) requires[134] VASPs to register. The BSP has developed an AML framework in line with FATF guidelines.

The BSP licensing requirements include exchanges of virtual assets and fiat currency. All transactions are treated as cross-border wire transfers and crypto service providers are expected to comply with relevant BSP rules. Additionally, BSP licensed firms must comply with rules for money service businesses such as liquidity risk management, IT risk management and consumer protection.

The BSP has published and updated FAQs for the public related to virtual currencies.

The National Internal Revenue Code (NIRC) of the Philippines states that any income of an individual or corporation, in whatever form, obtained in the Philippines is taxable.


Cryptocurrencies are regulated by the Monetary Authority of Singapore[135] (MAS). The Payment Services Act of 2019 regulates traditional and cryptocurrency payments and exchanges. The Securities and Futures Act is also applicable to public offerings and issues of digital tokens.

A May 2020 Guide to Digital Token Offerings[136] published by the MAS details the regulations surrounding digital tokens and their applicability to securities, collective investments, derivative contracts and the determination of whether a token is a type of “capital market product.” The AML/CFT provisions under the PSA address the risk of financial crimes and promotes best practices, including KYC, to help crypto businesses comply with the new regulatory framework.

In February 2022, the MAS issued Guidelines to Discourage Cryptocurrency Trading by General Public[137]. The new guidelines clarify the expectations that digital payment token (DPT) service providers should not engage in marketing or advertising of DPT services to the general public in Singapore.

The Inland Revenue Authority[138] has said, “Businesses that choose to accept digital tokens such as bitcoins for their remuneration or revenue are subject to normal income tax rules. They will be taxed on the income derived from or received in Singapore. Tax deductions will be allowed, where permissible, under our tax laws.”

[134] https://www.bsp.gov.ph/Media_and_Research/Primers%20Faqs/VC.pdf

[135] https://www.mas.gov.sg/regulation/acts/payment-services-act

[136] https://www.mas.gov.sg/regulation/explainers/a-guide-to-digital-token-offerings

[137] https://www.mas.gov.sg/news/media-releases/2022/mas-issues-guidelines-to-discourage-cryptocurrency-trading-by-general-public

[138] https://www.iras.gov.sg/taxes/corporate-income-tax/income-deductions-for-companies/taxable-non-taxable-income#:~:text=Trading%20in%20 Digital%20Tokens,-Businesses%20that%20buy&text=Businesses%20that%20buy%20digital%20tokens,are%20not%20subject%20to%20tax.

South Korea

South Koreans were early bitcoin pioneers and have been enthusiastic traders and investors in cryptos. In 2021, total trading volumes for cryptos in South Korea surpassed that of the domestic equities market. Regulators in South Korea have taken a cautious approach to cryptocurrency exchanges and companies. Companies are subject to equivalent AML and tax obligations as other financial institutions.

Following several large crypto-exchange hacks, South Korea passed the “Act on Reporting and Using Specified Financial Transaction Information,” also known as the Financial Transaction Reports Act[139] (FTRA), which requires VASPs to register and comply with AML regulations.

South Korea has sought to ensure market integrity compliance with the FATF. Regulators have also emphasized the importance of safety of trading platforms. New rules went into effect in 2021 requiring all crypto service providers to register with the Korean Financial Services Commission. Platforms must also comply with AML obligations and acquire an Information Security Management System (ISMS) certificate[140] from the Korea Internet & Security Agency (KISA).

In South Korea virtual assets are categorized under “other income” for tax purposes. In late 2020, South Korea authorized an initiative to tax crypto trading profits in 2022. Gains will be taxed at a rate of 20%. Korea’s National Tax Service has also widened the crypto tax law to include foreign crypto exchanges and businesses.

The amended law will tax 20% of profit from crypto transactions in excess of 2.5 million Korean won, or about $2,200. Korea’s National Tax Service (NTS) has since expanded[141] the crypto tax law on accounts by domestic investors to foreign crypto exchanges and businesses.


