Markets rise and fall, but crypto regulation has continued a steady trajectory of growth and stabilization over the past few years.
While legal approaches to the industry in the past have been couched in the language of fear or hostility, in 2022 most jurisdictions are taking steps to actively create a workable, clear framework in which cryptoassets can thrive and be integrated into the broader economy.
That doesn’t mean the approach is the same, however.
Despite calls for global standards in crypto regulation, many countries have taken sharply diverging attitudes to the market.
No one system has become the de facto norm as governments and regulators search for a coherent policy that supports the market while creating functional boundaries.
In this article, we break down crypto regulations around the world by country across the largest markets and most important jurisdictions. This list will be updated with more countries and new developments on a regular basis.
Cryptoassets and exchanges were recognised as legal in Australia in 2017; classified as property for tax purposes
First crypto ETFs launched in May 2022 on the ASX
Licencing requirements for crypto exchanges introduced in late 2021 and set to come into force in 2022
Similarly to Japan, Australia has taken a proactive approach to regulation of cryptoassets, and both digital currencies and exchanges have enjoyed legal status in the country since 2017.
Cryptoassets are considered property for tax purposes, with Capital Gains Tax regulations applicable. Exchanges must be registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) which safeguards against money laundering and terrorism financing activity.
The country’s accommodating philosophy was further demonstrated by the introduction of several crypto-based ETFs which were launched on the Australian Stock Exchange in May 2022.
Further proposals to create a long-term framework for the market were introduced in December 2021, with a consultation period in 2022 and the ultimate aim of allowing consumers to buy and sell cryptoassets safely in a regulated structure.
China effectively barred many exchanges from operating in the country in 2021, causing numerous firms to migrate to Singapore and other centers
Launched first government CBDC during a pilot test in Beijing at the 2022 Winter Olympics; since expanded to other cities
Crypto mining was outlawed in 2021, but many operators continue to function in the country
China emerged as a key player in the crypto industry over the last decade, with some of the world’s largest exchanges and a significant chunk of mining operations originating in the country.
With the explosion of interest and capital attracted to the industry, the Chinese authorities implemented a crackdown and domestic exchanges were outlawed along with initial coin offerings back in 2017.
While mining activity remained robust, it was also banned in June 2021, followed by a blanket ban on all cryptocurrencies which came into force in September last year.
Despite the ban on non-government cryptoassets, China has pushed forward with its own CBDC: the e-CNY was piloted at the Winter Olympics in Beijing in early 2022 in a scheme which has since been rolled out across several cities.
Given the country's tight currency controls and strict stance against the market, it's unlikely that crypto regulation will be loosened anytime soon, but the country remains a world leader in rolling out a blockchain-enabled version of its domestic currency.
Markets in Crypto Assets (MiCA) legislation is set to become law in late 2022, bringing cryptocurrencies under the supervision of EU financial regulations
Moves to harmonize diverging approaches of different countries within the bloc
Proposed ban on proof-of-work cryptoassets dropped, but environmental concerns remain
The European Union in April 2022 passed the landmark Markets in Crypto Assets (MiCA) legislation which harmonizes the regulation of digital assets across the bloc’s countries and brings them under the supervision of existing EU financial regulations.
That means that crypto exchanges operating in the EU are subject to the same Know-Your-Customer (KYC) checks and anti-money laundering (AML) provisions as other financial institutions, imposing a significantly increased compliance burden on the market.
That has been the case since the Fifth Anti-Money Laundering Directive came into force in 2020, which included cryptoasset to fiat exchanges, but MiCA significantly expands the compliance responsibilities of crypto across the bloc with specific legislation.
While crypto is legal across the bloc and exchanges are required to obtain licenses from national regulators, individual countries are not permitted to create their own CBDCs.
Meanwhile environmental concerns about the impact of proof-of-work cryptocurrencies such as Bitcoin remains high, with a proposal to include a ban on such assets in MiCA only being removed at the last minute amid stiff opposition from the industry and other stakeholders.
Cryptoassets are legal in Japan and considered as legal property for tax purposes
Exchanges are licensed and must register with the Financial Services Agency
Early crises have pushed regulation to the top of the agenda, with a clear regulatory structure for the market
Japan has a long history with crypto, with one of the industry’s first significant disasters hitting the country with the collapse of the Mount Gox exchange which prompted the authorities to take a proactive approach to the industry.
