Crypto regulation in other countries

At the moment, cryptocurrencies are just gaining popularity and make it more and more possible to include them in investment and consumer purchases. But their wider use raises significant issues regarding security, legal protection of market participants, and the level of regulation by government agencies. In this context, the development of an effective legal framework for regulating the cryptocurrency industry before 2025 becomes even more relevant.
By 2025, cryptocurrencies are expected to be widely used for international transfers, commercial transactions, and investments. This fact will contribute to increased volumes of circulation that, in turn, will attract increased attention from regulators and government agencies to the need to establish transparent and efficient rules of interaction in this market.

Thus, the growing interest and expanding scope of cryptocurrency requires the formation of a sustainable regulatory framework that will protect the rights of market participants, prevent offences and promote the sustainable development of cryptocurrency technologies.

Regulation of the cryptocurrency industry by 2025 is expected to include a set of measures aimed at legal regulation of this sector of the economy:

• Defining the legal status of cryptocurrencies: Governmental bodies may define cryptocurrencies as an asset, commodity, digital currency, or other legal categories, which will then influence the ways of its taxation and rules of circulation.
• Ensuring transparency and security of transactions: Regulators may demand more strict transparency in cryptocurrency deals, including user identification and anti-money laundering measures.
• The regulatory control over cryptocurrency exchanges and wallets: The process of licensing and supervision may become mandatory for all cryptocurrency exchanges and wallets to ensure protection of consumer rights and avoidance of fraud.
• Regulation of ICOs, IEOs and DeFi: Governments can make strict regulations for the protection of investors in initial coin offerings (ICOs), initial exchange offerings (IEOs) and decentralised financial platforms (DeFi).
• Tax laws can be clarified by government entities: explaining, for instance, under what circumstances and how cryptocurrency transactions are taxed.
• Central bank digital currencies can be introduced: this is yet another way in which cryptocurrencies become more controlled and regulated.
• Regulation of technology itself may change: blockchain technology advancements might give way to newer ways of technological control and regulation, such as with tools for blockchain analysis or network security.
• Consumer protection and liability: Legislation may include provisions aimed at protecting consumer rights and establishing legal liability for parties involved in cryptocurrency transactions, with provision for compensation in the event of infringement or fraud.

Regulatory approaches may vary significantly from jurisdiction to jurisdiction, given the degree of development and rigour of each country’s cryptocurrency laws and regulations.

Assuming what can actually occur with speed, by 2025, most states will definitely have specific legislation and rules governing the use of cryptocurrency; the scope of cryptocurrencies might heavily expand, including not just the financial sector but many others.

International standards aimed at harmonising regulation of the cryptocurrency industry are likely to be developed, facilitating interaction between countries in this area. Blockchain and cryptocurrency technologies are also expected to be actively developed and improved to address existing challenges such as scalability and privacy.

Cryptocurrencies will probably be included in the global economic system, playing a major role in international payments and transactions. That is, they will be an element of the infrastructural support of the global economy to enhance their role in global economic processes.

The stress should fall that cryptocurrency regulation should be balanced to be able to protect all market participants’ interests, namely users and investors. However, it is not necessary to suppress innovative development or technological progress at the same time. But to provide such a guarantee of security and protection of consumers, the establishment of strict rules and demands against activities in this respect will be necessary.

Cryptocurrency Regulation in the UK

UK’s Financial Conduct Authority published an update on the dynamics of cryptocurrencies and came forward with a detailed strategy to regulate this innovative industry.

The surge in interest in cryptoassets underlines their significance in the modern financial system. However, the FCA voices concerns over the extent of consumer understanding about cryptocurrencies and the risks that come with them. Against the backdrop of key development milestones expected to be reached in 2026, these regulatory initiatives are designed to reshape the legal landscape for cryptocurrency companies and investors.

FCA’s strategic vision is as follows:

• A call for awareness: Recent research confirms a significant increase in the number of cryptocurrency owners in the UK. However, many of them do not realise the full picture of the risks associated with cryptoassets. This opens up a debate on the need for greater consumer awareness support, the provision of complete and accurate information, especially in promotional material, which is the direct responsibility of the FCA.
• Risk management: Knowledge gaps and underestimation of the risks associated with investment in cryptocurrencies are significant contributors to the volatility that consumers face.
• The FCA is concerned about the potential for misrepresentation and inadequate disclosure, which puts weight on transparency and truthfulness of data provided to the public.
• The FCA has, therefore, put forward a roadmap-it is a phased strategy-meaning that the controls put in place and oversight of cryptoassets should be strengthened to attain an improved legal framework in cryptocurrency transactions.
• The increased regulatory measures by the FCA are thus merely a reaction to the protection of investors’ and consumers’ interests, along with stability and transparency in the fast-evolving cryptocurrency sector.

Key Milestones and Legal Consequences of Cryptocurrency Regulation in the UK

Implementation of the roadmap, starting from 2023, includes steps to be covered sequentially until 2026. This includes the imposition of key legal changes that will impact businesses and investors dealing in cryptocurrencies.

• Stablecoin Regulation (2025-2025)The new law requires stablecoin issuers to maintain sufficient reserves and spell out clear rules for redemption. Sound asset custody practices are also important. If these conditions are not met, unredeemed stablecoins could face operational constraints or severe legal repercussions, leaving companies vulnerable to consumer class-action lawsuits.
• Market Abuse and Governance (2025-2025)SMCR means that senior management is personally liable for breaches of regulatory requirements. The rules on market abuse allow increased scrutiny of insider trading and market manipulation. Poor governance in firms could lead to financial penalties against the firm and personal legal liability against their managers.
• Trading Platforms, Lending and Staking (2025-2026)Cryptocurrency transaction platforms will have to comply with enhanced standards of operational resilience, transparency, and access. Lending and staking should be organized in such a way that clear ownership is established along with full disclosure of risks. Non-compliance with the standards could amount to disqualification from operation in the UK jurisdiction and enforcement action at the instance of regulators.
• Prudential Standards (2025-2026)The new prudential capital, liquidity, and risk management requirements are intended to ensure that crypto-firms can resist financial shocks and protect customer assets. Inability to meet these standards may lead to insolvency or regulatory penalties. These steps show the UK’s commitment to strengthening the regulatory space for cryptocurrencies in order to enhance safety, stability, and protection of the rights of market participants.

The FCA’s Roadmap for Crypto Asset Regulation

The FCA’s roadmap for crypto asset regulation represents a significant change in the legal environment for crypto businesses and investors in the UK. Here’s what it means for both parties:

For Crypto-businesses

• Regulatory Gateway Passage: Firms will have to demonstrate full compliance with all FCA rules by 2026. This involves strict controls over all aspects of the business, including financial operations, risk management and marketing.
• Comply with the Financial Promotion Rules: The firms will have to reconsider their marketing materials for the standards set by FCA and not mislead consumers from the real risks of cryptoassets.
• Management Audit: As the significance of compliance with SMCR develops, clear structures of management, in turn, prevent senior managers from taking personal responsibility.
• Improved Risk Management: Firms should establish or further develop appropriate risk management systems that comply with the newly introduced prudential standards regarding the safeguarding of client assets and market abuse.

For Investors

• Improved Legal Protection: Digital assets becoming legally classified as personal property will strengthen investors’ position in cases of fraud or theft.
• Changing Accessibility of Products and Services: Stricter regulatory requirements could mean a change in the availability of products and services as companies adjust to the new regulations.

General Conclusions

• Strengthening Regulation: The FCA’s roadmap aims to build a more robust and complete regulatory regime that will enhance transparency and stability in the cryptoasset market.
• Improvement of Protection and Security: The strengthening of consumer protection and risk management regulations will raise investment security and protect the assets of clients.

All these changes require thoughtful consideration and preparation by both cryptocurrency companies and investors for them to be ready and capable of adapting to the new legal reality.

Key Takeaways from Recent FCA and Government Publications

The published updates on cryptocurrency regulation in the UK are a big step toward establishing the legal environment for the crypto industry in the country. In fact, these updates provide crypto businesses and investors with clearer guidelines to plan and adapt to future regulatory requirements. Let’s take a look at the key takeaways from recent FCA and government publications:

Integrated Regulatory Approach

The UK government has ditched the previous phased approach to regulation that was once proposed by Her Majesty’s Treasury, and instead, the UK now plans to introduce concurrent regulation of both stablecoins and a wider range of cryptoassets. This change in approach will mean all aspects of the cryptocurrency industry fall under one regulatory environment and therefore make life more predictable for all market participants.

Development and Implementation of Cryptoregime

According to the FCA, the approach to regulation has been informed by stakeholder roundtables. An indicative roadmap of key dates for the development and implementation of cryptocurrency provides an understanding of the timeline within which the industry will expect new rules. This, therefore, enables companies to begin putting in place mechanisms aimed at ensuring compliance with the forthcoming change, as well as plan their operations with the new regulatory requirements in mind.

Consumer Behaviour and Attitudes

As identified, one important result from an FCA research report regarding consumers’ attitudes and behaviour towards cryptocurrency: “This underlines how consumer awareness of the associated risks needs to be drawn to cryptoassets. There is, therefore, clear importance of transparency and effective communication within the marketing and sales strategies of cryptocurrency firms.”

Conclusion for Crypto Businesses and Investors

What this means for crypto businesses is a need to adapt to a wider, integrated regulatory regime. Companies should proactively be in discussions with regulators and prepare for implementation in operational and governance structures necessary for the change. On the other side, investors should consider how more intensive regulation may alter both the valuation and availability of cryptoassets, bringing with it its set of risks and opportunities.

These steps indicate that the UK is committed to establishing a stable, transparent, and secure regulatory environment for cryptocurrencies, which is a good omen for the long-term development of the industry.

Recent Updates in UK’s Regulatory Policy on Cryptocurrencies

Recent updates in the UK’s regulatory policy on cryptocurrencies suggest that there is a sea change in the regulatory approach towards the sector. The plans to bring the regulatory treatment of stablecoins together with a wider regulatory regime for crypto-assets have several key areas of focus, including:

Stablecoin Regulation

• New Regulated Activity: Under the Financial Services and Markets Act 2000 Order 2001 (RAO), it is planned to introduce a new category of regulated activity for fiat-backed stablecoins issued in the UK. This will require issuers to comply with certain conditions for the management and redemption of collateral assets.
• FCA Consultation: The Financial Conduct Authority is planning a series of consultations in 2025, starting with collateral asset management and ending with the redemption of stablecoins. This will be an avenue to show the views and suggestions of stakeholders on upcoming regulation.
• Lack of Regulation in the Payments Sphere: The government decided not to include stablecoins in the regulation of payments due to their excessive regulatory burden, disproportionately aligned with the current use of the assets.

Regulation of Cryptoassets

Publication of the Discussion Paper and Consultation Paper: The FCA is planning an active discussion with market participants, starting with a discussion paper on cryptoasset stacking in 2025, which will help define the final regulatory parameters for the sector.
The full implementation of the new regulatory regime will be effective in 2026 with the implementation of the authorisation gateway, to give enough time for companies to adapt to the changes that will need to be put into place.

Strategic Considerations for Firms

Cryptoasset companies should begin preparing for these changes now. This is important, considering upcoming legal requirements and adapting their business models and operational processes to the new regulatory landscape. Particular attention needs to be given to aspects of asset management, collateralisation, redemption of stablecoins, and requirements on staking and other cryptoasset transactions.

These steps taken by the government and the FCA are toward creating a more transparent, secure, and stable environment for the cryptocurrency sector, emphasizing the UK’s ambition to become one of the leaders in regulating the crypto industry.

Indeed, the FCA’s roadmap will dramatically shift the approach to cryptocurrency regulation in the UK. Indicating the closing of gaps in understanding of cryptoassets among consumers and introducing tougher legal rules for market behavior, the FCA wants to make sure a safer and more transparent crypto-ecosystem is developed.

Key Aspects for Businesses and Investors

The focus shall henceforth shift to the education of consumers in regard to cryptocurrency risks. Therefore, every business has to be ready to implement educational programs and clarify all details regarding their products.

• High Legal Standards: Increasing legal standards of market behaviour will require companies to review and possibly tighten internal policies and procedures. This will specifically be important in preventing any kind of abuse and following all relevant rules of the market.
• Proactive Approach: With the changing regulatory environment, it will be important that crypto businesses and investors be informed and actively participate in consultation processes. Being proactive and working collaboratively with regulators can help shape a more favorable operating environment.
• Legal Support: Understanding the subtlety of new regulations and their impact on your business may require professional legal support. Proper interpretation of legislative changes and adaptation of your business to them is the guarantee of successful adaptation and minimizing potential risks.

The upcoming regulatory changes for digital assets in the UK mean that market participants need to be very active and prepared for rapid changes. Informed and proactive engagement with regulators and legal advisors will help your crypto business operate efficiently and safely in the new legal environment.

Crypto regulation in Australia

The regulation of cryptocurrency in Australia is indeed characterized by a very elaborate and developed regulatory framework. It has actually created an environment where cryptocurrency exchanges and cryptoasset transactions are viewed as legitimate and, thus, under the regulation of various key bodies. Herein are the salient features of the current cryptocurrency regulatory landscape in Australia:

Registration and Regulation of Cryptocurrency Exchanges

Cryptocurrency exchanges operating in Australia must register with and receive approval from the Australian Transaction Reporting and Analysis Centre (AUSTRAC). This body is responsible for preventing, detecting and responding to criminal abuse in the financial system, including cryptocurrency markets. Registration requires exchanges to comply with strict anti-money laundering (AML) and counter-terrorist financing (CFT) regulations, as well as fulfil reporting obligations.

Taxation of Cryptocurrencies

The Australian Taxation Office (ATO) makes it clear that cryptocurrency transactions may be subject to capital gains tax (CGT). This means that any disposal of cryptocurrency, whether it is selling, exchanging, gifting or using cryptocurrency to pay for goods and services, may have tax implications.

Regulation of ICOs and Cryptoassets

The Australian Securities and Investments Commission, or ASIC for short, issues some pretty comprehensive regulatory guidance relating to cryptoassets and ICOs. Some of the key areas touched on include:

• What a business needs to consider if it’s offering cryptoassets
• What is likely to constitute misleading or deceptive conduct
• In what circumstances a cryptoasset or ICO might be considered a financial product
• Under what circumstances a trading platform dealing in cryptoassets will be considered a financial market
• Legal Framework and Investor Protection

ASIC continues to work towards crypto-asset-related activities falling within general financial market regulation designed to protect investors and ensure fair markets.

This extensive and multi-layered regulation makes the Australian crypto market one of the most regulated and, as a result, potentially one of the most stable and secure for investors and users. It is important that companies and investors dealing with crypto assets in Australia strictly follow these regulations to avoid legal violations and related penalties.

Australia has been quite progressive regarding regulating both cryptocurrencies and blockchain technologies, actively supporting innovations within the fintech sector. It is in this connection that the government and regulators carefully follow the development of this area for the purpose of protecting consumers and ensuring market transparency. Following are the main areas included in Australia’s regulatory policy with respect to cryptocurrencies:

Supporting Innovation

The Australian government is actively encouraging innovative financial services and products in general, and blockchain/cryptocurrencies-based initiatives in particular. This is particularly evident from a number of studies and public consultations conducted as part of the government’s intentions to improve the regulatory environment for fintechs.

Regulation Through Coercion Approach

ASIC, the corporate regulator in Australia, had been proactive in taking action against crypto firms for violation of licensing requirements or fraud commitments, including failure to hold an appropriate license to handle financial transactions and/or not taking enough measures to avoid consumers from being defrauded.