Taiwan’s Central Bank and Financial Supervisory Commission[142] (FSC) have warned that cryptocurrencies are not currencies, but rather commodities and have no legal protection. The FSC has been empowered under the country’s Money Laundering Control Act[143] and Terrorism Financing Prevention Act to require users on trading platforms to register their “real names.” The FSC implemented new money laundering regulations for the nation’s cryptocurrency exchanges, requiring them to report transactions valued at more than NT$500,000 ($17,770),

The FSC has required platform operators operating STO business to obtain a securities dealer’s license and comply with the securities business prevention system Money Laundering and Anti- Terrorism (AML/CFT) regulations. Banks must report suspicious anonymous transactions.

There are no regulations on crypto mining.

With the exodus from China following the government crackdown, many expected Taiwan to be a beneficiary; but, many still view Singapore as more crypto-friendly.

The trading of cryptos on a platform within Taiwan may be deemed a sale of services and thus subject to Taiwan business tax.

[139] https://www.kofiu.go.kr/eng/legislation/financial.do#:~:text=The%20Financial%20Transaction%20Reports%20Act,%2Fanalysis%2Fdissemina­tion%20of%20STRs.

[140] https://www.kisa.or.kr/eng/main.jsp

[141] https://forkast.news/headlines/south-korea-tax-overseas-crypto-asset-accounts/

[142] https://www.fsc.gov.tw/ch/home.jsp?id=96&parentpath=0,2&mcustomize=news_view.jsp&dataserno=202104200003&dtable=News

[143] https://law.moj.gov.tw/ENG/LawClass/LawAll.aspx?pcode=G0380131


The Securities and Exchange Commission of Thailand regulates cryptocurrencies under an Emergency Decree on Digital Asset Businesses B.E. 2561[144] issued in 2018. Under the decree, digital asset businesses are required to apply for a license, monitor for unfair trading practices, and are considered “financial institutions” for AML purposes among others.

The Thailand Central Bank has said repeatedly that it does not support use of crypto as payments. In January 2022, the central bank and market regulator announced plans to ban digital asset operators from facilitating use of crypto as a means of payment for goods and services.

Digital asset business operators have expanded their businesses to cover services related to the use of digital assets as payments, which may result in a wider adoption of such activity, they said in a joint statement[145].

That could potentially affect financial stability and the overall economic system, they said in the statement.

A public hearing on the new rule will be held until February 8 before it will be effective, Charuphan Intararoong, assistant secretary-general at the Securities and Exchange Commission (SEC), told a news conference. It will not yet cover use of digital assets as payments between merchants and customers, while trading of crypto assets is still allowed, Charuphan said.

“Investors, consumers, and citizens can still trade digital assets for investment as usual,” she said.

The central bank and relevant agencies will consider allowing digital assets that are beneficial to the country to operate, however, said Siritida Panomwon Na Ayudhya, assistant central bank governor, without elaborating.

Trading and use of cryptocurrencies have gained momentum in Thailand, with retailers and real estate developers accepting digital assets as payments.

Gains are taxed as income and subject to the highest tax bracket of 35%.

[144] https://www.sec.or.th/TH/Documents/DigitalAsset/enactment_digital_2561_summary_en.pdf

[145] https://www.bot.or.th/en/news-and-media/news/news-20220125.html

Russia, Middle East, Africa, and other countries


The 2018 Financial Law of Algeria prohibits the use of any cryptocurrencies as well as the purchase, sale, use, and possession of virtual currencies.


In 2020 the Bahamas passed the Digital Assets and Registered Exchange Bill (DARE) putting in place a framework for digital assets. The law creates opportunities for FinTech firms and facilitates the registration of exchanges and other business involved with digital tokens.

The legal framework[146] is being heralded as one of the most comprehensive regulatory structures and standards in the world while also welcoming to the industry.

The Bahamas Central Bank was the first to launch a CBDC, the Bahamian “Sand Dollar”[147] in October 2020.

The Bahamas are considered an investor-friendly tax haven where there is no income or capital gains tax.