Fast forward to 2022 and Japan has one of the most progessive and comprehensive regulatory structures in the world, with crypto considered legal and treated as ‘miscellaneous income’ for tax purposes, while exchanges are licensed by the Financial Services Agency.
Japan established the Japanese Virtual Currency Exchange Association (JVCEA) and the Japan Security Token Organization (STO) Association in 2022 to coordinate activity in the market.
The JVCEA’s membership is made up of cryptoasset-native firms operating in the country, while the Japan STO Association comprises the largest banks and financial institutions.
Cryptoassets are governed under the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA), which took effect in May 2020.
The PSA regulates firms such as custody services, while exchanges and derivatives providers fall under the jurisdiction of the FIEA.
Legislation on tax framework for cryptoassets scheduled for introduction in early 2023
Exchanges have to be registered and share identifying information with banks and regulators, and come under the supervision of the Financial Supervisory Service
Digital Asset Basic Act set to come into force in 2024; details yet to be released but consumer/ investor protection said to be high on its agenda
South Korea has consistently been at the forefront of technological efforts in the cryptoasset market, and, with adoption in the country high, regulators have similarly kept pace with developments in the space.
Exchanges are required to register with the Financial Supervisory Service (FSS) and the Ministry of Finance has indicated that it will introduce crypto-specific income tax rules early next year.
Know your customer (KYC) and Anti-money laundering (AML) requirements are strict and enforced. Since 2017, anonymous use of crypto has been banned, and the regulator requires all firms to obtain an operating license, and customers must use identifiable information on their crypto exchange accounts.
The anti-crime Financial Intelligence Unit (FIU) effectively banned all privacy-focussed cryptoassets such as Z-Cash from use in the country in 2021, with the assets delisted from local exchanges.
Crypto services have found it difficult to attain regulated status in the UK, but recent announcements suggests the tide is turning
UK government is actively exploring a CBDC and national NFT
The FCA is engaging with stakeholders and more concrete regulations are on the way
The UK approach to crypto regulation has undergone something of a renaissance in 2022, with the government revealing its plans to become more welcoming to the industry.
London was initially viewed by many as a natural hub for the market given its position as a global financial center and technology melting pot, but the approach of the Financial Conduct Authority (FCA), and lukewarm efforts by the government have pushed many startups towards other pastures like Berlin and Lisbon.
The lack of take up in the UK has clearly caused the government to reassess its approach, and so, in the first months of this year, there have been clear steps taken to revamp the country’s relationship with crypto.
In March, Chancellor Rishi Sunak announced plans to explore a UK central bank digital currency (CBDC), alongside a national NFT created by the Royal Mint. Meanwhile, the FCA has begun to engage with the industry with events like its recent CryptoSprint.
The regulator still maintains a strict approach to the promotion of crypto investments to retail investors and has continued to warn about the dangers that it says the sector poses to consumers. But with the backing of the central government, the sector can bet on a more open approach from the UK in the months to come.
Crypto is not classified as legal tender in the UK, and exchanges and other providers must register with the FCA to be allowed to operate in the jurisdiction.
President Joe Biden’s executive order in March 2022 underlined the US drive for more regulatory certainty around crypto
Treasury Secretary Janet Yellen has called for stablecoin regulations in 2022
Various agencies including the SEC, CFTC, FATF and others are pushing for oversight of digital assets
US regulators and the federal government have consistently raised concerns about the lack of legal framework governing crypto in the world’s largest economy, and in 2022 the country has taken more concrete steps to formalize how DeFi should be controlled, and by whom.
Various regulators from the Securities and Exchange Commission (SEC), to the US Treasury and Commodity Futures Trading Commission (CFTC) and others have made their pitch for why they should control the market, but the debate remains ongoing.
A March executive order from President Joe Biden underscored the need for regulators to come up with a more coherent and structured approach to the sector, and amid the collapse of the Terra UST stablecoin Treasury Secretary Janet Yellen has urged specific legislation to govern these assets.
Regulations have been promised in 2022, but with various stakeholders jockeying for position over jurisdiction and significant lobbying efforts underway from the industry, it may take longer for the US to crystallize a coherent, federally applicable position.
SEC Chair Gary Gensler has been vocal about his position that many cryptoassets should fall under existing securities laws, while CFTC Chair Rostin Behnam has said the crypto derivatives markets in particular should fall under the purview of the Chicago-headquartered regulator.
How these debates play out and the ultimate position of the federal government towards stablecoins while determining the extent to which crypto becomes an accepted part of the domestic, and by extension international, financial ecosystem.