An Overview of Cryptocurrency Regulation around the World

FREDRICK KWESI DICKSON

Abstract
The legal position of cryptocurrencies varies greatly between
jurisdictions and remains unknown or evolving in many of them.
While the use of cryptocurrency is not illegal in the majority of
nations, its status and utility as a method of payment (or a
commodity) differ, with varying regulatory ramifications. While
some states explicitly permit its use and commerce, others
prohibit or limit it.
Various regulatory and legislative responses have been made in
response to the growth of cryptocurrencies in different national
jurisdictions. Some of these responses have indicated approval of
the general transactional and functional aspects of
cryptocurrencies, while others have done so by enacting
legislative prohibitions or restrictions. This variety in legal
responses reflects the authorities' confusion over the full potential
of cryptocurrencies and their understanding of the inadequacy of
their supervision and governance function given the
disintermediation of bitcoin transactions. This paper evaluates the
variations in the legality of Bitcoin and other cryptocurrencies
across several jurisdictions.

1
Table of Contents

Abstract ................................................................................... 1
List of Abbreviations ............................................................... 3
List of Case law ........................................................................ 4
Introduction ............................................................................ 5
Countries' Regulatory Reactions to Cryptocurrencies .............. 9
Africa ................................................................................ 10
Oceania ........................................................................... 12
Europe………………………………………………………………………..12
East Asia .......................................................................... 20
The Middle, Central & South Asia ................................... 25
North America ................................................................ 26
South & Central America ................................................ 28
References.......................................................................... 31

2
LIST OF ABBREVIATIONS
DOJ- Department of Justice
FINCEN- Financial Crimes Enforcement Network
SEC - Securities & Exchange Commission
CFTC- Commodities and Futures Trading Commission
FATF - Financial Action Task Force
VAT- Value Added Tax
IRS- Internal Revenue Service
GST- Goods & Service Tax
EU- European Union
PBOC- People’s Bank of China
ASEAN- Association of Southeast Asian Nations
UAE- United Arab Emirates
ECB- European Central Bank
BAFIN- Federal Financial Supervisory Authority
RBI- Reserve Bank of India
BMO- Bank of Montreal
TD- Toronto-Dominion Bank
FINTRAC-Financial Transactions and Reports Analysis Centre of Canada
KYC- Know Your Customer
CNBV- Mexican National Banking and Securities Commission
DLT-Distributed Ledger Technologies
AML-Anti-Money Laundering
ICO- Initial Coin Offering

3
LIST OF CASE LAW
- WISCONSIN CENTRAL LTD. ET AL. v. UNITED STATES No. 17–530. Decided June 21, 2018

4
Introduction

A number of regulatory and legislative reactions have been made

in response to the emergence of cryptocurrencies across national
jurisdictions, some of which have expressed support for the broad
functionality and transactional features of cryptocurrencies while
others have reacted with legislative prohibitions or limits. This
range of legislative responses reflects both the authorities'
confusion regarding the full potential of cryptocurrencies and
their awareness of the inadequacy of their supervision and
governance functions given the fully disintermediated character
of bitcoin transactions.

Regulating bodies have, however, shown more initiative in recent

years when it comes to the Cryptocurrency space. Specifically,
the severe decline that occurred after Christmas Day in 2017 from
which many late-entrant investors took time to recover and civil
society organizations that have been harmed by fraudulent or
deceptive practices have articulated the need for some sort of
protection through conventional regulatory bodies. The public's
interest in cryptocurrencies and the urgency of regulating them
have both significantly increased as a result of the Covid-era price
rises to previously unheard-of levels. In fact, many jurisdictions
currently have intra- and inter-institutional protocols or quite
thorough regulatory frameworks to deal with cryptocurrencies in
a regulatory environment.

In addition, there has been an increasing body of evidence that

cryptocurrencies can be used in money-laundering or terrorist -
5
financing as well as other nefarious activities. This also behooves
governments to intervene and close the gap for such actors to
misuse virtual assets. As cryptocurrencies were not created with
the intent of malfeasance or nefarious activity
The most proactive regulatory actions and institutional efforts
with respect to anti-crime initiatives are those of the United
States, with several key actors (at the federal level) engaging in
concert to stem the risks posed by criminal activity in
cryptocurrencies. These include the Department of Justice (DoJ),
the Financial Crimes Enforcement Network (FinCEN), the
Securities & Exchange Commission (SEC) and Commodities and
Futures Trading Commission (CFTC). Together, they set an
important precedent for regulatory authorities around the world.
Their mature approach has been characterized by striking a
balance between promoting innovation and enhancing
accountability.