Plans by the Reserve Bank of Australia

The RBA is looking at the potential and the benefits of CBDCs for the economy, looking at wholesale CBDCs that would improve the payment infrastructure in the country. It does not plan to issue retail CBDCs.

RBA Extended Powers of Attorney

Treasury plans to give RBA wider powers over regulating the payment systems, including stablecoins, that will be essential in enhancing the country’s payments infrastructure.

Legislative Clarity

There is a need for further legislative clarification, especially in the context of new financial technologies and products. Government reviews and consultations aim at legal uncertainty, which should lead to a more legible and structured regulatory environment. Australia is taking proactive steps to support fintech innovation while seeking to ramp up consumer protection and increase transparency in financial transactions. Regulation of cryptocurrencies and related technologies continues to evolve, designed to find a balance between supporting the development of innovation and needing to ensure the stability and security of the financial system.

The regulatory environment in Australia for cryptocurrencies and blockchain technologies focuses on creating a stable and secure environment for transactions and innovation in this rapidly changing area. While the legislation does not focus on cryptocurrencies as a separate category of law, it effectively incorporates them into existing regulatory regimes. How this works in practice is explained below.

Legislative Amendments and Focus on Transactional Relationships

Australian law focuses more on the processes involved in the issue, exchange, and other transactions in cryptocurrencies, rather than the asset itself. This includes:

• Risk management for centralised entities.
• Control of cryptocurrency-related activities through licensing and supervision.

ASIC Approach and Technology Neutrality

ASIC supports technology neutrality in its regulatory requirements, which means that the rules apply regardless of the technology used. This ensures that all financial services, including those involving cryptoassets, are subject to the same regulatory standards.

Examples of Regulation of Cryptocurrency Products

• Collective Investment Products: Cryptocurrency that forms part of a collective investment product is a financial product under the Corporations Act 2001. The cryptocurrency is subject to the existing financial services regulatory regime in Australia.
• Cryptocurrency lending: It may be captured by the National Credit Consumer Protection Act 2009, when an organisation must hold an Australian credit licence or exempt from holding an Australian credit license.

Research and Development

The Reserve Bank of Australia is considering CBDC for the potential benefits and opportunities, which can further develop its payment system.

Australia’s current approach to cryptocurrency regulation remains the making of a safe environment for both consumers and businesses, while supporting innovative developments in financial technology. This enables Australia to retain its reputation as a secure and attractive center for the fintech industry, which helps in building confidence and protection at all levels of the market.

ASIC Australia continues to refine and adapt their regulatory approaches to cryptoassets and blockchain technology in a way that both offers protection to investors and provides a stable financial marketplace. Following are a few highlights from their regulatory activities:

Regulation of Cryptoassets as Investment Products

ASIC emphasizes the significance of crypto-assets, such as Bitcoin and Ether, realizing their potential suitability as the underlying assets for ETPs and other investment products:

Suitability of Cryptoassets for ETP: ASIC requires that market operators be able to demonstrate institutional support for the cryptoasset, spot market maturity, regulation of linked derivatives, and robust pricing mechanisms.
Cryptoasset Storage: Operators must ensure that adequate risk management and best practices are in place regarding cryptoasset storage, which is crucial for investor protection.

Regulation of Distributed Ledger Technology (DLT)

INFO 219: This information sheet outlines how ASIC regulates the use of DLT in financial services and credit. As there are no specific rules on blockchain or DLT, existing regulatory requirements apply.
Technology Neutral: ASIC stresses that the regulatory requirements are technology neutral, with the technology itself having no bearing on the application of the law.

General Commitments and Expectations

ASIC would expect the organisational competencies, technological resources, and effective risk management plans of all firms utilizing DLT or other technologies in providing regulated services.

ASIC is actively working to ensure that innovation in cryptoassets and blockchain technology develops within a structured and safe regulatory environment. While cryptoassets are only considered suitable investment assets in limited circumstances, ASIC places great emphasis on clearly articulating the rules and requirements for all market participants. This approach underlines that innovation should not come at the expense of investor protection and the stability of the financial system.

The ASIC has put clear and detailed guidelines on how to regulate cryptoassets and related financial products in Australia. Some of the key aspects of these guidelines, along with the expectations ASIC sets for cryptocurrency market participants:

Regulation of Smart Contracts

Electronic Transactions Act of 1999 (ETA): ETA provides a legal framework for granting electronic contracts, including smart contracts, the same status as traditional paper contracts. The law allows for smart contracts so long as they fulfill all criteria in the traditional legal standards for contracts, such as consent, purpose and consideration.

Regulation of Cryptoassets as Financial Products

AFSL and Cryptoassets: Any provider of financial services in relation to cryptoassets that fall within the definition of a financial product needs to hold an AFSL, or apply for an exemption in respect of the financial services provided. This, among others, encompasses issuances, trading, and payments made in cryptocurrency.
INFO 225: In this factsheet, ASIC clarifies that cryptoassets that have features similar to financial products are subject to regulation. This includes cryptoassets that can be categorised as managed investment schemes, securities, derivatives or other financial products.
Disclosure and Compliance Obligations: Organisations dealing in cryptoassets as financial products are required to comply with disclosure, licensing and registration requirements under the Corporations Act.

Regulation of Blockchain and DLT

INFO 219: ASIC emphasizes that any entities leveraging blockchain technology or some other form of DLT to operate in the provision of any type of regulated service has necessary organisational competencies and technological resources, along with requisite risk management systems to be found incompliance with relevant laws of regulation.

General Approach to Regulation

The regulatory approach of ASIC toward cryptoassets is technology-neutral, which means legal and regulatory requirements apply irrespective of the technology applied. This ensures fintech innovation develops within a sound and safe regulatory environment for all market participants, including consumers.

The ALRC enquiry is one step further towards the simplification and enhancement of the regulatory framework of financial services in Australia. It provides more scope for a system to be adaptive, efficient, and user-friendly both for consumers and regulated organizations. Below are highlighted some key aspects of the ALRC report and how they relate to cryptoasset regulation.

Key Aspects of the ALRC Report (Report 141)

• Simplify the Legislation: The report is trying to make corporate and financial services legislation simpler to understand. That should bring clarity and predictability to all market participants.
• The reforming and standardizing of definitions in the legislation in Corporate and Financial Services has to take away the elements of legal uncertainty and debates over term interpretations.
• Hierarchy of Laws and Regulatory Design: Proposals include revising the structure and hierarchy of existing laws to improve their interaction and reduce overlaps and conflicts between different regulations.
• Rethinking Financial Services Laws: Special attention is given to the possibility of restructuring financial services legislation to adapt it to modern market requirements and technological advances.

Relationship to Cryptoasset Regulation

While specific cryptoasset proposals are not highlighted as a separate asset class in the final report, recognition of their regulation as an important public policy initiative shows that they are important and may form part of better legislation sometime in the future. That is to say:

Inclusion within the General Regulatory Regime: Cryptoassets can be satisfactorily included within the general regulatory regime in the context of broad financial and corporate reforms.
Possible further Regulatory clarity may be drawn in with more evolution of the cryptocurrency market place as regulators obtain an increasing familiarity with this new crypto space that hosts various dimensions of risk peculiar to cryptoassets.

The conclusion of the ALRC Inquiry was another vital step to achieve a financial services regulation system for cryptoassets in Australia that is flexible and can adapt easily. The proposed consultations toward the licensing regime for providers of cryptoasset services underscore a determination by the government to support innovative practices while at the same time guaranteeing the protection of consumers and stability of markets.

The regulatory situation for cryptoassets and foreign financial service providers (FFSPs) in Australia is going through a significant period of legislative changes and updates. Here are the key aspects to consider:

Regulation of Cryptoasset Sales

Marketing Implications: Crypto-assets that are financial products need to be sold in a way that complies with the disclosure rules. This will involve, for retail clients, the provision of regulated documents, including a product disclosure statement or prospectus, under the Corporations Act.
Wholesale Client Exemptions: Wholesale Clients may not require standard regulated disclosure, allowing for more flexible engagement with this category of investor.

Regulation of Foreign Financial Service Providers

AFSL requirement: A foreign provider carrying on a financial services business in Australia must hold an AFSL unless an exemption applies. This requirement applies to the full range of financial products, including cryptoassets.
Changes to the Licensing Exemption Regime: After the abolition of the comparable jurisdiction regime in 2020 and policy changes, a new proposal, introduced in 2023 and refined in 2025, tries to restore and improve the environment for FFSPs. These changes offer exemptions for professional investors and comparable regulators, which may significantly affect the accessibility of the Australian market for foreign financial institutions.
Planned Dates of Entry into Force: Proposed laws that will regulate FFSPs in Australia are expected to enter into force from 1 April 2025 if the Bill is passed.

The changes in Australian legislation represent a continuous effort of the country to find a balance between encouraging innovation within cryptoassets and blockchain space and ensuring investor protection, clear regulation for international and local participants. These latest changes just underscore the reality of adherence to Australian law and regulations by all market players, especially international financial institutions looking into or doing business in the country.

ASIC actively regulates financial and credit products in Australia, including those involving crypto-assets, to protect consumers and maintain the integrity of the financial markets. Here are the key points relating to foreign companies doing business in Australia and ASIC’s product intervention powers and their product design and distribution responsibilities:

Licensing of foreign companies

Local presence: Foreign crypto-asset and other financial service providers must establish a branch or subsidiary in Australia to satisfy regulatory requirements, particularly if their activities amount to repetitive or continuous operations in this country.
Regulation of offshore marketing activities: Marketing of cryptoasset financial products to Australian residents from overseas may also be subject to licensing and disclosure obligations if, for example, such marketing can be seen as encouraging or persuading Australian residents to buy the products.

Product intervention powers and design and distribution obligations

Intervention powers regarding products: ASIC has the intervention power where the products are likely to cause significant harm to the consumers. It can make, among other things, such suspension or variation of the financial or credit product sale’s terms and conditions.
Design and Distribution Obligations (DDO): There are obligations on the company in designing and distributing the products to meet the needs and financial objectives of the customers. ASIC also actively enforces compliance with such requirements and can issue discontinuance orders if products are not meeting such criteria.
Examples of intervention actions: Between July 2022 and May 2025, ASIC issued 86 stop orders, of which three involved cryptocurrency products related to imperfect TMDs.

Impact on marketing and distribution practices

ASIC is active in intervening in the marketing and distribution of financial products to make sure that they meet identified standards and meet consumer needs. This involves vigilant monitoring of cryptoassets if and when they fall within the remit of ASIC.

This approach emphasizes Australia’s commitment to consumer protection, with transparency and fairness in the financial marketplace, and ensuring that financial products are suitable to the needs and interests of customers.

ASIC is indeed ramping up regulation in the cryptoasset space in Australia, using both financial and consumer protection laws that ensure fair and transparent treatment of investors and consumers. In this regard, here are some key considerations in respect of such regulations:

Application of the Consumer Protection Law (ACL)

• Deceptive or misleading conduct: Under the ACL, all marketing and promotional activities in the sale of cryptoassets should be truthful and not mislead consumers about the nature of the product, its value, or regulatory approval.
• Unfair practices: Sellers and promoters of cryptoassets must not engage in unfair practices, and products must be fit for their stated purpose-meaning consistent with the promises made to consumers.

ASIC’s role in the regulation of cryptoassets

• Delegated powers: ASIC has received additional powers from the ACCC to address misleading and deceptive behaviour in cryptoasset sales. This allows the regulator to better monitor and address possible breaches.
• Product intervention powers: ASIC may intervene in the distribution of financial and credit products where there is a risk of significant consumer detriment. This now includes issuing a stop order for cryptoassets or altering terms and conditions of sale, once these products are identified as harmful to consumers.
• Application of the financial services laws: ASIC proactively applies the financial services laws to cryptoassets, such that where a cryptoasset meets the legal definition of a financial product, issuers and intermediaries must comply with licensing, disclosure and other obligations under the Corporations Act.

Criminal consequences for offences

Fines and Sanctions: In cases of non-compliance with any provision of the ACL or under the ASIC Act, heavy penalties may be imposed, comprising financial fines, injunctive relief, compensatory damages, and costs of litigation.

Overall, the regulation of crypto-assets in Australia is meant to be clear about the fact that the sector should operate transparently, fairly, and in the interests of consumers, protecting them from the potential risks associated with investing in new, often complex financial products. To this end, ASIC plays a key role in using its enhanced powers for consumer protection and ensuring market integrity.

In Australia, the ATO classifies cryptocurrencies as an asset for income tax purposes. Following are the most important points that one must consider regarding the current status of the taxation of cryptocurrencies in Australia:

Classification and Taxation of Cryptocurrency

• Cryptocurrency Classification: For the ATO, cryptocurrency is neither money nor foreign currency. Instead, this is viewed as an asset-a fact with major implications for taxation.
• Cryptocurrency as an asset for trading: If cryptocurrency is used in a commercial activity, such as trading, the profits from that activity are taxable as income. It may be possible to deduct losses under normal business rules, but subject to the rules regarding “non-commercial losses”.
• Investment activity: If cryptocurrency is acquired for investment purposes rather than for business, any income or gains realised from the sale or exchange of cryptocurrency are considered capital gains and are subjected to the capital gains tax rules.

Special cases in cryptocurrency taxation

• CGT discounting: Where cryptocurrency has been held in excess of 12 months, the taxpayer may have access to CGT discounting, which reduces the taxable capital gain by 50% for residents.
• Cryptocurrency as a personal use asset: A cryptocurrency is a personal use asset to the extent that it was acquired for less than AUD$10,000 and privately used or consumed.

Legal initiatives and the future of cryptocurrency taxation

• Tax law changes: The ATO is also working to interpret and adapt tax laws to regulate these cryptocurrencies better. This has included reviews and consultations to get the tax policy adapted to evolving digital asset markets.
• Review by the Tax Council: The Tax Council has been conducting a review focused on adapting tax policy to digital assets and transactions, which will likely make significant changes in the near future to how cryptocurrencies are taxed.

The current Australian tax legislation puts the onus on the taxpayer to understand how their cryptocurrency activity may be categorized and the implications of such categorization on their tax liability. It is important to consult a tax advisor to ensure that all requirements are met and any potential tax implications are avoided.

In Australia, the regulation of cryptocurrency for tax purposes covers several aspects, from capital gains to goods and services tax (GST). A detailed overview of the tax aspects associated with various cryptocurrency transactions is given below.

Cryptocurrency Stacking

Any reward given to an entity participating in staking of cryptocurrencies to help maintain the functioning of a blockchain is deemed to be ordinary income. Tax on such income would depend on the market value of the tokens on the date of receipt.

DeFi Transactions

Where cryptocurrency is lent using DeFi and the interest is determined in additional tokens, that too will be assessable as ordinary income. In contrast, such DeFi arrangements that result in a change of ownership in cryptocurrency may be a disposal for CGT events.

Goods and Services Tax

An Entity can supply Cryptocurrency as:

• Financial supplies subject to input tax: Where supplies are made to another Australian resident.
• Supplies not subject to GST: If the supplies are made to a non-resident outside Australia.

Cryptocurrency platforms may be subject to GST on transaction fees, but may face restrictions in claiming input tax credits.

Definition of “digital currency” for GST

A digital currency must have fungibility and be available without significant restrictions to qualify as such for GST purposes.

Taxation obligations of miners

A miner needs to register for GST if the turnover in a 12-month period exceeds AUD 75,000. On registration, they can claim a refund of GST related to their business.

Compliance with taxation obligations

The ATO actively monitors tax compliance among cryptocurrency users, using data from local cryptocurrency services to verify tax compliance.

