As cryptocurrency grows from a niche investment to a major asset class, governments around the world are figuring out how best to regulate it. By September 2024, some countries had introduced clear rules to protect investors and limit misuse, while others are still observing and planning.
Key Highlights
- As crypto plays a bigger role in the global economy, each country is taking a different approach to regulating it.
- The European Union has led the way in setting up rules that help detect and prevent illegal use of digital currencies.
- In the U.S., regulation is slowly taking shape, but legal battles between crypto companies and government agencies continue.
- Other nations treat cryptocurrency differently in terms of taxes, legal status, and investment classification.
United States
In 2022, the U.S. introduced a regulatory framework that gave authority to bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to oversee crypto activities.
The SEC, in particular, has taken a strong position by filing lawsuits against major crypto companies like Ripple, Coinbase, and Binance.
In a partial win for crypto, a 2023 U.S. court ruled that Ripple’s XRP tokens were securities only when sold to institutional investors, not when traded on public exchanges.
Another big development came when the court overturned the SEC’s rejection of Grayscale’s application to launch a Bitcoin ETF. This led to the approval of the first spot Bitcoin ETFs in January 2024 and Ethereum ETFs in July 2024.
Despite these changes, SEC Chair Gary Gensler clarified that ETF approvals don’t imply wider acceptance of crypto as compliant financial assets. He insisted that most crypto assets still qualify as securities under U.S. law and are subject to those regulations.
Note: Central Bank Digital Currencies (CBDCs), which are government-backed digital currencies, are not the same as cryptocurrencies and are not discussed in this summary.
China
China has taken a strict stance against crypto. The People’s Bank of China banned crypto companies from operating, stating that they offer financial services without proper government approval. In May 2021, China also banned Bitcoin mining.
Later that year, it fully outlawed cryptocurrencies, pushing miners and businesses to relocate to other countries.
Canada
Although cryptocurrency isn’t legal tender in Canada, the country has been progressive in regulating the industry. Canada was the first to approve a Bitcoin exchange-traded fund (ETF), and several now trade on the Toronto Stock Exchange.
Crypto trading platforms in Canada must register with provincial regulators under the guidance of the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC).
Crypto firms are also considered money service businesses (MSBs) and must register with FINTRAC, the agency responsible for tracking suspicious financial activity. Cryptocurrency is taxed like other commodities in Canada.
United Kingdom
In October 2022, the U.K. recognized crypto assets as financial instruments. By June 2023, new laws came into effect through the Financial Services and Markets Act, bringing crypto under broader financial regulations.
There are specific requirements for identity checks (KYC), anti-money laundering (AML), and counter-terrorism financing (CFT) measures.
Profits from trading crypto are still taxed as capital gains, but taxation depends on the type of crypto activity and the people involved.
Quick Fact: The U.K. has banned crypto derivatives trading.
Crypto companies must also report suspicious activities to the Office of Financial Sanctions Implementation (OFSI).
Japan
Japan recognizes cryptocurrencies as legal property under the Payment Services Act (PSA). All crypto exchanges must register with the Financial Services Agency (FSA) and follow anti-money laundering and anti-terrorism rules.
Japan created the Japanese Virtual Currency Exchange Association (JVCEA), and all registered exchanges must join it. Crypto gains are taxed as miscellaneous income.
To combat illegal activity, Japan updated its laws in 2023 to require more customer information and prevent money laundering via crypto exchanges.
Australia
Australia also treats cryptocurrencies as legal property, making them subject to capital gains tax. Crypto exchanges can operate freely as long as they register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and meet AML/CTF requirements.
In 2019, Australia imposed rules on initial coin offerings (ICOs) and banned privacy coins that conceal transactions. The country is also considering a licensing system for crypto firms and exploring the idea of a central bank digital currency (CBDC).
A draft regulatory framework was announced in 2023, with a 12-month transition period expected once it’s approved.
Singapore
Singapore views cryptocurrency as property—not as legal tender. The Monetary Authority of Singapore (MAS) oversees crypto exchanges through the Payment Services Act. In 2022, MAS warned digital payment token (DPT) providers not to promote their services to the public.
By August 2023, Singapore introduced a framework to regulate stablecoins. Only those approved by MAS can use the label “MAS-regulated stablecoin.”
Singapore is considered crypto-friendly, partly because it does not charge long-term capital gains tax. However, businesses that frequently trade in crypto are taxed on those earnings as income.
South Korea
South Korea requires all crypto exchanges to register with the Korea Financial Intelligence Unit (KFIU). The country banned privacy coins in 2021.
A law called the Act on the Protection of Virtual Asset Users took effect in 2023, officially appointing the Financial Services Commission to regulate digital assets. This law also outlines acceptable and illegal crypto practices and ensures user protection.
India
India hasn’t clearly legalized or banned crypto. There is a draft bill proposing a ban on all private cryptocurrencies, but it has not yet passed into law.
The government charges a 30% tax on crypto income and takes a 1% tax at the source for crypto trades. The 2022 Finance Bill also defined virtual digital assets as property, establishing rules for taxing them.
India remains undecided on how it wants to regulate crypto, keeping investors and companies uncertain about the future.
Brazil
Brazil has not made Bitcoin legal tender, but it has recognized cryptocurrencies as legal payment methods. In November 2022, the government passed a law that allowed crypto to be used for payments. This law became effective on June 20, 2023.
Brazil’s Central Bank was given the authority to oversee and regulate crypto activities starting in June 2023 under a presidential decree.
European Union
Crypto is legal across most EU countries, although regulation and taxation vary. Tax rates can range from 0% to 48% depending on the country.
To strengthen regulations, the EU passed new rules like the 5th and 6th Anti-Money Laundering Directives (5AMLD and 6AMLD), enforcing tougher KYC and anti-terrorism financing laws.
The EU also introduced the Markets in Crypto-Assets (MiCA) regulation, approved in 2022 and enacted in July 2023. MiCA aims to create consistent rules across Europe, provide strong consumer protection, and ensure that crypto firms operate legally and transparently.
Are Cryptocurrencies Regulated?
Many countries are either developing or already enforcing cryptocurrency laws. While some are leading the way, others are still lagging behind due to political, legal, or economic challenges.
Which U.S. States Are Crypto-Friendly?
States like California, Florida, and Texas are known to support crypto-friendly policies and innovation in the blockchain space.
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What Rules Apply to Crypto Trading?
Rules vary by country and sometimes even by state. However, common requirements include KYC compliance, registration with financial regulators, and taxes on profits from crypto activities.
Final Thoughts
Even though cryptocurrencies have been around since 2009, global regulators are still figuring out how best to govern them. Protecting consumers from fraud and preventing illegal activities are top priorities.
While some countries have made major progress, creating global standards remains a complex and ongoing task.
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