However, in recent times, two major jurisdictions which have

expressed an outright hostility towards cryptocurrencies are India
and China. While India had a periodic ban that was later reversed,
China took a gradualist approach from relative permissiveness
and then towards outlawing it outright.
These are two giants in the world economy, with positive
economic growth rates and a youth cohort that has taken a strong
interest in the cryptocurrency space. With the regulatory hostility
of these two governments, the promise of cryptocurrency
legalization worldwide has perhaps diminished slightly. That
said, the maturity of several cryptocurrencies, such as the seminal
Bitcoin, has also laid some doubts to rest regarding the
permanence of the space. Deeper capital markets have evolved,

6
and mainstream institutional investors have also entered the field.
Many mainstream investment banks and institutional investors,
for example, have looked at direct and indirect exposure to
cryptocurrency markets as either a hedge or as a downright
investment class.

Consequently, some beneficial actions are being taken

(mainstreaming, deeper markets, better enforcement). The
general public's smaller investors, who have been severely hurt
by bitcoin falls, have also advocated for regulatory bodies to have
more authority. The most ardent supporters of cryptoanarchism,
the theory that underpins cryptocurrencies, have "stick to their
guns" in regards to the regulation and exchange of digital assets.
In light of the foregoing, the goal of this discussion paper is to
compare and contrast the legal recognition of Bitcoin and other
cryptocurrencies in various national jurisdictions.

7
A map of countries depicting the current legal status of
cryptocurrency:

Source: wikipedia.org
8
Countries' Regulatory Reactions to Cryptocurrencies

The responses of national governments (as well as some

subnational and supranational) to Bitcoin and other
cryptocurrencies are outlined in this section using a region-by-
region method. All of the analysis given here is current as of the
time of writing, and changes to rules can and frequently do so
suddenly. They are also subject to numerous modifications
throughout time. This is a process that is still in progress and has
been seen in many jurisdictions. The Financial Action Task Force
(FATF) may have a significant impact on the area by concretizing
worldwide regulatory norms through its guidelines, as will be
discussed in the next section. In general, permissive, acrimonious,
or hostile attitudes can be used to define regulatory attitudes.

Even in the controversial category, there is a distinction to be

made between certain purposeful legislative limits and the
application of outdated rules; the former openly permits Bitcoin,
while the latter does not. Additionally, the kind of conflict might
vary according to the rules: some areas permit ownership but
forbid transactions or payments; other places permit ownership
but forbid the financial system from taking part in or facilitating
transactions, yet other places permit ownership but forbid mining.
These several types of contentious attitudes vary greatly between
nations.

9
Africa
Bitcoin does not have an ‘illegal’ status in the two largest Sub-
Saharan African economies Nigeria and South Africa. Initially,
the Nigerian Central Bank issued a circular in January 2017 to
Nigerian Banks informing them that it was banned, but this was
revisited through a clarification from the Deputy Director of the
Central Bank stating that it was not in its power to ban virtual
currency use in the same way that it was not in its power to ban
the internet.
The purchase, sale, use, or possession of any cryptocurrencies is
prohibited in Algeria.
In Senegal, Banque Régionale de Marchés (BRM) announced that
it partnered with eCurrency Mint Limited (eCurrency) to provide
a digital currency in the WAEMU. BRM will issue the digital
tender, eCFA, in compliance with the e-money regulations of
BCEAO. The eCFAs will be transacted across all existing
payment platforms and will be equivalent to physical legal tender.
Senegal is a member of the West African Economic Monetary
Union (WAEMU). The Banque Centrale des Etats de l’Afrique
de l’Ouest (BCEAO), is the Central Bank of the WAEMU. The
countries that are members of this union are Benin, Burkina,
Fasco, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and
Togo.
In South Africa, a 2014 position paper stated that virtual currency
had no legal status or regulatory framework. As of 2019, the
South African Reserve Bank has warned that virtual currencies

10
have no legal status and are subject to lack of security, may lose
value, and may not be convertible to legal tender.
The Central Bank of Tunisia exerts, on the State's behalf, the
exclusive privilege of issuing on the territory of the Republic
bearer banknotes and metal coins which are the only legal tender
in the country. In 2015, Tunisia agreed to become the first nation
to offer its national currency for transmittance through
cryptographic technology and in 2016 Tunisia has been reported
to be replacing its self-created eDinar digital currency with a
blockchain-based version, making it the world’s first country to
issue national currency using advanced blockchain technology

In Morocco, the use of cryptocurrencies is outlawed.