The ATO’s approach to cryptocurrency regulation includes both tax guidance and compliance measures, reflecting the global trend towards increased oversight of cryptocurrency transactions. It is important for all crypto market participants in Australia to understand their tax obligations and maintain tax compliance to avoid potential legal consequences.

In Australia, the regulation of cryptocurrencies and blockchain technology is constantly and rapidly evolving due to the interaction between regulators and the industry. Both ASIC and AUSTRAC are important in this respect, each with particular areas of responsibility and approaches to innovation.

The role of ASIC and AUSTRAC in the regulation of DCEs

ASIC and AUSTRAC have implemented key mechanisms to control and support the digital currency exchange (DCE) sector:

• DCE Registration and Responsibilities: All DCEs should be registered with AUSTRAC and adhere to the anti-money laundering and counter-terrorist financing requirements.
• Penalties for unregistered DCEs are huge. Its responsibilities include customer identification (KYC), reporting of suspicious and large transactions, record keeping for seven years among others.
• Innovation Hubs and Regulatory Sandboxes: ASIC has established an Innovation Hub and Regulatory Sandbox to support fintech start-ups and pioneering cryptocurrency projects.
• These initiatives provide startups with resources and temporary regulatory relief to test their products and services.
• Cross-border collaboration: ASIC is very active in international regulators, such as the UK Financial Conduct Authority, sharing experience and best practice information on fintech and cryptocurrency regulation.

AUSTRAC’s role in innovation and fighting against financial crime

AUSTRAC has taken steps to actively help fight cryptocurrency-related financial crimes with efforts such as:

• Fintel Alliance: This public-private partnership aims to research and test innovative technological solutions in combating financial crime. Activities will include analysis of virtual asset tax crimes and fraud.
• Innovative approaches: Through the use of innovative technologies-like blockchain and cryptocurrencies-the AUSTRAC Innovation Centre will better battle financial crimes and terrorism.

The combined efforts of ASIC and AUSTRAC, underpinned by extensive cooperation with international regulators and industry, provide a stable and secure regulatory environment for cryptocurrencies and blockchain in Australia. These actions protect not only consumers and investors but also foster innovation in the development of the fintech sector.

In Australia, the licensing and regulation of cryptocurrency investment managers are governed by strict rules. Key aspects of the licensing and management requirements for cryptocurrency assets include the following:

AFSL licensing requirements

The definition of a financial product: If the cryptocurrencies held by an investment manager constitute financial products, then his or her activity in managing those assets is considered the provision of financial services, for which an AFSL with ASIC is required.
Custody of assets: Where the investment manager intends to hold cryptocurrency on behalf of clients, an AFSL with custody or other forms of custodial authorisation may be required. This depends on whether the organisation retains beneficial ownership of the assets it holds.

Regulation and responsibilities

• Advice obligations: Investment managers who provide advice on cryptocurrencies as financial products need to adhere to the guidelines from ASIC, including the advice, conduct, and disclosure requirements. The conflict of interest and remuneration provisions are not to be forgotten.
• Robo-advisory and digital advice: Those investment and fund companies providing either pure digital or hybrid advice-which also includes algorithmic or automated advice-need to meet the AFSL. It is also supposed to cover traditional advice into its conventional form from the latest digital methods.

Innovations and regulatory sandboxes

ASIC regulatory sandboxes: In these sandboxes, fintech startups and other innovators could have the ability to operate their products and services in the real world, but without needing the full suite of AFSL licensing, for limited periods. The objective would be to reduce the barriers innovative financial technologies could face.
International co-operation: ASIC also cooperates internationally with other regulators on issues like sharing expertise and information concerning financial innovation regulation, which encompasses topics like cryptocurrencies and blockchain technology.

Practical steps for investment managers

Investment managers will need to consider carefully their responsibilities and any licensing requirements in both managing and providing advice about cryptocurrencies to ensure compliance with all relevant ASIC regulatory requirements. Recent changes in legislation and regulatory practice that may affect cryptocurrency transactions and related financial services need to be considered.

Crypto regulation in the European Union in 2025

Cryptocurrencies fall under immense regulation in the European Union that keeps on evolving. In 2025, an unprecedentedly wide-ranging set of rules entitled Markets in Cryptoassets Regulation (MiCA) is about to make things much easier than it is today. Following are the key features of the new regime that will come into play:

Main areas of MiCA regulation

• Licensing and registration: Mandatory registration and licensing will be extended to all cryptocurrency exchanges and wallets intending to operate within the EU. The standardisation of licensing procedures makes uniform standards of security and transparency mandatory for all market actors.
• International passporting: A license obtained in a European country will be internationally effective within the union itself, allowing the exchanges with this license to easily spread throughout the European market.
• Anti-money laundering: Strict requirements under the EU’s sixth anti-money laundering directive (6AMLD) will be extended to all cryptocurrency transactions, strengthening controls on financial flows and improving measures to prevent terrorist financing.
• Consumer protection: Improved consumer protection measures are being introduced, including requirements for transparency and honesty of transactions. This is important to prevent fraud and protect consumer rights in the single market.
• New Regulatory Approach: The proposals contain a new regulatory approach, including licensing of cryptoasset issuers and rules of conduct for cryptocurrency traders.

MiCA development and implementation

MiCA is part of a broader effort by the EU to develop a harmonized regulatory environment for cryptoassets, thereby allowing them to be integrated into the pan-European financial system. Once negotiated and agreed upon, these rules will give clarity and certainty to market operators and consumers alike, drive innovation, and further improve security in transactions.

By 2025, these changes are expected to radically change the face of cryptocurrency in Europe and turn the region into a more appealing place for investment and the development of the digital economy. This may also give an impetus for further changes in national legislation of the member states, bringing it in line with the pan-European standard.

Clear regulation in cryptoasset management is highly important for the European Union if the group is to strike a balance between innovation and consumer protection. From data provided by the World Economic Forum and current trends, MiCA is a base step toward stability and transparency within the digital asset market in the EU.

Key highlights of MiCA:

• Standardization of regulatory regime: MiCA seeks to harmonize approaches towards cryptoasset regulation across the EU, bringing about a uniform standard across all member states.
• Licensing and registration: The introduction of compulsory registration and licensing for cryptoasset issuers and crypto exchanges ensures that all market operators meet strict AML (anti-money laundering) and KYC (customer identification) requirements.
• Consumer protection: Increased consumer protection through measures of transparency and disclosure helps users better understand the risks involved with investing in cryptoassets. Technology sandboxes: Regulatory sandboxes continue to provide a forum to test innovative financial products and services in a controlled environment that fosters safe fintech innovation.
• Encouraging innovation: While strictly regulated, MiCA is crafted in a way that will not hamper innovation but support its development, while ensuring that the standards for safety and reliability remain high.
• Harmonized AML/KYC measures: Common standards in anti-money laundering and customer verification will go a long way in securing transactions and preventing financial crime.
• Challenges and suggestions: Effective implementation of MiCA will have to take into consideration the differences in national laws of EU Member States and the specificities of local markets. Policymakers should seek to harmonise legislation to avoid legal fragmentation that could hamper pan-European trade and investment.

Success with MiCA will require that the European Union coordinate at all levels of government and involve key stakeholders in the process of developing and implementing effective regulatory measures. An approach focused on transparency, inclusiveness, and adaptability can help maximize the potential of cryptoassets, protect the interests of consumers, and promote further development of the blockchain industry in Europe.

The implementation of the Markets in Cryptoassets Regulation (MiCA) in the European Union is a significant step towards unifying and strengthening the regulation of cryptocurrency markets across the EU. This is important to create a transparent and safe environment for investors and users, as well as to strengthen the integration and stability of financial markets.

Stages of MiCA implementation

• Development and consultation: ESMA, in cooperation with EBA, EIOPA and ECB, is organising a public consultation to develop technical standards for Level 2 and Level 3 measures. These measures detail and clarify the conditions for the application of the main provisions of MiCA.
• Publication of consultation packages: Three consultation packages will be issued, with the first covering issues having the shortest timescale for implementation. This covers issues of authorization, governance, conflict of interest, and grievance procedures.
• First Consultation Package July 2023: Develop RTS and ITS on major aspects of authorization and governance regarding Crypto Asset Services Providers – CASPs.
• Packages Two and Three: The second packages will cover larger mandates and encompass other elements of the regulatory process such as information requirements for proposed acquisitions, among others.
• Adoption and entry into force of the measures: After public consultation and the drafting of technical standards, the proposals will be sent to the European Commission for adoption, following which they need to be approved by the European Parliament and the Council of the EU before taking effect.

Importance of MiCA for the market

MiCA’s adoption will ensure that:

• More legal certainty for crypto-asset issuers and market operators.
• Improved investor and consumer protection.
• Harmonization of regulatory procedures throughout the EU will reduce cross-border barriers and boost competitiveness in the European financial sector.
• Effective co-operation of national regulators and the European Institutions for the application of the new rules.

MiCA intends to regulate but at the same time promote the use of crypto-assets responsibly, supporting innovation and technological development under strict regulatory oversight.

The implementation of MiCA and TFR is a milestone in the European Union’s effort to create an effective and harmonized regulatory approach to cryptoasset management. These regulations introduce strict transparency, licensing, and anti-money laundering requirements that should improve investor and consumer protection, ensure financial stability, and promote innovation and growth in the cryptoasset sector.

• Key MiCA and TFR implementation highlights: The standardization of regulation at the EU level, where MiCA provides a common standard for all types of cryptoassets and related activities within the EU. This will make the requirements for registration, transactions, and reporting consistent for cryptoasset service providers.
• Anti-money laundering approach: TFR extends the FATF requirements regarding cryptocurrency funds transfers by mandating CASPs to collect and provide full details of parties to transactions regardless of their size.
• Ensuring transparency and security: MiCA lays down stringent standards on CASPs in terms of transparency of operations, risk management, business continuity, and consumer protection.
• Investor Protection and Stablecoins: The Regulation has provided rigid conditions for the issuers of stablecoins, like maintaining adequate reserves, so that such instruments are stable and reliable.
• Exemptions for NFTs: MiCA clearly delineates the regulatory treatment of non-fungible tokens, which do not fall within the definition of cryptoassets unless they include characteristics common to financial instruments.
• Grace period and entry into force: both regulations will be in force as of 30 December 2025, with a transitional period aimed at preparing market participants and adapting to the new regime.

Implications for the crypto industry

• Increased legal certainty: MiCA and TFR will provide clarity and predictability for cryptoasset transactions – something crucial for current and future market players.
• Innovation-fomenting: Clear regulation would provoke innovation and growth in the crypto industry, and the atmosphere would be great to start and develop new projects.
• Increasing consumer confidence: When there is protection for consumers’ and investors’ rights by way of robust regulations, trust in digital assets will increase as a safe and transparent means of investment and payment.

The implementation of MiCA and TFR is a milestone toward the establishment of a sustainable and secure crypto-economy in the European Union, coupled with protection for market participants and high business conduct standards in this fast-changing industry.

The implementation of the Markets in Cryptoassets Regulation in the European Union is a significant step toward standardizing cryptoasset regulation at an EU-wide level. It puts in place clear rules and procedures that CASPs should follow to ensure a high level of transparency, security, and accountability in cryptoasset transactions.

Key provisions of the MiCA regulations include:

• Mandatory registration of CASP: CASPs are obliged to be registered and approved by competent national regulatory authorities to be able to operate within the EU. This is just a way of ensuring that different operators operate on equal principles.
• Strict AML and KYC requirements: Under MiCA, mandatory requirements for anti-money laundering conditions and ‘know your customer’ procedures are placed to be adhered to while preventing financial crime.
• Travel Rule: All crypto-asset transactions, whether cross-border or not, are to adhere to this rule whereby CASPs have to collect and provide information on the parties to the transaction. This brings more transparency and allows for better tracking of any potential illicit transaction.
• Consumer Protection: MiCA lays down that CASPs are liable in case of loss of customers’ crypto assets, hence adding to the protection of investors.
• Regulation of Stablecoins: Stablecoin issuers must hold sufficient reserves to guarantee the stability and reliability of their cryptoassets.

Implementation and Challenges:

• How it will work in practice: The numerous Level 2 and Level 3 measures currently under development by ESMA in co-operation with the other EU regulators will provide further details on how these are implemented and complete clarity of the rules for all market participants.
• Compliance with the GDPR: All processes related to personal data processing under MiCA need to be in conformity with GDPR, which particularly points to the protection of confidentiality regarding the processing and transmission of personal data.
• The ongoing monitoring and regular evaluation: Regular reviews of the efficacy of regulation in general and of its effects within the cryptoasset market will become necessary in order to adopt and adapt regulatory policy, keeping up with technological advances as well as market developments.

MiCA is a sweeping regulatory approach that is also adaptable to the ever-changing nature of the cryptocurrency industry, while ensuring very active oversight and protection of the interests of all market actors. It will finally be able to position the European Union as a leader in cryptocurrency regulation, fostering innovation yet providing a high level of investor protection and market integrity.

Markets in Cryptoassets Regulation, or MiCAR for short, is a cornerstone for digital asset regulation in the European Union, pursuing transparency of markets, consumer and investor protection, and prevention of financial risks. The Regulation puts into place a common framework for activities involving crypto assets, such as their issuance, trading, custody, and advice on them.

Key aspects of MiCAR:

• Issuance of Cryptoassets: MiCAR places under very stringent conditions the various issuance of cryptoassets, including utility tokens and stablecoins, with a requirement for ART and EMT in a way so as to ensure consumer protection and provide complete product information.
• Authorization and Supervision: Each Crypto Asset Service Provider has to be licensed and also supervised on a regular basis by the national regulatory authority-NCA-or the
• European Banking Authority, the EBA, for conformity with all the regulatory requirements.
• Stringent AML/KYC requirements: MiCAR introduces additional anti-money laundering provisions, including the obligation of CASPs to perform enhanced customer due diligence
• (KYC) in order to deter financial crime and ensure maximum clarity in cryptoasset transactions.
• Consumer protection: The Regulations introduce a number of measures aimed at investor protection, inter alia, on disclosure, marketing integrity, and customer data privacy under the GDPR.
• Principle of transparency and standardization: MiCAR implies the standardization of the information provided to the investors and requires stablecoin providers to hold sufficient reserves that allow them to maintain the stability and liquidity of their crypto-assets.

Implementation of MiCAR

The process for the implementation of MiCAR includes the development of technical standards in detail and public consultation to adapt and adjust measures on regulation. This would unify all ways of cryptoasset-related activities within one regulatory framework and align them with it. MiCAR represents a very important step toward the establishment of a more secure and transparent cryptoasset market in the European Union. The regulation incentivizes innovation and the development of new technologies, while providing the necessary level of regulatory oversight to promote consumer protection and overall financial stability. The implementation of MiCAR will be one of the most important elements in shaping the future digital financial market in Europe.

The Central Bank’s dealings in MiCAR, with authorization to operate in cryptoassets, is basically done in various steps, namely:

Initial stage of interaction
First meeting: It is required that the applicant submits a proposal presentation no later than five working days before the meeting. The Central Bank shall discuss the steps for authorization, its expectations, and the purpose of providing a KFD.
Feedback: After the meeting, the Central Bank will emphasize points that must be addressed prior to the application’s progressing to the KFD stage.
KFD stage
Filing a KFD: The applicant must file a KFD using a standardised template and guidelines. This aids in the pre-assessment of the application.
Central Bank Analysis: The Central Bank will review the KFD for compliance with authorisation and supervision requirements. Further information may be necessary and active engagement with the applicant may be needed.