The offshore finance and insurance center Bermuda, has adopted a business-friendly approach to the oversight of cryptos and related businesses. The Digital Asset Business Act[148] and the Companies and Limited Liability Company Initial Coin Offering Amendment Act, passed in 2018, defines digital assets and provide standards governing ICOs and digital asset businesses.

The Bermuda Monetary Authority (BMA) has issued requirements[149] through the Digital Asset Business Act creating a licensing regime for custodians, service providers, trading platforms and other crypto businesses.

Initial coin offerings are classified as a restricted business activity that requires approval from the BMA. Digital asset businesses are required to register and comply with AML/CTF regulations, specifically, the Proceeds of Crime Acts.

There are no specific taxes on income, capital gains, or other taxes on digital assets in Bermuda.

[146] https://www.bahamas.gov.bs/wps/portal/public/gov/government/news/

[147] https://www.sanddollar.bs/

[148] https://www.bma.bm/digital-assets-supervision-regulation

[149] https://www.bma.bm/digital-assets-supervision-regulation

Cayman Islands

In May 2020, Cayman Islands lawmakers enacted several new legislative acts[150] regulating the cryptocurrency industry. The centerpiece, the Virtual Asset Service Provider (VASP) Law, makes it mandatory for digital asset businesses to be registered with the Cayman Islands Monetary Authority (CIMA).

The Cayman’s crypto regulations provided regulatory certainty for VASPs and align with international AML/CFT regulations to protect consumers and to meet the requirements of the FATF recommendations.

The Caymans have no income, inheritance, gift, capital gains, or corporate taxes with respect to the issuance, holding, or transfer of digital assets.


The Egyptian government banned trading of cryptos in 2018 because of religious decrees under Islamic law. Despite the ban, several international crypto trading platforms have reported significant user growth in the country in recent years. The Central Bank of Egypt[151] has cited the importance of art 206 of the Central Bank and Banking System Law promulgated by Law No. 194 of 2020. The law prohibits the issuance, trading, promotion, platforms, and other activities related to cryptos.


In 2018 the Reserve Bank of India[152] banned cryptocurrency trading and prohibited Indian banks from dealing with cryptocurrency exchanges following consumer protection, AML and market integrity concerns. In 2020, however, the Indian Supreme Court struck down the ban, and clarified that no prohibition exists.

Despite widespread concerns, skepticism, and prior bans on cryptocurrencies, India has encouraged innovation and the use of blockchain. It has also begun work on a state-backed CBDC, the digital rupee.

A proposed crypto regulatory framework was published[153] on the website of the Lok Sabha in 2021. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was dropped in the final days of the session but will likely resurface in the future.

The Advertising Standards Council of India announced new guidance[154] related to the advertising of cryptos and NFTs in February 2022. The new rules, which come into effect on April 1, prohibit the use of the words “currency, securities, custodian, and depositories” in advertisements, as consumers often associate the terms with regulated products.

[150] https://www.cfatf-gafic.org/home/what-s-happening/649-cayman-islands-adopts-regulatory-framework-for-virtual-asset-services

[151] https://www.cbe.org.eg/en/Pages/default.aspx

[152] https://www.rbi.org.in/

[153] http://loksabhadocs.nic.in/bull2mk/2021/23.11.21.pdf

[154] https://ascionline.in/images/pdf/vda-guidelines-press-release-feb-23.pdf


The Iranian Central Bank[155] has authorized banks and currency exchanges to use crypto-currencies mined by licensed crypto miners in the county. Although mining is legal, the country takes a heavy-handed approach requiring firms to sell cryptos to the central bank to fund imports.

The country has issued more than 1,000 licenses to crypto miners and shut down unlicensed firms. Trading outside the country has been banned, to stop capital flight. The use of cryptos for payments has also been banned.

In early 2022, the country said[156] it was exploring the possible use of cryptos for international trade, which potentially would allow some businesses to make international payments using cryptos.


The Israeli Securities Authority has ruled that cryptocurrency is a security[157] (link in Hebrew) subject to Israel’s Securities Laws.