Pursuant to the FATF guidelines on cryptocurrencies, Zimbabwe

is now developing a framework. However, banks in Zimbabwe
are banned from providing banking services to anyone dealing
with or settling virtual currencies. In 2018, the Reserve Bank of
Zimbabwe (the country’s central bank) directed all banks to
refrain from providing banking services to anyone dealing with
or settling virtual currencies, citing fears of money laundering and
other criminal activity. Cryptocurrency exchanges are not
affected by the ban for now. The ban is not expected to hinder
peer-to-peer transactions; merely settling between banks.

The Central Bank of Egypt is exploring a ban on cryptocurrency

without licenses. In 2019, a proposed new law for the Central
Bank of Egypt (CBE) would prohibit the creation, promotion, or
operation of platforms that issue or exchange cryptocurrency
without obtaining required licenses. The bill, currently in draft
11
form, would allow the Board of the CBE to promulgate rules
governing the trading and dealing of cryptocurrency.

Oceania:
The Reserve Banks of Australia and New Zealand have both
decided not to penalize the use of Bitcoin, and in Australia,
Bitcoin is now treated ‘just like money’, while in New Zealand
there is no objection to Bitcoin as a ‘store of value.

Australian digital currency exchanges have been subject to

registration and regulation in the country since mid-2018, after
amendments to the Anti-Money Laundering and Counter-
Terrorism Financing Act of 2006. Australia’s primary financial
regulator, the Australian Securities and Investments Commission
(ASIC), does not regulate ‘ICOs’ in principle, but digital assets
could be regulated as ‘financial products’ or financial services’
under Australia’s existing financial services regulatory regime.
To date, there has not yet been a regulated financial product ICO
in Australia. Digital currency transactions are no longer subject
to goods and services taxes (GST) but remain subject to incomes
and capital gains taxes.
New Zealand’s Commerce Commission stated that bitcoin is
covered by New Zealand’s Fair Trading Act and Commerce Act.
There have been Informal warnings about the risks associated
with virtual currencies; and suggestions from the Commerce
Commission that virtual currency may be regulated.

Europe:
12
The EU has been comparatively leger de main vis-a-vis
cryptocurrencies, and Bitcoin isn’t illegal in the EU. There is no
specific legislation on the status of Bitcoin as a monetary device.
However, the sales tax (VAT/GST) is not transposable to
conversion between fiat currencies and Bitcoin. For taxation
purposes the tax vehicles still apply to transactions made in
Bitcoins. In October 2015, the Court of Justice of the European
Union ruled that exchanging traditional currencies for Bitcoin is
exempt from VAT because Bitcoins should be treated as a means
of payment. For the ECB, regulation pertaining to the traditional
financial sector cannot apply as there are no traditional financial
actors, and it classifies Bitcoin as a “convertible decentralized
virtual currency”. The European Banking Authority has advised
banks not to transact in virtual money until a regulatory regime is
in place. With this background, a taskforce was proposed by the
EU Parliament to monitor virtual currencies. At the national level,
all EU member states treat virtual currencies as legal in a general
sense.

Some European countries have been more forthcoming in

promoting its development, including Belarus which has issued
the Decree On the Development of Digital Economy, a
comprehensive crypto-friendly document that stipulates the
interaction of cryptocurrencies with traditional finance, along
with preferential treatment of crypto-developers in terms of tax
exemption, facilitation, and simplification of processes. The
Estonian Ministry of Finance has ruled that there is no legal
obstacle to the usage of Bitcoin-like cryptocurrencies as a
payment method. Traders must therefore identify the buyer when
establishing a business relationship or if the buyer acquires more
than 1,000 euros of the currency in a month. The Norwegian Tax
13
Administration stated in December 2013 that they don't define
Bitcoin as money but regard it as an asset. Profits are subjected to
wealth tax. In business, the use of Bitcoin falls under the sales tax
regulation.