Application phase

Application Form: Applicant fills out application form for a CASP licence.
Completeness check: The Central Bank shall verify completeness of information within 25 business days.
Possible rejection
Incomplete Application: In case the application is not complete at the time of expiry of the deadline, the application may be rejected by the Central Bank.
Evaluation phase
Application assessment: A 40-day assessment process is conducted. The assessment may be suspended for a maximum period of 20 working days to request further information.
Solution
Communication of the results: The results are communicated to the applicant within five working days after the decision to grant or refuse the permit.

The authorization process requires a thorough preparation and involvement with the Central Bank at each step for effective authorization.

Markets in Cryptoassets Regulation, known as MiCAR, signifies a meaningful development by the European Union towards setting uniform regulatory standards in cryptoassets. In summary, MiCAR applies its main provisions to a wide variety of activities and services dealing in cryptoassets: their issuance, custody, trading, and advisory services.

Key considerations under the MiCAR regime:

• Consumer and investor protection: MiCAR aims to reduce financial risks and protect investors by setting rules for transparency and fair dealing among all market participants.
• Oversight and authorization: Cryptoasset issuers and service providers shall be authorized by the NCAs and shall comply with strict governance and operational regulations.
• Prevention of market abuse: Introduce mechanisms to combat insider trading, market manipulation, and other abuses.
• Transition period: There will be a transition period where the current operators can adjust to the new rules, thus making it easier and less disrupting to operations.
• International co-operation: The provisions under MiCAR also seek to enhance international co-operation and co-ordination in the supervision of cryptoassets.

Application of MiCAR:

• Stablecoin issuers must hold sufficient reserves and liquidity for the stability of their cryptoassets.
• Cryptoasset service providers must follow strict procedures in the areas of risk management, data retention, consumer protection and transparency of actions.
• Technical standards and guidelines developed by ESMA and EBA complement the main regulation and provide detailed guidance on its application.

Indeed, the effective application of MiCAR will depend on proactive involvement by market participants and regulators in explaining what new requirements are imposed, but will ultimately help ensure a much safer and more sustainable cryptoasset trading environment for all participants in the EU economy.

Regulation of cryptocurrencies in Poland

In Poland, as well as in other EU countries, the regulation of cryptocurrencies will be subject to new requirements imposed by the Markets in Cryptoassets Regulation (MiCA), which shall come into force on 30 December 2025. The above-mentioned regulation introduces standards related to the licensing and supervision of cryptoasset service providers (CASPs).

Highlights for crypto business in Poland:

• CASP licensing: All organisations providing cryptocurrency-related services will need to obtain a CASP licence to operate legally in the EU. This includes a wide range of services from storage of cryptoassets to trading and advisory services.
• Transition period: The grace period, until 30 June 2025, is applicable to those already engaged in cryptoasset services activities under the currently applicable VASP licence. This gives them a temporary advantage in adapting to the new MiCA.
• Licence application deadline: Polish organisations shall apply for a CASP licence no later than by 30 June 2025. Efficient preparation and submitting complete documentation is crucial for avoiding interruptions of activities.
• The importance of timely filing: An organisation that files an application by 1 May 2025 and confirms its completeness may continue beyond the deadline until the final application is processed.
• Regulatory burden: To get ready for MiCA, organisations would need to understand and fully comply with regulatory requirements. This may include adjusting internal processes, data management, and information security.
• Awareness and Update: Companies should regularly update themselves in case of any change in legislation and guidance from ESMA and/or local regulators regarding the new regulation.

It is important that cryptocurrency companies in Poland and across the EU actively participate in the regulatory process, obtaining the required licenses and maintaining compliance with the new rules, in order to ensure stability for their operations and protection of their customers’ interests in the dynamically developing environment of digital assets.

The Polish cryptocurrency scene is on fire due to the developed financial and technological ecosystem, and due to progressive regulation. The financial services market develops rapidly, and this creates a lot of opportunities for both startups and established crypto ventures.

Prospects for Crypto-enterprises in Poland

• Strategic location: Poland is strategically located in Central and Eastern Europe, making it a convenient platform for operations that are targeting both Western and Eastern markets.
• Regulatory clarity: MiCA as the EU’s harmonized regulation for cryptoassets gives clear rules of the game for all market participants, enhances legal certainty, and reduces risks for businesses and consumers.
• Opportunities for innovation: Poland actively supports innovation in FinTech and cryptocurrencies, creating favorable conditions to experiment and test new products and services.
• Talent attraction: A strong academic environment and a growing number of fin-tech and cybersecurity professionals give Poland a great place to acquire skilled talent.

Challenges

• Competition: while the growth of the entire cryptocurrency ecosystem is a boost for the industry, more competition arises. It would be hard for new entrants to be recognized among bigger players.
• Technical infrastructure: Despite progress, some regions of Poland still require infrastructure improvements to support all aspects of cryptocurrency transactions, especially in less developed areas.
• Regulatory changes: While MiCA provides stability, crypto businesses still need to stay in touch with regulatory updates that could affect their operations.

In order to be successful in the Polish crypto market, businesses should not only follow MiCA regulations but also take an active part in the local market, being able to adapt to its features and demands. With a potential for growth and innovation, Poland creates a very favorable environment for crypto-business development, adapting to global trends in this fast-growing industry.

Acquiring a CASP license in Poland or any other EU member state involves serious planning and strict adherence to the rules under MiCA. Companies should take the following steps:

Application Preparation
Compliance Assessment: A company should first assess its compliance with MiCA before the actual application.
Collection of Documents: A company needs to prepare all the necessary documents, which include operational plans, prudential measures, governance arrangements, shareholder information, and risk management.
Application Submission
Competent authority choice: In Poland, this is the Financial Supervision Authority KNF.
Formal Requirements: The application should be complete and meet all formal requirements.
Checking and dialogue with the regulator
Initial verification: KNF will check whether the application is complete and may request additional information.
Discussion with the regulator: It may be necessary to discuss the details of the application and provide further clarification.
Evaluation and decision
Application Review: A complete review of the application for compliance with governance, risk, and prudential standards.
Licensing Decision: Based on the review, the KNF will issue a decision on whether to grant a license under CASP.
Post-Licensing
Ongoing Supervision and Compliance: Ongoing compliance with regulatory requirements and readiness for KNF inspections.
Ongoing Compliance: Continuously revise policies and procedures according to changes in legislation.

Additional tips

Professional advice: It will be advisable to seek professional legal and counselling assistance to manage the licensing process.
Technology preparation: Ensure your IT infrastructure and security is compliant to MiCA requirements, in particular on data protection and cybersecurity.

Obtaining a CASP licence is a complex process that requires careful preparation and engagement with regulators. Compliance with all requirements and active engagement with KNF will help to ensure successful licensing and allow your company to operate legally in the cryptoasset sector in the EU.

CASP compliance is highly critical for MiCA Regulation, where its legality and efficiency in running businesses in the crypto industry become relevant in the European Union. That, on one side, grows confidence among clients and investors and also keeps security and transparency high. This will better describe what is needed from shareholders and employees so that there will be further clarity about the requirements concerning how they relate to crypto asset transactions.

CASP Shareholder Requirements:

• Criminal record: The shareholders of the company should not have a criminal record of any type, especially related to any conviction for financial crimes, offenses concerning money laundering, financing of terrorism, and fraud
• Statement of legal compliance: shareholders are required to confirm that they have never been fined administratively and/or criminally on any ground related to financial activities.
• Ownership structure diagram: Provide documents describing the ownership structure and shareholdings of shareholders, especially those who hold a significant stake or have a decisive influence on the management of the company.

CASP Staff Requirements:

• Competence and experience: Employees shall possess knowledge and experience suitable to the level and complexity of the crypto services provided. This requires that employees have an understanding of both the technical nature of cryptocurrencies, as well as the relevant financial and legal regulation.
• Continuing Education: The continuing professional development and education of employees is important, given the speed at which the industry is evolving.
  The Observance of Ethical Standards: They work in a high-standards level because the risks of conflict of interest are decreased and can support customers’ and partners’ trust.

Importance of compliance with CASP:

• Legitimacy: Being registered as a CASP has a legal implication, offering cryptoassets trading in the European Union.
• Confidence and reputation: It helps earn customer confidence, given strict regulatory requirements and, additionally, strengthens the company reputation as a reliable partner.
• Regulatory risk defense: Non-compliance can lead to considerable fines, legal disputes, and loss of credibility.
• Companies willing to operate in crypto assets in the EU should carefully prepare for the CASP licence process in all aspects of regulation in order to be fully compliant with the MiCA regulations.

Crypto regulation in Asia in 2025

Regulation of cryptocurrency in Asia in 2025 reflects great differences in approach among countries, from a wide array of economic strategies to various political systems. An overview of key aspects of cryptocurrency regulation in key Asian countries is given below.

Japan

Japan is one of the leaders in regulating cryptocurrencies. The Virtual Currency Payment Law provides for the regulation of cryptocurrency transactions, while cryptocurrency exchanges must be licensed and adhere to a set of high standards in terms of security and transparency. The government also works closely with cryptocurrency platforms regarding anti-money laundering and financing of terrorism.

South Korea

South Korea recognises cryptocurrencies and actively incorporates them into its financial system, but regulation in this area is quite strict. The government requires cryptocurrency exchanges to comply with strict regulatory requirements, including identification of all users and adherence to AML/CFT rules. This commitment to transparency and security is intended to protect consumers and strengthen the legitimacy of the cryptocurrency market.

Singapore

Singapore is known for its friendly attitude towards financial innovation and is one of the centres of cryptocurrency development in Asia. The government regulates cryptocurrency exchanges and operators through the Payment Services Act, which ensures proper licensing and regulation of cryptocurrency activities. Singapore emphasises innovation while maintaining strict controls and supervision to prevent financial crime.

China

China has charted a course for the strict banning of cryptocurrencies, including the production (mining) and trading via cryptocurrency platforms. The government views cryptocurrencies as a threat to financial stability and national currency control. This policy is expected to continue in 2025, with a possible tightening of measures against the use and distribution of cryptocurrencies.

India

Cryptocurrencies remain in a state of limbo in India, while the drive for the regulation of this sector is gaining momentum. It is expected that the government will bring on board a law defining legal status, a framework for the use and trading of cryptocurrencies, and their taxation. Although the exact contours of the proposed law are not yet clear, it is ostensibly aimed at the protection of investors and minimizing risks in the financial system.

Cryptocurrency regulation in Asia remains dynamic and diverse, reflecting different economic policies and levels of acceptability of technological innovation.

Regulation of cryptocurrencies in Singapore

Singapore is one of Asia’s leaders in cryptocurrency and financial technology regulation, demonstrating both openness to innovation and rigour in regulatory and consumer protection matters. Below is an overview of key aspects of cryptocurrency regulation in Singapore:

Regulatory structure

Monetary Authority of Singapore plays the basic role in regulating and developing this industry of digital assets.
MAS refers to cryptocurrencies as digital payment tokens (DPTs), different from traditional cash, allowing them to be classified in terms of functionality as being securities, electronic money, or any other financial instrument.

Projects and Initiatives

Projects Ubin and Dunbar explore and test the use of blockchain and DLTs in enhancing the efficiency of clearing and settlement of cross-border payments and securities.
Ubin+ and Project Orchid study the application of wholesale and retail CBDC, respectively. However, wholesale CBDC is the chief focus because there are no significant issues related to financial inclusion in Singapore.

Regulatory Requirements and Policies

Singapore law, including the PSA and the FSMA, provides strict controls on cryptocurrency transactions, especially in the context of AML/CFT and consumer protection.
The adopted amendments to the PSA further strengthen oversight of cryptocurrency transactions and require cryptoasset operators to comply with strict licensing and operational rules.
Industry Impact

The policy and regulatory initiatives by MAS are shaping an innovative and responsible digital asset ecosystem, which is driving technology development in conjunction with consumer protection and financial system stability.
Collaboration with international partners and participation in global initiatives will continue to help Singapore stay ahead as one of the leading centres of cryptocurrency innovation.

This approach allows Singapore to strike a balance between innovation and regulatory requirements, making it one of the most attractive and safe places to invest and grow the cryptocurrency industry in Asia.

Singapore has one of the most developed regulatory environments for cryptocurrencies in Asia, making it a significant financial hub in the region. Let’s take a closer look at the key aspects of cryptocurrency regulation in Singapore:

Legal status of cryptocurrencies

In the meanwhile, while being considered not legal tender, cryptocurrencies are actively used as a medium of exchange and investment in Singapore. Functionality and the use factor determines whether a cryptocurrency will be regulated as DPTs, electronic money or capital market products.

Regulatory bodies and policies

Monetary Authority of Singapore, MAS, is actively engaged in developing regulations for the crypto industry, with a primary focus on consumer protection and preventing financial crime.
Amends the Payment Services Act (PSA) to clarify the licensing and transaction requirements for DPTs.

Projects and research

Project Ubin: is examining the use of blockchain technology to enhance clearing and settlement transactions.

Project Dunbar and Project Ubin+: are two projects studying international and cross-border settlement using CBDCs.

Project Orchid: a retail CBDC system is under development, even though the focus is on wholesale CBDCs.

Legislative changes and court practice

Crypto assets are now defined as a form of personal property by the Singapore High Court; hence, they are amenable to judicial protection and in addition to execution against them. Recent cases have thrown up the use of agreement schemes between cryptocurrency companies and their users for the resolution of financial difficulties during financial instability.

Singapore continues to actively develop and implement regulatory standards for cryptocurrencies, thus creating a favorable environment for their development and innovation, and at the same time providing strict measures to protect the interests of all participants in the market.

The legal framework regulating cryptocurrencies in Singapore is continuously following a balanced approach that encourages innovation and provides a high level of security, transparency, and protection for consumers.

Main Regulatory Aspects

Licensing under the PSA

Licence Types

• Standard Payment Institution Licence: for companies whose average monthly total transaction value is less than specified thresholds (SGD 3 million for a single service and SGD 6 million for multiple services).
• Large Payment Institution Licence: for companies that exceed the specified thresholds or are engaged in issuing electronic money if their average daily turnover exceeds SGD 5 million.

Eligibility Requirements

• Minimum paid-up capital: SGD 100,000 for a standard licence and SGD 250,000 for a large institution.
• Singapore presence: a permanent office or registered address.
• Management: at least one of the directors must be a citizen, permanent resident of Singapore, or a work permit holder.

Licensee Requirements

• Keeping records in sufficient detail.
• Appointment of a money laundering reporting officer to receive reports from customers.
• Maintaining a security deposit for the protection of customers’ money (in the case of a large payment institution).

Characteristics of Regulated Cryptocurrency

• Electronic Money (e-money): Cryptocurrencies linked to currencies to facilitate payments.
• Digital Payment Tokens (DPT): Means of exchange accepted in certain circles to pay for goods or services.

Exceptions

• Internal game assets and bonus points that are not convertible into money do not require licensing.

Trading Cryptocurrencies as Capital Markets Products

Application of the Securities and Futures Act (SFA)

Cryptocurrencies, akin to stocks, bonds, or derivatives, are regulated as capital markets products. Companies issuing such cryptoassets must:

• Hold a license to provide capital markets services.
• Draft and file a prospectus with MAS for such proposals.

Trading in Asset-Backed Cryptocurrencies

If crypto-assets are asset-backed tokens (e.g., metals or other commodities), they fall under the Commodities Trading Act and require a different license.

Further Regulatory Aspects

AML/CFT

Extensive measures against money laundering and financing of terrorism, including obligatory KYC compliance.

MAS Projects

Initiatives such as Project Ubin and Project Guardian aim to develop blockchain infrastructure and explore the potential of tokenising assets.