The regulator has warned[158] the public of the risks associated with cryptocurrencies.

On November 14, 2021, an anti-money laundering order[159] regulating transactions in digital currencies came into effect. The new law is seen as the first step toward the need for entities dealing in digital currencies to have a permanent operating license.

The Israel Money Laundering and Terror Financing Prohibition Authority has taken a similar approach to AML/CTF requirements as FATF.

The Israel Tax Authority defines cryptocurrency as an asset and levies 25% on capital gains.


The Central Bank of Kenya[160] issued a public notice in December 2015 warning that bitcoin and other cryptos are unregulated and not guaranteed by any government or central bank. The notice said no entity is licensed to offer money remittance services and products using virtual currencies.

Despite of lack of any regulatory framework, Kenya is considered as one of the leading markets for Bitcoin.

The Central Bank is reportedly considering a CBDC.

[155] https://www.cbi.ir/default_en.aspx

[156] https://www.mehrnews.com/news/5396149/

[157] https://www.isa.gov.il/%d7%92%d7%95%d7%a4%d7%99%d7%9d%20%d7%9e%d7%a4%d7%95%d7%a7%d7%97%d7%99%d7%9d/Corporations/Staf_Positions/Preliminary_Inquiries/Prospectuses/Documents/T3121.pdf

[158] https://www.isa.gov.il/sites/ISAEng/Pages/unregulated-investments.aspx

[159] https://perma.cc/JN4X-F7P5

[160] https://www.centralbank.go.ke/images/docs/media/Public_Notice_on_virtual_currencies_such_as_Bitcoin.pdf


Despite a law in 2017 banning cryptos in Morocco, the public continues to operate underground, circumventing the restrictions.

The Morocco Foreign Exchange Office[161] has said it does not support “hidden payment systems” not backed by government institutions. However, the country’s central bank has reportedly confirmed[162], that it is exploring a CBDC.


The two primary financial regulators in Nigeria view cryptos differently. The Central Bank of Nigeria[163] has barred banks and financial institutions from dealing in cryptos. The central bank has argued that cryptos are unregulated and not legal tender. Meanwhile the Nigerian Securities and Exchange Commission[164] (SEC) has sought to regulate cryptocurrency investments on the grounds that they qualify as securities transactions.

Both regulators said they had identified certain risks within the digital asset sector, without explaining further.

The central bank has argued that cryptocurrencies, which are unregulated and not legal tender, are risky for the user.

Use of bitcoin, the original and biggest cryptocurrency, has boomed in Nigeria in recent years, especially among small businesses, as the weakening naira currency makes it difficult to get the U.S. dollars needed to import goods or services.

The Central Bank of Nigeria officially launched the “eNaira,” its CBDC, on October 25, 2021.

There is no Nigerian legislation clarifying the tax treatment of transactions involving virtual currencies.

[161] https://www.finances.gov.ma/en/The_Ministry/Pages/The-Foreign-Exchange-Office.aspx

[162] https://www.ledgerinsights.com/morocco-central-bank-confirms-exploring-digital-currency-cbdc/

[163] https://www.cbn.gov.ng/

[164] https://sec.gov.ng/

[165] http://publication.pravo.gov.ru/Document/View/0001202007310056?index=0&rangeSize=1


In 2020, Russian President Vladimir Putin signed a law[165] that regulates digital financial asset transactions. Under the law, which took effect on January 1, 2021, digital currencies are recognized as a payment means and investment. The digital currency cannot be used to pay for any goods and services, however.

Digital currencies were previously banned. Russian banks and exchanges can become exchange operators of digital financial assets if they register with the Bank of Russia.

The Central Bank of Russia[166] has also begun a pilot program to develop a digital central bank currency, the Digital Ruble. The central bank has staunchly opposed cryptos, while Russia’s Ministry of Finance has pushed for regulations on cryptos.

The Ministry of Finance introduced a bill “On Digital Currency”[167] in February 2022, which creates a “mechanism for organizing the circulation of digital currencies.”