For most EU countries that have exercised rulings, Bitcoin is not

treated as a currency but rather as an asset and is taxed
accordingly. Some European countries do not have a specific
legal framework for cryptocurrencies or virtual assets, including
Greece, Ukraine, Portugal, Spain, and Italy, among others. On
February 26, 2020, a French court (Nanterre Commercial Court)
gave the ruling that a loan involving Bitcoin was a “consumer
loan,” which put Bitcoin in the same category as money and other
financial assets in France for the first time. This ruling helped to
assure local Bitcoin users that they would enjoy the same sorts of
monetary protections under the law.
In Greece, the Bank of Greece has adopted the EBA warnings
regarding virtual currencies.

In Spain, virtual currencies are reportedly taxable as an electronic

payment system under gambling law, but their treatment under
other areas of law is unclear.

Portugal and 21 other countries signed a declaration creating the

European Blockchain Partnership (EBP). The goals of the EBP
are to establish a European Blockchain Services Infrastructure
(EBSI) to support the delivery of cross-border digital public
services while adhering to established standards for security and
privacy. There have also been warnings from the Bank of

14
Portugal about the risks of virtual currency to the general public,
while the Bank has also clarified that it does not regulate bitcoin.

Swiss financial regulator has defined licensing requirements for

bitcoin kiosk operators and created special requirements for
blockchain companies applying for licenses in the country. The
country has also said that virtual currency platforms are subject
to anti-money laundering rules.
In Luxemburg, the issuance of virtual currency is not regulated
“from a monetary point of view.” Financial services providers,
which could include virtual currency businesses, must receive
authorization from the Minister of Finance.
Malta was one of the first countries (in 2018) to adopt a holistic
regulatory framework intended to promote and adopt blockchain,
cryptocurrency, and Distributed Ledger Technologies (DLT).
The European Commission (Commission) is recommending that
Malta increase its AML enforcement efforts to keep up with its
growing crypto and gaming industries. The Commission
commended recent AML efforts by the country but noted the risk
of conflicts of interest for governmental officials and the
understaffing of Malta’s Economic Crimes Unit. The
Commission also asked that Malta looks at its tax system to
prevent aggressive tax planning and tax avoidance.

Beginning January 1, 2020, cryptocurrency exchanges and wallet

providers will need to obtain licensure from BaFin.
Cryptocurrency businesses must comply with existing German
anti-money laundering regulations. Note that this requirement
relates to any entity, including overseas entities that target
15
German customers. The German regulator, BaFin, has also made
amendments in 2020. In November 2020, the German parliament
released draft legislation that would permit the issuance of
electronic bonds, including those issued as security tokens on a
blockchain. The bill removes the requirement of a paper-based
note and replaces it with the entry of the “e-Security” into a
supervised digital register. The register may be decentralized, to
permit the issuance of blockchain-based digital securities, or it
may be a central register that must be run by a licensed central
securities depositary. The registrar license is separate from the
license required for the provision of custody services for crypto
assets. The proposed legislation would permit traditional
securities to be exchanged for e-Securities and vice versa. Virtual
currencies are financial instruments under German law and, more
specifically, are a form of “private money” that can be taxed as
capital. Certain uses may also require a license or permit. Earlier
guidance from the German financial supervisory authority also
suggested virtual currencies are commodities and are subject to
taxation both upon sale of bitcoin and sale of goods in exchange
for bitcoin. Germany has not adopted laws specific to ICOs, but
ICOs are subject to certain existing regulations.
Austria regulates financial services involving virtual currencies
through existing legislation, this is to say that the country does
not have specific legislation for digital assets. According to
the EU Blockchain Forum, Austria has a somewhat hands-off
approach to regulating digital assets. National funding for certain
blockchain-related research has supported some innovations in
the country.