Regulation of Cryptocurrencies in Singapore

The regulation of cryptocurrencies in Singapore, especially through the PSA and SFA, builds an ecosystem in which cryptocurrency companies have to follow strict standards. It allows a mix of innovation and security for both investors and customers. To conduct business in the crypto industry in Singapore, it is important to follow licensing requirements and comply with relevant regulatory obligations.

The regulation of cryptocurrencies in Singapore is still a constantly developing area, reflecting the government’s desire to balance supporting innovation with ensuring consumer protection and the stability of the financial system. The main elements of regulation can be divided into several categories, including:

• Regulation of DPT service providers
• Amendments to the PSR (Payment Services Regulations)
• Regulation of Stablecoins
• Regulation of cryptocurrencies as financial products
• MAS projects on digital assets
• Consumer protection
• General approach to regulation

Regulation of DPT Service Providers

Amendments to the PSR (Payment Services Regulations)

• Trust management of client assets: Starting from 4 October 2025, DPT providers shall hold client assets in statutory trusts to minimize the risks of losing funds in case of insolvency.
• Lending and Staking Restrictions: Providers are not allowed to offer lending or staking services to retail customers.
• Consumer Protection Guidance: The providers have to take measures to reduce consumer protection risks, including transparency and fair trading practice requirements from 4 October 2025.

Licensing Requirements

• A licence is required for any business involving the purchase, sale, exchange, or storage of DPT.
• Companies exceeding certain thresholds of transactions or issuing electronic money are required to take a licence from a major payment institution.

Regulation of Stablecoins

A new regulatory framework for stablecoins applies to single-currency stablecoins pegged to the Singapore dollar or G10 currencies. The requirements include ensuring stability of value, including obligations to establish liquid asset reserves.

Objective: To provide a trusted digital medium of exchange that facilitates the transition between fiat money and digital assets.

Regulation of Cryptocurrencies as Financial Products

• Cryptocurrencies as securities or contracts based on securities: Subject to exemptions, a prospectus must be prepared and lodged for offers. The usual exemptions apply, for example, private placement of up to 50 persons or small offers of up to SGD 5 million over 12 months.
• The broking of such cryptocurrencies is subject to the grant of a capital markets services licence.
• Cryptocurrencies: DPT or electronic money: Any dealing in or trading of, or exchange or issuance of such assets will be subject to the grant of a licence.

MAS Projects on Digital Assets

• Orchid Blueprint (2023): Outlines the technology infrastructure and standards to be applied for implementing digital money in Singapore. Thematic areas of focus include, but are not limited to, forms of digital money, security standards, and operational and commercial considerations.
• Ubin and Guardian projects: Study the application of blockchain to cross-border payments, asset tokenization, and enhancing liquidity in financial markets.

Consumer Protection

Unfair Trade Practices

MAS proposes measures on a mandatory basis to avoid market manipulation and enhance transparency.

Rules for Retail Customers

• Imposing restrictions on risky financial services like staking.
• Introducing educational programs for users.

General Approach to Regulation

• Flexibility and a personalized approach: MAS often consults with the general public and the industry regarding new initiatives and amendments.
• Safety, transparency, and risk management: The regulation is focused on ensuring high standards of safety, transparency, and risk management.

Singapore remains one of the leaders in cryptocurrency regulation, presenting a clear framework for businesses that makes it appealing to innovative digital asset companies.

Legal and tax aspects of the issuance and use of cryptocurrencies in Singapore

Legal documentation for cryptocurrency issuers and sellers

On one hand, those issuing or selling cryptocurrencies in Singapore need not only to be aware of the regulations, but also have a full and robust set of legal documentation, such as for the legal settlement of the transaction and definition of the rights and obligations of issuers, sellers, and buyers. This approach protects the interests of all participants.

The main documents that will help regulate activities with cryptocurrency are the following:

• Token Sale Terms (Token Sale Terms) – describe the procedure and terms of purchasing cryptocurrency tokens.
• Privacy Policy – controls processing and protection of users’ personal data.
• AML/CFT (Anti-Money Laundering and Counter-Terrorist Financing Compliance Policy) Guidelines – contain the measures on preventing money laundering and terrorist financing.
• Simple Agreement for Future Tokens (SAFT) – controls preliminary agreements about the issue of tokens in the future.
• Private Placement Memorandum – used when offering tokens to a limited number of investors.
• Prospectus – used to inform investors about the characteristics and risks of investing in tokens.

Taxation of cryptocurrency transactions in Singapore

The tax treatment of cryptocurrencies in Singapore varies depending on the nature of the activity:

Cryptocurrency trading:
If cryptocurrency is used as a commodity in the course of business activities, the profit made from its sale is subject to income tax.
Cryptocurrency Investment:
If cryptocurrencies are purchased for long-term holding for the purpose of investment, capital gains from their realisation are not taxable as capital gains are exempt from taxation in Singapore.
Use of cryptocurrencies to pay for goods or services:
Transactions involving cryptocurrencies as a form of payment are considered barter transactions. The valuation of such a transaction shall be paid in tax by the company offering such goods or services. In this case, cryptocurrency will be regarded as an intangible property, not legal tender or fiat currency.

Taxation of income from initial coin offerings (ICOs)

According to the explanation by Singapore’s Revenue Authority, in the e-Tax Guide on Income Tax Treatment of Digital Tokens, income derived from an ICO may be subjected to various heads of income tax depending upon the nature of tokens offered and issued. For instance:

• Payment tokens: As an object of trade. Income derived from its sales is subject to income tax.
• Utility tokens: Taxable upon the provision of the underlying services that the issuer is obliged to provide on the basis of those tokens. Income will then be considered as remuneration in respect of services provided.
• Securities tokens: Their issuance results in no taxable capital gains; it is classified as investment assets.

Thus, any successful cryptocurrency activity in Singapore demands great legal and tax preparation, with very precise compliance with the local legal requirements.

Singapore’s Money Transfer and AML/CFT Legislation

Key legislative provisions and requirements

In Singapore, there are general AML/CFT laws applied to virtual currencies and their respective transfers. Central legal acts include:

• Corruption, Drug Trafficking and Other Serious Offences Act (1992, CDSA)
• Subjects the parties of any financial transaction to make an immediate report in case of suspicious transaction to the relevant authorities.
• Failure to fulfill this obligation constitutes a criminal offense.
• Anti-Terrorism Act (TSFA, 2002)
• Imposes an obligation on a person to report to the police if that person believes that any assets belong to, or are in the possession or control of terrorists or terrorist organisations.
• To implement financial sanctions against individuals and organisations listed under the UN Security Council Resolutions and under domestic laws and regulations.

Intermediary and Payment Service Provider Requirements

The MAS has regulated intermediaries in cryptocurrencies through the following notices:

For entities regulated under the SFA:

Notice SFA04-N02 “Prevention of Money Laundering and Countering the Financing of Terrorism – Capital Markets Intermediaries”

For entities regulated under the PSA:

The following notices apply:

PSN01: for licencees providing certain payment services.
PSN02: for licensees working with DPTs.

Amendments to the PSA effective 2021 broadened the DPT services’ definition to include:

• DPT Translation.
• Providing custodial services for the storage of cryptoassets.
• Facilitating the exchange of DPT without holding funds or tokens.
• To these were also added cross-border transfer services for cases where funds may not pass through a service provider based in Singapore, thus mandating the most minimally engaged parties to be licensed, too, and compliant with rules laid down by MAS as well.
• Activities outside Singapore

Under the Financial Services and Markets Act (FSMA):

Companies incorporated or operating in Singapore but providing digital tokenisation services outside the country are also required to comply with AML/CFT requirements.
Services include:

• Providing means for token exchange.
• Entering into an agreement to sell or subscribe to digital tokens.
• Providing financial advice on the sale or offering of tokens.

Additional MAS requirements

MAS has the power to impose additional regulatory measures in the interests of financial stability and customer protection:

• Require a bank guarantee, professional indemnity insurance or a deposit with MAS.
• Protection of client assets include segregation from the service provider’s assets
• Restriction on transfers of assets among organisations

Customer due diligence and other requirements under AML/CFT framework

Licensees falling under the SFA or PSA should:

• Identify the client, including their ownership and control structure;
• Verify customer identity with sufficiently independent and reliable data sources;
• Verify the legal entity status, formation documents and power of legal entities.

Increased DPT risk rating

With effect from 1 July 2025, the Singapore government has revised the national strategy to counter terrorist financing, identifying digital payment tokens as an area of higher risk because of their use in illicit activities that requires the industry to be more vigilant and put in place tighter controls.

Singapore remains one of the most highly regulated jurisdictions for cryptocurrency and virtual asset transactions. In this respect, market participants should make sure to be fully compliant with local laws and MAS guidelines to avoid legal and financial risks.

MAS Regulatory Sandbox and Blockchain Innovation Programme in Singapore

MAS Regulatory Sandbox Programme

To support financial technology innovation, or Fintech, the Monetary Authority of Singapore introduced a regulatory sandbox. This regulatory sandbox allows financial institutions and start-ups to operate in a controlled and flexible regulatory environment to test their projects.

Key features of the MAS regulatory sandbox:

Limits and time limits:
Participation in the sandbox is preconditioned with certain limits and time limits, regulated depending on the participant’s project.
Safeguards:
To minimise risks and prevent systemic failures in Singapore’s financial system, the sandbox involves the implementation of safeguards, including the management of operational risks and possible consequences for users.
Relaxation of regulatory requirements:
Within the sandbox, MAS may relax certain requirements for participants to facilitate innovation.
Examples of relaxed requirements include:
Minimum liquid assets and paid-in capital.
Licence Fees.
Financial sustainability requirements.
Experience and composition of the management team.

However, there are some requirements that do not change and are absolute, including:

• Confidentiality of customer data.
• Customer Due Diligence (KYC) and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance.
• Reliability and honesty of managers.
• Secure handling of customer funds and assets.

Fintech Regulatory Sandbox Guidelines (Fintech Regulatory Sandbox Guidelines)

The updated MAS guidelines, effective January 2022, clearly outline the regulatory requirements to be considered and those that are mandatory. This is the balancing act between innovation and the protection of financial stability.

Blockchain Blockchain Innovation Programme (SBIP)

MAS and the Singapore government, together with leading universities, are running the Singapore Blockchain Innovation Programme (SBIP). This will have a positive effect on the blockchain ecosystem and enable its potential to be tapped into in various parts of the economy.

Objectives of SBIP Programme:

• Strengthening of Blockchain Ecosystem:
• Engage local companies in blockchain-based projects and solutions.
• Human Capital Development:
• Building a team of professional blockchain experts by improving the competencies and training of new experts.
• Scalability and Interoperability Research:
• Working on technologies to enhance blockchain performance, integration, and interoperability among different platforms.

MAS initiatives like the regulatory sandbox and the SBIP programme further reinforce Singapore’s status as one of the global leaders in both financial technology and blockchain. It allows participants that plan to innovate in these areas to test their projects in a safe regulatory environment, while at the same time contributing to the development of the country’s technology and human resources infrastructure.

Requirements for owning and licensing cryptocurrencies in Singapore

Regulation of activities related to capital market products

If a cryptocurrency qualifies as a capital market product, the following acts among others:

Concluding or proposing to conclude transactions, inducing or attempting to induce third parties to enter into agreements related to the purchase, sale, subscription or underwriting of cryptocurrency, would be considered a regulated activity of trading in capital market products.

In this case, the person is obliged to:

• Hold a capital market services licence under the Securities and Futures Act.
• Comply with SFA rules and regulations related to areas such as customer due diligence, regulatory capital, business conduct and investor protection, among others.
• Asset management involving cryptocurrency
• If the cryptocurrency forms part of the assets of a collective investment scheme :
• The person who manages such assets or operates a CIS will be carrying out a regulated activity of fund management.
• In the case of managing a portfolio that comprises cryptocurrency as a capital market product, the management of such a portfolio is also a regulated activity.

Such persons are required to:

• Hold a capital market services licence under the SFA.
• Comply with MAS requirements on governance structure, investor asset protection and reporting.

Cryptocurrency advisory services

If a cryptocurrency constitutes an investment product under the FAA, 2001, a financial adviser has to:

• Hold a Financial Adviser Licence for carrying out such services in Singapore.
• Adhere to the requirements set by FAA for proper disclosure of information to investors;
• Customer Due Diligence Check (KYC);
• Standards of Professional Conduct.

Peculiarities of regulation

License and MAS Compliance:

Any of the abovementioned activities presuppose obtaining a license issued by MAS and corresponding to the standards of established regulatory regime.
Cryptocurrency classification:
The nature of regulation depends on the categorization of cryptocurrency – whether it is a capital market product, an investment product, or an asset of a collective investment scheme.
Investor and client protection:
MAS focuses on transparency, client asset protection, and compliance with AML/CFT standards.

The nature and classification of cryptocurrency activities determine whether such activities fall under the regulatory purview of Singapore. In any case, there is full compliance with regulatory requirements by individuals and companies with appropriate licenses to conduct such transactions, customer due diligence procedures, and adherence to MAS standards that will retain confidence in the financial system and further the interest of market participants.

Japan CryptoCurrency Regulation

Japan was among the first to institute a legal framework for cryptocurrency and related transactions. Its primary regulation, regarding cryptoassets and cryptocurrency exchange services, is the revised PSA, which came into force in 2017.

Cryptoasset regulation basics

Japanese regulation for cryptocurrency has been tightened due to the following events:

• Leaks of cryptoassets due to the hacking of service providers.
• Changes to the FATF Standards on Cryptoassets

In general, the extended regulation has been put in place for the protection of users and the enhancement of AML/CFT.

Key Aspects of Regulation

Cryptoasset definition
The PSA defines a “cryptoasset” as referring to the following:

• Type I cryptoasset: a value of the property that can be used for paying for goods and services, sold or bought from an unspecified person, transferred through electronic systems.
• Type II cryptoasset: A value of the property which may be exchanged for Type I cryptoassets and transferred through electronic systems.

Crypto-assets are distinguished from “currency denominated assets” such as Japanese and foreign currencies or electronic prepaid cards, which are not regarded as crypto-assets.

Definition of cryptoasset exchange services (CAES) Cryptoasset exchange services include:

• Selling, buying or exchanging cryptoassets.
• Intermediating or brokering such transactions.
• Managing client cash associated with crypto asset transactions.
• Managing clients’ crypto-assets on their behalf.
• Service Provider Registration (CAESP)
• Persons or companies providing cryptoasset

exchange services are required to:

• Registration with FSA
• Strict prerequisites for the protection of customers, including AML/CFT
• Criminal responsibility in case of unregistered activities
• Enhanced Regulations
• Enhanced regulations provide:
• Rules on the protection of the clients’ assets and their custody
• Compulsory Insurance to cover cryptoasset breach.
• Formulation of the standards of security to counter hack attack

Taxation of Crypto Assets

From a tax perspective, Japan established a complex taxation regime for cryptoasset transactions. Profits received from cryptocurrency transactions have been treated as investment gains that are taxed progressively.

Policy de Web3 and news technologies

In 2022 the Japanese government adopted a Web3 strategy focused on:

• Development of the decentralised internet by using blockchain.
• Regulatory reform in the financial field, including taxation.
• Establishing rules for stablecoins and non-fungible tokens (NFTs).

This policy aims to position Japan as a centre for blockchain and Web3 technology development.

Japan’s cryptocurrency regulation includes strict rules for service providers to protect users and enhance financial transparency. The introduction of measures to support Web3 demonstrates the country’s commitment to creating a favourable environment for innovation, strengthening its economy and actively participating in the development of new technologies.

