Mapped: Cryptocurrency Regulations Around the World

Following the unprecedented cryptocurrency boom in 2017, investors and governments alike could no longer ignore the growth of decentralized finance.

The world has become increasingly fascinated with cryptocurrencies and the ways they are enabling greater access, such as being able to send funds to remote places or securing capital for small businesses.

To aid this, cryptocurrency regulations are being slowly introduced into global financial markets. Regulations help to monitor these emerging digital currencies, and to allow for clearer guidelines and a measure of security.

The Regulatory Landscape

Today’s graphic from ComplyAdvantage maps out major regulatory cryptocurrency and exchange landscapes around the world, showing how sentiments towards digital currencies are evolving.

To do this, ComplyAdvantage measured cryptocurrency regulatory environments using their own Light-to-Tight scale, based on the following criteria:

Cryptocurrencies and exchanges status? (Ban = 3 points, Regulated = 2 points, Grey Area = 1 point)

Cryptocurrency considered legal tender? (Yes = 1 point, No = 0 points)

Planned legislation to increase crypto regulation? (Yes = 1 point, No = 0 points)

Which jurisdictions have the strictest and most relaxed regulations for cryptocurrencies?

Regulations by Region

Global attitudes towards the rise of cryptocurrencies have shifted greatly over the past few years. While the term cryptocurrency is a bit of a misnomer, some countries do consider digital currencies legal tender, with many viewing cryptocurrencies as commodities.

Below is a table of the major countries that are pursuing cryptocurrency regulations:

Country Cryptocurrencies Exchanges Initial Coin Offerings (ICOs) Australia Legal; treated as property Legal, must register with AUSTRAC Regulated Switzerland Legal; generally accepted as payment Legal, regulated by SFTA Regulated Malta Not legal tender Legal, regulated under the VFA Act Regulated Estonia Not legal tender Legal, must register with the Financial Intelligence Unit Regulated Gibraltar Not legal tender Legal, must register with the GFSC Regulated Luxembourg Not legal tender Legal, must register with the CSSF Regulated Canada Not legal tender; some retailers accept as payment Legal, regulation varies by province; final federal regulations expected late 2019 Regulated Mexico Legal, accepted as payment in some contexts Grey area; first crypto exchange in opened mid 2019 Regulated Lithuania Not legal tender Legal, must register with the Lithuanian Finance Ministry Grey area United States Not legal tender; some retailers accept as payment Legal, regulation varies by state; SEC expected to publish updated crypto regulations late 2019 Grey area UK Not legal tender; considered assets Legal, registration requirements with FCA Grey area Russia Not legal tender Grey area; regulations to be determined by the end of 2019 Grey area Japan Legal; treated as property Legal, must register with the Financial Services Agency Grey area Nigeria Legal Grey area; regulations upcoming from Central Bank of Nigeria Grey area Singapore Not legal tender Legal, no registration required Grey area South Korea Not legal tender Legal and regulated, must register with FSS Banned India Not legal tender; digital rupee may be in the works Effectively illegal, but global and federal regulations being considered Banned China Bitcoin considered property; all other cryptocurrencies banned Illegal, but a global regulatory framework being considered Banned

Sources: ComplyAdvantage, HedgeTrade, CoinDesk

Asia

Japan has one of the most progressive regulatory climates for cryptocurrencies, widely considering bitcoin as legal tender and passing a law in mid-2017 recognizing cryptocurrencies as legal property. In late 2018, Japan also approved self-regulation for the crypto industry.

By contrast, China currently has one of the most restrictive environments in the world for cryptocurrency. China banned bitcoin transactions in 2013, as well as ICOs and crypto exchanges in 2017─though many have found workarounds through sites not yet firewalled.

Europe

Cryptocurrency and exchange regulations in the EU are determined by individual member states, and are considered legal across the bloc.

Digital currency offers great promise, through its ability to reach people and businesses in remote and marginalized regions.

—Christine Lagarde, Managing Director of IMF

Perhaps unsurprisingly, Switzerland has one of the most open climates for cryptocurrencies and exchanges in Europe. In 2016, the city of Zug, known as “Crypto Valley”, started accepting bitcoin as payment for city fees. Swiss Economics Minister Johann Schneider-Ammann announced his goal in 2018 to make Switzerland the world’s first “crypto-nation”.

North America

Both Canada and the U.S. take a similar approach to cryptocurrency legislation at the federal level, as both countries view cryptocurrencies as securities. However, provincial and state regulations differ widely in their taxation requirements of profits from crypto investments.

Latin America

Regulations throughout Latin and South America run the full legislative spectrum.

Bolivia : unilateral ban on cryptocurrencies and exchanges

: unilateral ban on cryptocurrencies and exchanges Ecuador : the first country to launch its own token; ban on all cryptocurrencies aside from its government-issued SDE token (Sistema de Dinero Electrónico = electronic money system)

: the first country to launch its own token; ban on all cryptocurrencies aside from its government-issued SDE token (Sistema de Dinero Electrónico = electronic money system) Mexico, Argentina, Brazil, Chile : cryptocurrencies widely accepted as payment

: cryptocurrencies widely accepted as payment Venezuela: cryptocurrencies widely accepted; this makes sense, considering the economic crisis and subsequent freefall of the bolívar

The Importance of Cryptocurrency Regulations

Cryptocurrency’s journey is the story of a technology rapidly outpacing the laws that govern it.

Governments around the world are keenly aware of this problem. Members of the G20 published a request in June 2019 for a global regulatory framework for cryptocurrencies to be implemented to better manage the benefits and challenges that cryptocurrencies bring.

Regulation for both cryptocurrencies and crypto exchanges is essential for the future of digital finance─bringing legitimacy to the digital financial market, and making it more attractive for new businesses, established banks, and investors worldwide to more easily conduct business within this emerging ecosystem.