Despite the regulatory confusion, Russia is considered a significant player, and estimates peg Russian ownership of cryptos at approximately 12% of the international crypto economy.

Saudi Arabia

The Saudi Central Bank and Minster of Finance have warned[168] “against dealing or investing in virtual currencies including cryptocurrencies as they are not recognized by legal entities in the kingdom. They are outside the scope of the regulatory framework and are not traded by financial institutions locally. Such crypto currencies have been associated with fraudulent activities and attract concern that they may be used in illegal and illegitimate financial activities in addition to their high-investment risks related to frequent price fluctuations.”

While the Saudi Central Bank has warned the public of the risks associated with cryptocurrencies, and that they are not legal tender, bitcoin is accepted by small businesses and merchants, and the government has taken a very light regulatory approach thus far. In recent years, Saudi Arabia has worked with the United Arab Emirates to attract crypto companies to the region. Cryptos are sure to play and important role in the country’s long-term effort to diversify its economy and become an innovation hub — “Saudi Vision 2030.”

The Saudi Central Bank has begun to use blockchain technology in its activities in the banking sector and to keep pace with market trends. It has also created a regulatory sandbox[169] for collaboration on new digital banking services and blockchain education programs.

South Africa

The South African Reserve Bank[170], the Financial Sector Conduct Authority (FCSA) and the National Treasury, together with an Intergovernmental FinTech Working Group[171], have published plans to develop a registration regulatory framework. The plans would codify FATF AML recommendations.

The regulatory framework is expected in 2022 and comes as a response to major crypto scams where investors have been defrauded. The FCSA aims to also address how cryptos will interact with traditional financial services and overall financial stability. Virtual currency is not considered legal tender in South Africa.

The South African Revenue Service considers cryptocurrencies such as bitcoin to be intangible assets rather than currency or property. They are taxed as long-term or short-term income ranging from 18% to 40% allowing for deduction of costs.

United Arab Emirates

The UAE is estimated to be the third-largest crypto market in the Middle East, with total transaction values estimated at approximately $26 billion. The Dubai Financial Services Authority included a crypto regulatory framework in its 2021 business plan for firms operating in the Dubai International Financial Center.

In early 2022 the UAE announced a licensing program to be rolled out early in the year. The UAE also said it wants to build and attract a mining ecosystem in the region. The UAE Securities and Commodities Authority issued[172] its regulation in 2020, which seeks to provide clarity as to how crypto and other digital assets may be used as a stored value when purchasing various goods and services.

The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market has enhanced its “Guidance for the Regulation of Crypto Asset Activities.”[173]

The UAE and Saudi Arabia are reportedly working on research for a CBDC dubbed “Project Aber.”

[166] https://www.cbr.ru/press/event/?id=9761

[167] https://tass.com/economy/1406879?

[168] https://www.sama.gov.sa/en-US/News/Pages/news21082019.aspx

[169] https://www.sama.gov.sa/en-us/news/pages/news-575.aspx

[170] https://www.resbank.co.za/en/home/quick-links/frequently-asked-questions

[171] https://www.ifwg.co.za/Pages/default.aspx

[172] https://www.sca.gov.ae/en/regulations/drafts.aspx#page=1

[173] https://www.adgm.com/media/announcements/adgm-enhances-guidance-on-regulation-of-crypto-asset-activities

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About the authors


 Susannah Hammond is Senior Regulatory Intelligence Expert for Thomson Reuters Regulatory Intelligence with more than 25 years of wide-ranging compliance, regulatory and risk experience in international and UK financial services. She is co-author of “Conduct and Accountability in Financial Services: A Practical Guide” published by Bloomsbury Professional.


 Todd Ehret is a Senior Regulatory Intelligence Expert for Thomson Reuters Regulatory Intelligence. He has more than 25 years’ experience in the financial industry where he held key positions in trading, operations, accounting, audit, and compliance for broker-dealers, asset managers, private equity, and hedge funds. Before joining Thomson Reuters he served as a Chief Compliance Officer and Chief Operating Officer at a Registered Investment Adviser/Hedge Fund for nearly a decade.

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