Japan has one of the most developed legal systems for the regulation of cryptoassets and related services. Legislation encompasses cryptoassets, stablecoins, security tokens, and other blockchain-based assets. The mainstays of regulation are the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA).

Cryptoasset Custody Services

The provision under paragraph d of the PSA classifies any management of customers’ cryptoassets in the interest of third parties, without selling or buying, as cryptoasset exchange services. This includes the crypto-asset custody services if a provider has access to users’ private keys and the capability for transfer without the involvement of their owners.

An example of independent wallets (non-custodial wallets) where users manage their keys independently, such services are not subject to CAES because the provider cannot manage the users’ assets.

In order to provide custodial services for cryptoassets (custodial services) it is necessary:

• Complete registration as a Crypto Asset Exchange Service Provider (CAESP).
• Comply with customer protection and security requirements set out by the Financial Services Agency (FSA).

Classification of tokens in Japan

• Cryptocurrencies and utility tokens
• Regulated as crypto-assets under the PSA.
• Examples: Bitcoin (BTC), Ethereum (ETH).
• Business operators who are in business of buying, selling, exchanging or managing crypto-assets on behalf of others are required to be registered as CAESPs.
• Stablecoins
• Currency stablecoins, for example, USDC, USDT, are classified as EPIs under the PSA.
• Operators offering EPIs are required to be registered as EPIESPs.
• Algorithmic stablecoins, not pegged to any fiat currency, are considered crypto-assets if they can be transferred or traded between third parties.
• Security tokens
• Represent an equity, a bond or any other security.
• Regulated under the FIEA as electronically recorded transferable rights (ERTRs).
• ERTR operators are required to register as Type I financial instrument operators (Type I FIBOs).
• NFT
• Non-interchangeable tokens that do not have a means of payment function and are not classified under the economic categories of PSA or FIEA are not regulated.
• Regulatory framework for Stablecoins
• Act on Partial Amendment of the Payment Services Act: enacted on 3 June 2022 and effective from 1 June 2023.

Key provisions:

• Introduces regulations on fiat currency-backed stablecoins, with emphasis on transparency, collateralisation and consumer protection.
• For operators, strict requirements were provided for the operation of stablecoin operators, in particular, their compulsory registration as EPIESPs.

Main requirements for operators

• For CAESP.
• Registration by FSA.
• Following standards in the security and asset protection.
• Compliance with AML/CFT regulations.
• For EPIESP.
• Licence to work with electronic payment instruments.
• Confirmation of the provision of stablecoins and disclosure to users.
• For FIBO type I
• Registration by FSA
• Compliance with FIEA requirements of transparency and protection of investors.

Japan follows a balanced and incremental path of regulating cryptoassets, stablecoins, and blockchain-based tokens. The regulations assure high protection to consumers while enabling the market for digital assets within an overall tight framework.

Japan has one of the strictest regulatory frameworks concerning cryptoassets, such as EPIs, NFTs, and any other new emerging cryptoasset. Such rules should allow transparency, user protection, and compliance with AML/CFT requirements.

Electronic Payment Instruments (EPI)

EPIs are currency-denominated stablecoins that can be used to pay unspecified persons and traded between such persons without the involvement of the issuer. Under the amendments to the PSA effective 1 June 2023, the following are the key provisions:

Classification of EPI
The following features differentiate EPIs from other currency-denominated assets:

• Ability to pay unspecified persons (no restrictions on users or merchants).
• The ability to transfer or trade without the consent or participation of the issuer.

For instance:

• Prepaid payment instruments are not EPI because there is centralised issuer control over user balances.
• Algorithmic stablecoins not backed by fiat currency are classified as crypto-assets.

Who can issue EPIs The issue of EPIs in Japan is only permitted:

• To the banks,
• To providers of fund transfer services,
• Licensed trust banks or trust companies.

This is because the issuance and redemption of EPIs constitute fund transfer transactions (kawase-torihiki).

EPIESP Operator Registration and Responsibilities EPIESP

Operators dealing with EPI shall:

• Register as an Electronic Payment Instrument Exchange Service Provider.
• Implement AML/CFT measures, including the “travelling” rule when transacting with another EPIESP, transferring customer identification information thereof.
• Conduct reviews regarding overseas VASPs’ AML/CFT measures if this were to occur on a frequent basis.

NFTs

NFTs are unique digital assets that make use of blockchain technology. They have gained attention in their ability to verify ownership of digital objects such as pieces of art and gaming items.

Regulation of NFTs in Japan

NFTs will not be considered as subjects of regulation under the PSA or FIEA if:

• They are never used as a means of payment.
• Their holders do not share in profits or dividends.

For instance, if an NFT has the sole purpose of confirming ownership of a digital object, it would not be considered a crypto-asset or security.

Criteria for exclusion from cryptoasset classification
Under the Cryptoasset
Guidelines, a token will not be considered a cryptoasset if:

• The issuer explicitly prohibits the use of the token to pay for goods and services to unspecified persons.
• Technical limitations of the token prevent the use of the token as a means of payment.

Regulation of new cryptoassets

To address the new cryptoasset, service providers need to adhere to strict regulations, which include the PSA requirements and rules set by the Japan Virtual and Cryptoasset Exchange Association (JVCEA), a self-regulatory organisation.

• FSA notification
• Any CAESP that intends to deal with the new cryptoasset needs to provide prior notice to the FSA.
• Pre-checks under JVCEA
• The member has to make an internal valuation of the cryptoasset.
• The findings of the valuation are then sent to JVCEA for clearance.
• In case of objections by JVCEA, the cryptoasset is not listed on CAESP

This system assures a high degree of control and reduces the risks to the users.

Japan continues to tighten the regulation of EPI, cryptoassets, and NFTs, making sure that users are protected and the international standards of AML/CFT are observed. The new rules contribute to creating a transparent and secure market of digital assets, strengthening Japan’s position of one of the leaders in cryptocurrency regulation.

Over the last years, Japan has taken several tough steps aimed at protection of users’ property, especially in the context of cryptoassets. These measures were updated after several incidents of leakage of cryptocurrency and problems regarding asset management by cryptocurrency and financial platforms. Due to these events, Japanese authorities have developed several new regulations with regard to the protection of user assets that every cryptocurrency exchange and every financial services platform of cryptocurrency assets is obliged to follow.

Asset segregation and separation of custodial liabilities

One of the important features of Japanese law is the requirement to segregate users’ fiat currencies and crypto-assets from the assets belonging to CAESPs themselves, in order not to risk users’ assets in cases of bankruptcy or any other financial misfortune of the company.

For the management of fiat currency, there is a requirement to hold that currency in trust through a trust bank or company, which protects the assets from possible CAESP bankruptcy.

With regard to crypto-assets, the following key measures have been introduced:

• Asset segregation: CAESP is required to manage its users’ crypto-assets and its own cryptocurrency assets in separate wallets.
• Cold wallets: According to new regulations, at least 95 per cent of users’ crypto-assets must be stored in so-called “cold wallets” – wallets that are not connected to the Internet. This significantly reduces the risks of data breaches or hacking.
• Hot wallets: The wallets that are connected to the network may hold less than 5% of the users’ assets. However, even for those assets, CAESP is under obligation to safeguard them by managing an amount of its own crypto-assets with guaranteed redemption in cold wallets.
• Pre-emptive rights of users: In general, users of a cryptocurrency platform have legal rights to redemption of their assets evidenced by a service provision agreement.

In addition, each CAESP is obligated to go through an annual asset segregation audit with a certified public accountant or audit firm to add another layer of control and transparency.

CAESP Registration Process

This implies that it has to be registered with the following prerequisite: that it needs to have a subsidiary in Japan in case of a foreign company or establish a Japanese legal entity. The FSA, till now, has not approved any branch registration of a foreign company as CAESP.

Applicants must also give information about their capital and organizational structure, showing that they can meet the strict requirements of Japanese regulators, such as:

• Minimum capital of 10 million yen.
• Existence of positive net assets.
• Organizational structure in line with the standards of Japanese financial institutions.
• Internal systems to comply with laws and regulations.

In addition, there are over 400 questions required to be completed during the registration process to ensure the applicant’s internal safety and soundness system is satisfactory for the Japanese regulators. The process is complex and requires applicants to have experienced professionals with experience in Japanese financial institutions, as well as willing to invest in governance and regulatory compliance.

The user property protection system in Japan tries to avoid the financial risks related to cryptocurrency assets and offers high investor protection. The introduction of strict asset segregation requirements and additional oversight by Japanese regulators show the determination of Japan to provide a safe and stable financial environment for participants in cryptocurrency markets.

Japan continues to develop legislation on cryptocurrencies and tokens to ensure their regulation and safety in the market. The country has established clear rules governing cryptocurrency exchanges (CAESPs) and token sales, including initial coin offerings (ICOs). Let’s take a look at the main types of tokens, their legal status and the requirements that issuers in Japan must comply with.

Separation of cryptoassets and securities

In Japan, cryptocurrencies, including tokens and cryptoassets, are not within the definition of “securities” under the FIEA, unless they meet specific conditions to be securities. It means that the sale of cryptocurrency or tokens themselves, including ICOs, is not regulated under the FIEA, except for some types of tokens that might be subject to higher requirements, depending on their characteristics.

Main types of tokens

Cryptoassets and ICOs: If a token is a cryptoasset, the PSA regulation, or, more precisely, the Cryptoasset Regulation Rules, shall apply to it. Tokens issued in the context of an ICO and already traded on exchanges, whether Japanese or foreign, generally fall within the definition of crypto-asset under the PSA. That means that such tokens have to comply with certain requirements regarding their security and funds raised in the context of ICOs.
Types of Initial Crypto Offerings: Basically, there exist two variants of ICO in Japan: Sale-delegating tokens: When an emitter, that is to say, the CAESP issues and resells these tokens. In the process, the issuers do delegate the new tokens with their sale in CAESP. In both options, the Regulations for Selling New Crypto-assets of Japanese association JVCEA cover ICOs, which entail some requirements under the regulation as follows :

• Maintaining a framework for considering a target business raising funds through an ICO.
• Disclosure of information on tokens and use of issuer funds.
• Separate management of funds raised through ICOs (both fiat and crypto assets).
• Securing tokens and platforms (blockchain, smart contracts, wallets).
• Evaluation of tokens and their compliance with regulatory requirements.

Tokens subject to FIEA regulation

Security Tokens (STO): If tokens issued via STO fulfil certain requirements, such as:

• Investors invest money or assets in a business;
• The money so subscribed is utilized for the business;
• Investors shall be entitled to receive dividends or profits arising from the assets of the business,
• then such tokens will be classified as digital property rights, or ERTRs (Electronic Rights to Transferable Rights). In this case, tokens issued under the STO are considered securities and are regulated under the FIEA. Issuers of such tokens are required to register and file a prospectus if they are conducting a public offering or secondary issuance of tokens. It is also important that issuers are registered as a Financial Institutions (FIBO) Type I or II depending on the type of activity.

Prepaid tokens: When the tokens are used for buying goods or services as some sort of prepaid card, they are regulated separately. They follow the PSA rules, but the cryptoasset provisions are inapplicable here.

Japan has been actively developing the legal framework of regulating cryptocurrencies and tokens, clearly defining which tokens fall under crypto-assets and which under securities. More importantly, the tokens that fall under crypto-assets face strict asset management and security regulations, while tokens that meet STO requirements are even further regulated in terms of registration and disclosure for investor protection and stability in the market.

Taxation of cryptocurrency in Japan

Japan levies a unique tax on cryptocurrencies, extending to both individuals and corporations. Japanese legislation has a clear division between the levying of taxes on the profit generated by cryptoassets, consumption tax, and inheritance and corporate tax.

Taxation of individuals

Taxes on profits from trading cryptoassets: Profits derived from trading cryptoassets are classified as “miscellaneous income” (zatsu-shotoku) and are subject to taxation as part of an individual tax return. The tax rate is progressive and ranges from 5% to 45% depending on the amount of profit. In addition, profits are subject to an additional 10% residence tax, which is paid to the local government.

Importantly, losses from trading crypto-assets can be used to offset profits derived from such transactions, thus providing an opportunity to reduce the tax base.

Consumption Tax: No consumption tax is charged on the sale or exchange of cryptoassets. However, if in the process of dealing with cryptocurrencies, commission expenses are accrued (e.g. for lending or interest earned on crypto-assets), consumption tax will be charged on these amounts.
Inheritance Tax: Crypto-assets also face inheritance tax. On the death of a person, if cryptocurrency is considered part of his estate, then inheritance tax is imposed on such assets.

Taxation for corporate clients

Corporate taxation of crypto-assets: In cases of legal entities holding crypto-assets, there is a rule necessitating the market valuation of crypto-assets at the end of the financial year. The difference between the market price and book value of such assets has to be accounted for and recognised in the profit and loss accounts. This means taxation of unrealized gains, which can make a huge difference in the financial results of a company.
The current corporate tax changes: As noted above, 2023-2025 brought in some taxation reforms to ease the burden for companies holding cryptoassets. Essentially, cryptoassets issued by a company itself and held continuously by that company from the time of issue can now be exempted from valuation. Also, cryptoassets might be exempted, even those which have transfer restrictions and some other conditions. This can make operations so much easier on cryptocurrency companies.

Special features related to cryptoassets with restrictions

Cryptoassets that, for instance, have technical features to impede its transfer to a third party, or any other similar restriction of which the owners have to declare to CAESP its existence, might also be excluded from market valuation taxation.

Transfer of funds and issuance of stablecoins

Fund transfer services: In Japan, the provision of fund transfer services is reserved for licensed banks and fund transfer operators. Technically speaking, crypto-assets are not funds, but in the case of a transfer of crypto-assets that perform a funds transfer function, the service provider may be recognised as providing a funds transfer service.
Issuance of Stablecoins: The issue of stablecoins linked to fiat currency will also be viewed as participation in funds transfer activities. In this regard, steblecoin issuers will have to fulfill the funds transfer operators’ requirements.

Anti-money laundering requirements

According to the Prevention of the Transfer of Criminal Proceeds Act, cryptocurrency operators (CAESP) are obligated to:

• Know Your Customer (KYC) check on its customer and any person who may, in fact, have significant control over the customers’ businesses.
• Maintain customer and transaction records for 7 years.
• Report suspicious transactions to the relevant authorities.
• These measures are put in place to prevent money laundering and terrorist financing by maintaining a high level of control over crypto-asset movements.

In Japan, cryptocurrency taxation is a quite complicated system that covers the spheres of income taxes, consumption taxes, inheritance taxes, and even taxation for corporations. At the same time, the country is actively pursuing tax reforms with the aim of easing the tax burden for crypto asset companies. Simultaneously, the regulation of cryptocurrency transactions is strictly controlled to protect the economy from money laundering and other criminal activities.

Regulation of Cryptocurrency in Hong Kong

Hong Kong is actively seeking to enhance its position as a leading cryptoasset centre in the APAC region by attracting innovation in the cryptocurrency and blockchain technology sector. Hong Kong regulators, including the Hong Kong Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), have announced various new initiatives that are expected to foster growth and development in the crypto industry, while meeting requirements on anti-money laundering and consumer protection.

Licensing of Virtual Asset Trading Platforms

One of the key steps was the introduction of a licensing regime for virtual asset trading platforms (VATPs), which came into effect from mid-2023. Under this regime, all cryptoasset exchanges and service providers must comply with strict anti-money laundering (AML) and counter-terrorist financing (CFT), consumer protection and other regulatory requirements. Importantly, an advisory group will be formed to include the licensed VATPs and afford the SFC with an opportunity to consult the industry on the regulation of new types of crypto products and services.

According to Eric Yip, executive director of intermediaries at SFC, the group will make an effort to enhance the compliance and risk management practices in the sector of cryptocurrency platform. It would help the advisory group produce whitepapers that will help sort the most pressing issues and future directions both for the SFC and the industry. More VATP licences will be issued by the end of the year, a clear way to accelerate the development of a regulated cryptocurrency ecosystem in Hong Kong.

Real Asset Tokenisation and Regulation of Stablecoins

Hong Kong is now working in depth on the implementation of real asset tokenization-one of the key points for large financial institutions interested in implementing the use of blockchain. Among these, HKMA itself has been an active endorser of the recently initiated Project Ensemble, also a regulatory sandbox for the testing of tokenisation. The project will enable financial institutions to test and develop innovations in asset tokenization, opening new horizons for innovative financial services and improving interaction between data and users.

HKMA Chief Executive Eddie Yue said tokenization can become an engine of economic progress, providing the “hyper-connectivity” between users and data that is needed to drive innovation in the financial sector.

Besides, Hong Kong has been noticeably developing rules for regulating stablecoins with the aim of keeping them stable and secure. It was announced by the Ministry of Finance of Hong Kong that the long-awaited regulations regarding the regulation of steiblcoins will be approved in 2025. In this regard, a sandbox will be opened for steiblcoin issuers to find out what kind of regulatory measure will be most appropriate in this segment.

The future of the cryptocurrency industry in Hong Kong

These, and further work with regulators, demonstrate the determination of Hong Kong to be a leader in cryptocurrency and blockchain innovation in the APAC region. The stance of the SFC and HKMA on cryptocurrency and blockchain regulatory issues gives the industry clarity and confidence that Hong Kong can be a sound base for offering new products and services within a stable and sound regulatory framework.

In a nutshell, Hong Kong is still active in the development and perfection of cryptocurrency regulation with the aim of making the space appealing and secure enough for businesses and investors. The inclusion of initiatives such as the licensing of virtual asset trading platforms, tokenization of real assets, and regulation of stablecoins underlines Hong Kong’s willingness to innovate and actively participate in global cryptocurrency trends.

Cryptocurrency regulation in South Korea

The South Korean government continues to actively develop the regulatory framework for cryptocurrency companies, strengthening control and supervision in this area. On 3 September 2025, the Financial Supervisory Service of South Korea (FSS) announced the launch of inspections of cryptoasset exchanges across the country to identify possible anti-money laundering (AML) and countering the financing of terrorism (CFT) violations, as well as compliance with cryptoasset protection requirements.

Planned inspections and their objectives

The planned inspections will include at least five cryptocurrency exchanges and one custodial wallet provider, reflecting a desire to strengthen oversight of these organisations. The FSS will pay attention to whether they are in full compliance with regulatory requirements under the Anti-Money Laundering and Cryptocurrency Asset Protection Act.

It should also be regarded as a response to past events, like the crash of the TerraUSD stablecoin, which was connected with South Koreans. This became a significant hint for the government that the cryptocurrency market requires more stringent regulation and control to prevent the possibility of similar situations in the future.

Extended FSS authorization

With the introduction of new legislation this year, South Korea has largely expanded the powers of the Financial Supervisory Service to monitor cryptocurrency transactions. In particular, the Virtual Asset User Protection Act was passed, given the FSS additional powers to supervise the operations of the companies involved in cryptocurrency business activities and to impose punitive measures for violations of the law.

Under the new rules, fines for non-compliance can be as high as $3.7 million, an important step toward financial discipline within the sector.

The Context of Increased Control

Increasing the number of South Korean crypto companies subject to oversight is part of the approach to reinforce legal regulation due to the high risks associated with the assets in question. Besides AML/CFT, the new innovations also have the protection of crypto users’ rights and counter fraud in this field.

Special attention is paid to investor protection and the prevention of financial crimes, including manipulation of the cryptocurrency market, money leaks, and risks associated with unstable cryptocurrency projects. In this regard, the country’s authorities see such measures as a necessary step in maintaining stability in the financial markets and ensuring confidence in themselves from both investors and the international community.

Market Impact and Response by Cryptocurrency Companies

Greater scrutiny of cryptocurrency exchanges and cryptoasset service providers has certainly received a mixed response from players in the market. Various firms operating in the area of cryptocurrency welcome increased regulation because it provides a cleaner environment with more security in which to operate, and may ensure investor confidence. Other operators in the market have come out to complain that the highly restrictive requirements may affect the profitability of small and medium-sized companies operating in this line of business.

At any rate, all the measures that might improve transparency and work to nip off illegal activities would certainly boost South Korea as a stronghold in the world for virtual money innovation, which ensures that the sector has given way to safety and its wholesome growth.

Further attention to crypto companies working in South Korea is being noticed nowadays because of a wide perspective involved in improving the crypto-assets regulation regime. New legislation and the extension of financial regulators’ powers have underlined the country’s commitment to ensuring the safety of the cryptocurrency market, protecting users’ rights, and adhering to international standards. This sets a very good premise for the stable development of the cryptocurrency sector in South Korea and may serve as a certain example for other countries in regulating digital assets.

Crypto regulation in Middle East in 2025

Since 2023, countries of the Middle East, especially the UAE, have been actively developing their approaches to cryptocurrency regulation in order to strengthen their positions as leaders in the world of blockchain innovations and cryptoassets. In this process, the UAE has attracted special attention with the establishment of VARA in Dubai, which is playing a major role in regulating cryptocurrency platforms and activities in the country. However, the regulation of cryptocurrencies in the region will continue to evolve in 2025 with new initiatives aimed at balancing the interests of both companies operating in the field of cryptocurrencies and investors.

VARA and its balance between soft and hard standards

VARA, established with the purpose of oversight for crypto assets in Dubai, thus far has had a profoundly positive effect on the local market since its establishment in 2023. The policy of the organization was labeled “cryptocurrency-friendly” and aimed at attracting international innovations and creating a stable foundation for companies dealing with cryptocurrencies. The regulator can be too slow regarding the licensing process, critics noted, by which it is difficult to launch new cryptocurrency projects.

So far, VARA has licensed 22 approved virtual active suppliers, or VASPs, which some industry experts consider insufficient for a region with high ambitions. At the same time, the regulator has been active in cracking down on illegal operations, issuing cease-and-desist orders to seven companies operating in Dubai without official authorization.

The words of McHugh, head of VARA, emphasise the importance of the “right balance” in approaches to regulating cryptocurrencies. He notes that in order to achieve institutional acceptance of cryptoassets, it is important not to be too strict, but also not to be overly liberal. This balance, McHugh believes, sets the stage for a more sustainable industry in the future, providing both investor protection and support for innovation.

The future of UAE cryptocurrency regulation, and else where

Speed up the licensing process and enhance transparency: VARA and other regulators in the UAE are expected to further enhance the process of licensing in 2025. The regulator will try to accelerate the process of registering new organizations and give more transparency to crypto companies willing to operate in the country. This will enhance the attraction of global players to the cryptocurrency sector.
Besides regular crypto exchanges, the UAE will, in the future, also actively support the introduction of new crypto products and services such as stablecoins, asset tokenization, and DeFi. VARA will strive to create regulations that will enable the safe use of such technologies in the financial sector.
Working in tandem with international regulators: The UAE will continue actively to cooperate with international regulators to make sure that standards related to cryptoassets and blockchain technologies are harmonized in 2025. This co-operation will not only help the UAE maintain its competitiveness but also provide additional safeguards for international investors and companies.
Training and capacity building among regulators and market participants: One of the important aspects to support growth and stability in the sector will be training and capacity building of both local regulators and market participants. The regulation of cryptocurrencies needs to be flexible enough to adapt to the ever-changing market conditions, and training and expertise from international partners shall play a key role in that regard.

In 2025, regulation of cryptocurrency in the UAE and the Middle East as a whole will continue to be evolutionary, moving toward flexibility and innovation in order to establish a sustainable, secure, and competitive cryptocurrency ecosystem. With strategic focus on attracting global players, improving licensing mechanisms, and developing new products, the UAE will consolidate its position as the leading cryptocurrency hub in the region, while providing robust protection for investors and supporting technological innovation.

Meanwhile, UAE has been working on the consistent enhancement of its leading center of virtual assets, struggling to create a stable and innovative ecosystem for cryptocurrencies. Given the increasing interest in blockchain and cryptocurrencies, including enhanced market volatility, the UAE is set to bring in more legislation that could ensure safety, clarity, and stability for cryptocurrency. Most notably, significant changes to the regulation of stablecoins are due to come into effect in June 2025, which will affect not just the UAE but also the global market.

The Need for Comprehensive Regulation of Virtual Assets

With the rapid growth of the market for virtual assets and their integration into personal finance and institutional investments, there is a need for comprehensive regulation that can provide clarity and protection for market participants. The key challenges facing global regulators are market manipulation, security risks and the use of cryptocurrencies for illicit purposes.

Against these challenges, the UAE is actively working on a regulatory framework to balance innovation with ensuring market stability by creating an infrastructure capable of managing the risks associated with volatility and legal uncertainties. Further, it is actively working towards harmonized international standards and solutions to cross-border regulatory challenges. This makes the country a very important player on the global stage.

Key elements of the new Stablecoins regulation in the UAE

• Dirham-backed stablecoins: The foreseen change in the stablecoin regulatory framework in the UAE is a game-changing development in the way digital assets are handled. The new regulations, effective June 2025, will only permit transactions of stablecoins backed by the local currency, the dirham. This excludes the use of popular cryptocurrencies such as Bitcoin and Ether, as well as dollar-denominated stablecoins for everyday payments. The move is aimed at creating a more stable and predictable financial environment, reducing the risks associated with market volatility.
• Limited use of foreign tokens: Foreign payment tokens will only be allowed for the purchase of certain virtual assets, such as non-fungible tokens. This will limit legal uncertainty with respect to the use of foreign cryptocurrencies and will also allow for the clear regulation of transactions.
• Improved market structure: The new UAE approach to regulating stablecoins will provide a safe and structured market environment. This will, in turn, remove legal uncertainties and promote co-operation between financial technology companies and virtual asset service providers. The regulation will be set to reduce risks and increase the stability of the cryptocurrency market.

Global impact and normative benchmark

The rules devised by the UAE for stablecoins might just become the basis from which global standards are set for cryptocurrency regulation. The UAE is actively shaping a holistic framework for managing virtual assets, which aligns with international standards. This approach is a critical step toward global harmonization of cryptocurrency regulation and has given other countries examples to consider for effectively balancing innovation with regulatory oversight.

This approach follows the trend of increasing clarity and security of rules that are easily adaptable to changing technological conditions. Given the strategic use of stablecoins, especially, the UAE’s role as a leading global player in cryptocurrency regulation is conducive to confidence building in the virtual asset market and ensuring the stability of development in the industry.

VARA and its role in regulation

The UAE has established the Virtual Asset Regulatory Authority, VARA, which is responsible for administering the regulation and enforcement in the field of virtual assets. The new regulations are vigorously implemented by VARA, while it also enables safe innovation in the financial system as a way to facilitate industry development.

But VARA is also influencing global trends in cryptocurrency regulation, setting a precedent for other countries that want to balance technological advancement with strict oversight. This approach contributes to a safer and more innovative digital financial ecosystem.

World Blockchain Summit (WBS) Dubai and its Impact on the Industry

One such event that demonstrates the UAE’s role as a leading hub for blockchain and cryptocurrency technology is the World Blockchain Summit Dubai. This key event brings together leading industry players, providing a platform to discuss the latest trends and innovations in the blockchain sphere. In 2025, WBS Dubai will showcase how the UAE continues to advance its leadership in digital financial technology and cryptocurrency regulation.

The UAE has ambitions to become the leading global regulator in the field of cryptocurrency and blockchain and is hence promoting a very ambitious and balanced regulatory framework. New rules for stablecoins, improved market structure, and an active role for VARA further reveal that the country does not leave a single chance to emerge as a centre of innovation while not sacrificing financial stability. These developments are going to make much difference not only within the Middle East but also in general trends in the digital asset class globally.

Regulation of Cryptocurrency in the UAE

The more time goes by, the more the cryptocurrency market develops in the UAE, becoming one of the key centers of digital assets and new technologies in the MENA region. Such a rapid growth in the number of crypto traders, friendly government regulation, and active development of cryptocurrency infrastructure make the UAE one of the leaders in this field. The country will further strengthen its position and will see an extraordinary growth of the cryptocurrency ecosystem in the region.

Growth of cryptocurrency market in UAE

As per Bitget, more than 500,000 active crypto traders will be present in the UAE during the beginning of 2025. It marks a 51 per cent increase from the previous year, 2023. The figure underlines the ever-growing interest and usage of cryptocurrencies in daily financial operations. By 2025, the UAE is expected to be the leading country in cryptocurrency adoption in the MENA region, followed by countries like Turkey, Morocco, and Iran. According to a report by Bitget, 72 per cent of cryptocurrency users in the UAE have already invested in Bitcoin, while 29 per cent of respondents find digital assets more convenient to use.

This growth is supported by the favourable regulatory environment in the UAE, which allows for the active development of blockchain and virtual asset technologies. The number of crypto traders in the Middle East is expected to increase to 700,000 per day in 2025, confirming the region’s strong prospects.

New rules on stablecoins

Perhaps most significantly, this would involve the introduction of new regulations regarding Stablecoins issued by the UAE Central Bank. In the case of new regulations, it would be possible to pay with UAE dirham-backed stablecoins for goods and services using the UAE resident’s status. It is permitted, under regulations, for stablecoins to be utilized in the purchase of virtual assets, representing an important innovation in the cryptocurrency market within the region.

Adoption of AED stablecoins as legal tender develops confidence in cryptocurrencies and allows new opportunities for their application in different sectors of the economy. The UAE was the first country in the MENA region to regulate Stablecoins, a decision allowing the extension of the cryptocurrency market by ensuring transparency and compliance with the standards set by regulators.

Tokenisation of assets and new market opportunities

Besides payments, regulated stablecoins can also have important applications in the tokenization of traditional assets, such as financial instruments and AED-valued real estate, letting digital assets interact with traditional markets, creating opportunities for investors and companies in new sectors.

According to Aka Leung, Bitget’s Country Manager for the UAE, stablecoins to tokenise assets can be the bridge between traditional financial systems and digital assets, enabling large market expansion.

Global outlook and impact on the UAE economy

The UAE is making every effort to double the contribution of the digital economy in the country’s GDP from 9.7 per cent to 19.4 per cent in the next decade. Regulation of cryptocurrencies and stablecoins will form an integral part of this strategy as it guarantees growth and stability in the digital asset sector.

The UAE’s strategy to regulate cryptocurrencies and blockchain, including supporting innovation and creating a secure regulatory environment, will help strengthen the country’s economy and attract international investment in the digital sector.

The UAE is continuing to build its reputation as a leading cryptocurrency hub in the MENA region and in the global market. The development of new regulations on stablecoins, support for innovative technologies, and the creation of a favorable regulatory environment make the country appealing to both cryptocurrency companies and investors. With the UAE’s growing interest in cryptocurrencies and blockchain technologies, it is well-positioned to continue leading globally in the digital space, developing a secure and innovative digital financial ecosystem.

The UAE has been continuously working on its cryptocurrency regulatory regime, among other initiatives, to position the country as an international focal point when it comes to cryptoasset regulation. During the past years, the country has been aggressively implementing systems to support innovation in blockchain technology and digital assets, while at the same time offering a premium amount of regulation and protection for the participants in such markets.

New supervisory framework for virtual asset companies

On 9 September 2023, the SCA and VARA announced an agreement to introduce a new oversight system for virtual assets in the UAE. The agreement represents a key step towards harmonization and unification of regulatory requirements in the country and creates a single licensing regime for virtual asset companies.

Until recently, the companies dealing in cryptocurrencies and other virtual assets had to get licences from different regulatory authorities in different Emirates such as Dubai, Abu Dhabi, Dubai Financial Centre and Ras Al Khaimah. Now, with the introduction of the new agreement, the companies which receive a licence from VARA get automatically registered from SCA and can provide their services throughout UAE. This simplifies the licensing process of VASPs and at the same time provides much flexibility to operate throughout the country.

Objectives and benefits of the new regime

The Chairman of the VARA Executive Board, H.E. Helal Saeed Al Marri, said the new agreement symbolizes regulatory unity in the UAE and helps advance the goal of creating a safe, secure, and compliant virtual asset ecosystem. Such a collaboration with federal partners like the SCA offers “seamless and efficient passporting of regulated services”, thus making market access easier for new companies.

One of the key factors that sets the new system apart is its ability to provide protection against market risks while promoting responsible innovation. An important aspect is the focus on adhering to the highest standards of cross-border compliance and investor protection, which is particularly important for building confidence in both local and international markets.

Private sector response

New regulations have brought about a positive response from the private sector. Several major VASPs and financial institutions have started operations in the UAE by launching cryptocurrency products and services. This further cements the reputation of the UAE as one of the leading cryptoassets and blockchain technology hubs in the world.

These steps, observers believe, will lead to more confidence on the part of private companies by bringing greater stability and transparency into the legal environment for doing business. Companies that wish to innovate will be supported by regulators, and in turn the market will be more attractive to foreign investors.

Looking to the future: the UAE to be a cryptoassets leader

It also furthers the UAE’s status as a leading centre for cryptocurrency and blockchain assets in the Middle East and across the world. New regulations and the simplification of the licensing process have opened up the country to more international cryptocurrency companies and investors. Further development of the regulatory framework and its integration with international standards will, in addition, enable the UAE to become an example for other countries that seek to develop their cryptocurrency markets.

The United Arab Emirates is making crucial steps toward a secure, stable, and innovative digital economy. A new licensing system and cooperation between VARA and SCA will grant flexibility and enhance market access for virtual asset service providers. This will make the UAE an even more attractive destination for cryptocurrency and blockchain companies and enhance their international competitiveness.

Crypto regulation in the Caribbean in 2025

Over the last few years, the Caribbean has established itself as an important and promising player in the global cryptocurrency industry. From being known throughout history as a tax haven and tropical paradise, the region is now turning heads in respect of its cryptocurrency regulatory initiatives. The passage of legislation such as the Bahamas Digital Assets and Registered Exchanges Act (DARE) allows the Caribbean to differentiate itself in the global marketplace as a centre for digital asset regulation.

DARE Act: A Step Towards Harmonization of Cryptocurrency Regulation

The Bahamas’ Digital Assets and Registered Exchanges Act (DARE), enacted in 2020, was a milestone for the Caribbean region, providing clear and structured rules for the registration, licensing and oversight of cryptocurrency companies. This law has helped to address the regulatory uncertainty faced by digital asset companies. The DARE Act has provided the foundation for further steps to create a safe and regulated environment for cryptocurrency transactions.

The DARE Act represents one more proactive and dynamic approach of the Bahamas toward the regulation of cryptocurrencies, which contrasts with the slower movement of other countries. This law has made the Bahamas a very important jurisdiction for crypto companies, offering not only an attractive business environment but also protection for investors and market participants.

Infrastructure problems and implementation of legislation

But the success of the DARE Act, as well as other similar legislative initiatives in the Caribbean, depends not only on the nature of the regulations themselves but also on having the proper infrastructure in place to implement such regulations. Most Caribbean islands lack the technical and institutional frameworks for effectively implementing legislation related to cryptocurrencies. This can be a big barrier to the effective implementation of new regulations and making them truly effective.

The inability to fully enforce the legislation due to lack of appropriate infrastructure and resources might lead to partial implementation or incomplete implementation. In this aspect, it is relevant for the countries in the region to invest in technological infrastructure and education in order to ensure that adopted laws are fully effective.

Risk mitigation: problems with liaising with banks

One of the most significant challenges that businesses involved in cryptocurrency face in the Caribbean is mitigating risks associated with dealing with international financial institutions. Banks within the region often avoid co-operating with businesses dealing in cryptocurrency, fearing that this may jeopardize their relations with international correspondent banks. This therefore leads to difficulties in the access of banking services by cryptocurrency companies, which in turn limits their ability to grow.

The Caribbean will therefore have to put in place mechanisms that assure financial institutions of safety when dealing with crypto companies. This may perhaps take the form of creating meeting and interaction platforms and forums that could afford risk mitigation and co-operation between innovators of the cryptocurrency and financial regulators as well as banking institutions, a sure way to foster growth of the sector.

Prospects for economic growth

Nevertheless, the Caribbean region potentially holds immense prospects in terms of the development of the cryptocurrency segment. This unique chance enables the region’s small open economy to effectively make practical use of the application of cryptocurrencies or blockchain technology, especially where diversification and attraction of investments are at issue.

The development of the cryptocurrency sector can be an important driver of economic growth in many countries of the region, opening new sources of income and fostering job creation. With the attraction of international cryptocurrency companies and fostering local innovation, it could turn the Caribbean region into a global center of digital assets and attract investors interested in a safe and regulated environment for cryptocurrency transactions.

Conclusion: necessary steps for success

In order for the Caribbean region to realise its full potential in cryptocurrencies, several key challenges need to be addressed. First and foremost, it is important to develop infrastructure to support cryptocurrency regulation, build institutional frameworks and improve education and training. It is also important to work on improving interaction with financial institutions, minimising the risks associated with working with cryptocurrency businesses.

Balanced and thoughtful regulation to underpin and foster innovation, as well as necessary infrastructure and support, holds the potential for the Caribbean to be considered in the vanguard of cryptocurrency worldwide.

The Caribbean stands at a time of tremendous change. Offering unique opportunities to emerge as one of the world’s leading centers of the global cryptocurrency industry. Historically linked with tax incentives and tourism, today the region is actively working on establishing laws to bring clarity and a structured approach to the regulation of cryptoassets. In the same vein, important infrastructure and mitigation of risk concerns must be dealt with if the Caribbean is ever to realize its full potential and assume leadership in this nascent area of regulating digital assets.

Caribbean leader in the regulation of Cryptocurrencies

In fact, the Caribbean, especially the Bahamas, is already making significant efforts to establish a stronger presence in the global cryptocurrency market. The Digital Assets and Registered Exchanges Act that has been passed in the Bahamas and the similar legislative efforts of other Caribbean countries provide a strong legal framework for the registration, licensing, and supervision of cryptocurrency transactions. This has allowed the region to eliminate the legal ambiguity that has long hindered the development of the cryptocurrency market and has created an attractive environment for cryptocurrency companies and investors.

Despite these successes, however, the very process of implementing and enforcing these laws requires an appropriate infrastructure to support and facilitate the effective implementation of these rules. Without the relevant technological and institutional framework, even the most thoughtful and advanced laws are at risk of remaining mere paperwork.

Infrastructure and risk mitigation issues

Infrastructure remains one of the key challenges that need to be addressed in the Caribbean region. There is a shortage of specialized technology solutions and platforms for fully-fledged cryptocurrency operations in the region. Besides, a lack of sufficient institutional support and human resources also constrains the effective implementation and enforcement of legislation.

Another challenge is the issue of risk mitigation. Banks and financial institutions are often refusing to work with companies associated with cryptocurrency for fear of possible sanctions or loss of connection to international financial systems. This creates a barrier for the growth of the cryptocurrency sector in the region, as access to banking services for a cryptocurrency company is limited and this is an obstacle to its further development and attraction of international investments.

Global Centre for Cryptocurrency Innovation

However, only the Caribbean is positioned advantageously to take advantage of the growth in the industry of cryptocurrency. Attracting international cryptocurrency companies and nurturing local innovation can go a long way in making the region economically competitive in the global economy. The development of crypto infrastructure may become an economic driver for growth, allowing the region to be a hub for a new generation of technology startups working in blockchain technology and digital assets.

Embracing challenges like the creation of a flexible and secure financial system for cryptocurrencies and solving problems with access to banking services will enable the Caribbean to open new horizons for economic diversification. In particular, the development of the cryptocurrency sector can provide a very good alternative to traditional sources of income, such as tourism and natural resource exports, and reduce dependence on external economic factors.

Conclusion: the way forward

The future of cryptocurrencies in the Caribbean looks bright, but there are several important issues that need to be addressed in order for it to be realised. The region must focus on improving infrastructure, developing technology and building institutional capabilities to support the growth of the cryptocurrency industry. Concerted efforts by the public and private sectors to strengthen regulatory frameworks and mitigate risks will help the Caribbean take a leadership position in the global cryptocurrency space.

Once these issues are overcome, the Caribbean would provide a sustainable ecosystem for digital cryptocurrencies and be hailed as a beacon of innovation in the global financial landscape, leading the way into the future for new generations and providing a new benchmark for regulation of digital assets across the world.

Cryptocurrency Regulation in the Cayman Islands

The Cayman Islands have emerged as one of the world’s greatest financial centers and, respectively, a very favorable environment for doing cryptocurrency and digital asset business. The growing interest in fintech services and cryptocurrencies has impelled the government and regulators in the region to actively develop a regulatory framework that aims at a secure and transparent environment for such deals.

Virtual Assets and Service Providers Act (VASP)

One of the most important further steps in this direction was Virtual Asset Services Law, enacted back in 2020, and amended in 2025 by the Cayman Islands Government. The law was passed to introduce an appropriate regulation that will allow the government of this jurisdiction to regulate providers of services with virtual assets, including crypto exchanges, custodial wallets, and any other financial technology companies. The purpose of the law is mainly to adhere to international standards set by organizations such as the Financial Action Task Force.

The VASP law came into effect in two steps. The first step concerned AML regulation and the registration of virtual asset service providers, while the second one relates to licensing and the explanation of different aspects of regulation, is now being found and changes to the legislation have been proposed for 2025.

Key provisions of the VASP Act

• The VASP Law stipulates that each company dealing in the issuing of virtual assets or their related services should be listed or hold a license given by CIMA. As such, all operators conform to applicable legal and regulatory demands.
• Other particular services falling under regulations: Among the wide areas covered in the Act is:
• Exchange of virtual assets for fiat currencies and vice versa, and between different types of virtual assets.
• Transfer of virtual assets.
• Custody and management of virtual assets, including custodial wallet services.
• Participating in financial services concerning the issue or sale of virtual assets.
• Definition of Virtual Assets: For the purpose of the law, virtual assets are defined as a digital representation of value that can be traded or invested. However, it excludes any digital representation of fiat currency and a virtual token that cannot be transferred or exchanged by a third party.
• Licensing and control: Virtual asset issuers have to get pre-approval from CIMA prior to issuance, and a public token sale has to be registered as prescribed by the applicable law.
• This helps minimize the possibility of fraud and increases confidence in the security of investment among investors.
• Simplification of the structure and changes: The legislation under proposed changes in 2025 will update the law on improving the structure of licensing, revising the audit requirements, and simplifying the procedure for VASP. Moreover, the bill provides an explanation of such terms as “Operator” and “Convertible Virtual Asset,” which will give more certainty for market participants.

Outlook for Investors and Cryptocurrency Companies

The Cayman Islands continues to be a very friendly jurisdiction for crypto companies because of its flexible regulation and stable financial environment. Legislation has been made to attract institutional investors and fintech companies by creating opportunities for them to operate in a strong and clear legal environment. At the same time, the regional government is working hard on infrastructure development to help create more welcoming conditions for innovative companies and investors.

The regulation of cryptocurrencies and virtual assets in the Cayman Islands opens new avenues for companies offering DeFi solutions, digital asset exchanges, and investors interested in launching cryptocurrency projects and launching their respective ICOs/IEOs.

The Cayman Islands continue to enhance their reputation as an international financial centre by providing legal and financial infrastructure to support the growth of cryptocurrency and fintech companies. The VASP Act and its subsequent amendments demonstrate the country’s commitment to adhering to international standards when regulating digital assets, while offering flexibility for companies and investors. It is important to note that in order to realise the region’s full potential, further work is needed to improve the technological infrastructure and strengthen interactions with international financial systems.

The Cayman Islands continue to hold a significant position in the global financial universe and remain an attractive venue for cryptocurrency and fintech businesses due to their flexible legal framework and tax-neutral environment. This makes the Cayman Islands a very attractive jurisdiction for digital asset and cryptocurrency companies and supports their growth in the international arena.

Securities and Investments Act (SIBA)

Companies that trade, organize, manage, or advise on digital assets in the Cayman Islands are likely to fall within the scope of the SIBA. The law sets out a regulatory framework for the issue, sale, and exchange of virtual assets, which may constitute securities. In this regard, the definition of “securities” under SIBA includes virtual assets, which can be converted into traditional forms of securities, such as shares, debt instruments, options, or futures.

Companies that engage in such transactions must obtain registration or a licence from the Cayman Islands Monetary Authority (CIMA) in accordance with SIBA requirements. This provision emphasises the importance of having clear and transparent regulatory controls for digital assets, particularly when these assets can be used in traditional financial instruments.

Important points:

• Securities: Virtual assets that are interchangeable with other forms of assets or are used as an instrument for purchase, would be considered securities.
• Registration and licensing: The regulator requires all providers of services involving virtual assets to be registered or licensed with CIMA for the purpose of regulatory oversight.
  Offer of Securities

Cayman Islands Companies Law restricts offers of securities by a Cayman Islands incorporated company, which is not listed on the Cayman Islands Stock Exchange. These apply both to exempted companies and LLCs to prevent unauthorized public offers within the Islands.

Of importance, however, to companies incorporated outside the Cayman Islands, care is taken not to fall foul of doing business in the islands. Examples of this may be digital asset sales where active advertising and selling into the Cayman Islands public is conducted. Where such business is done, registration and licensing requirements are further needed, with financial and other legal consequences flowing for failure to comply.

Taxation of cryptocurrency in the Cayman Islands

One of the major reasons why such cryptocurrency companies are drawn toward the Cayman Islands has to do with tax neutrality. The following taxes are not imposed in the region:

• Income tax
• Capital gains tax
• Inheritance tax
• Gift tax
• Corporate tax
• Withholding tax

This sort of tax regime allows companies dealing with cryptocurrencies and other digital assets to minimize their tax liabilities even further, hence making the Cayman Islands more attractive to the international cryptocurrency companies.

However, the Cayman Islands can charge stamp duty, which is payable with regard to original documents executed in the Islands or brought into the Territory. Such fees are usually nominal and do not have a material consequence on financial transactions.

Tax exemption certificates

Companies domiciled within the Cayman Islands have the benefit of applying for an exemption certificate. This typically provides the assurance that a company is not subject to taxes on profits, income, capital gains, or other forms of similar taxation for a particular tenure, which usually ranges between 20 to 50 years for different classes of organizations. By this mechanism, companies further remain assured of stability in tax regimes, thus enabling plans even in reasonably long time horizons.

The Cayman Islands is a popular destination for cryptocurrency and fintech businesses due to the flexibility and sophistication of the regulatory framework, the tax-neutral and politically stable environment. Clear rules provided by legislation with respect to virtual assets and securities are given to crypto-organizations and high-level investor protection. At the same time, companies should consider aspects of registration, licensing, and compliance to avoid legal and financial risks.