16
In Russia, digital currencies were previously banned as money
surrogates under federal law, however, 2017 has seen a softening
of Russia’s regulation of cryptocurrency. Plans to regulate
cryptocurrency have made headway, and procedures for buying
cryptocurrency are scheduled to be announced by the end of 2017.
On February 2, 2020, the Russian Supreme Court has added the
illicit use of cryptocurrencies to the list of criminal offenses
related to money laundering, introducing new amendments to a
July 2015 AML decree. The ruling does not give a legal definition
to “cryptocurrencies.” According to coverage of the ruling,
converting crypto to fiat is not considered a crime, so courts must
prove that the digital assets in question were obtained by criminal
means.
The Central Bank of Russia has also published a new set of rules
for suspicious transactions, broadly characterizing any
cryptocurrency-linked transaction as a potential money
laundering risk.

The Netherlands does not regulate bitcoin under its Act on

Financial Supervision, but its national bank has released
consumer warnings regarding the use of virtual currency. One
court has ruled that it is a “medium of exchange” but not
electronic money and another court has classified virtual currency
as an “object” subject to seizure.

In 2020, the Serbian government began permitting digital asset

service providers to operate in the country. Companies must
obtain permission from Serbia’s Securities Commission and the
National Bank of Serbia. Previously, Serbia did not consider
Bitcoin or other cryptocurrencies to be legal tender. Serbia’s new
17
“Digital Asset Law” came into effect on December 29, 2020,
which permits digital asset services to operate in the country with
permission from Serbia’s regulators. The law was announced in
October 2020 and was passed in late November. Serbia’s
Securities Commission and National Bank (NBS) are the entities
supervising and enforcing the law. Under the new rules, trading
digital assets will require licensure. The law permits secondary
trading of digital assets, OTC trading, and the use of smart
contracts in secondary trading--but requires an approved white
paper for these activities. Issuers of digital assets can do so
without an approved white paper but will face a limit on the
number of digital assets they can distribute, and issuers must
obtain approval to advertise digital assets within Serbia. The new
law does not apply to mining. It allows miners to acquire digital
assets through mining activities, without licensure. However,
financial institutions already under the supervision of NSB are not
allowed to engage with digital assets, e.g. to convert existing
assets to cryptocurrencies or participate in offering digital assets.
Banks can only interact with digital assets in the limited
circumstance of keeping cryptographic keys.
In Italy, Laws requiring the identification of parties in bitcoin
transactions and granting legal effect to blockchain-based
registers have been proposed in the Italian Parliament, but no
regulation yet. Virtual currency is still not legal tender.
In 2020, Ukraine’s draft Bill on Virtual Assets, a crypto-specific
bill, passed the first stage of the legislative process, receiving 229
“yes” votes out of 340, and has two more hearings before it can
become law. The bill reflects Ukraine’s legislative approach to
18
addressing cryptocurrency specifically, including provisions such
as definitions for virtual assets and ownership of virtual assets and
identifying Ukraine’s Ministry of the Digital Transformation as
the primary regulator for virtual assets. The bill would also
impose registration and compliance requirements on
cryptocurrency service providers. Ukraine’s revenue agency has
published guidance for taxpayers to report digital assets as
intangible property. Cryptocurrency is described in the guidance
in accordance with the definition given by the Financial Action
Task Force (FATF).
Meanwhile, the United Kingdom’s FCA recently issued final
guidance, providing a reframed taxonomy of crypto assets to
provide clarity to market participants. Crypto assets have been
identified as a growing conduit for global money laundering in
HM Treasury’s Economic Crime Plan. In response to this risk,
HM Treasury “has implemented the Fifth Money Laundering
Directive (5MLD) through amending the UK’s Money
Laundering Regulations (MLRs); this designated the FCA
[Financial Conduct Authority] as the AML supervisor for specific
crypto asset activities; which goes beyond the 5MLD to include a
broader set of activities, such as Initial Coin Offerings (ICOs), as
recommended by FATF last year.” The FCA’s AML regime
extends to specific activities, such as exchange, custody, ICOs,
and crypto-ATMs. Firms that undertake activities within the
regime overseen by the FCA must satisfy the FCA as to their
activities.
In September 2018, the Central Bank of Norway announced in a
working paper this month that it is considering developing its own
19
cryptocurrency. The bank also indicated that virtual currencies
are not “money” or “currency” but are assets subject to capital
gains taxes.
The Central Bank of Ireland does not regulate bitcoin. Ireland’s
Revenue Commissioners have released tax-related guidance, and
an inter-departmental government working group has been
formed.
In Poland, virtual currencies are not illegal but the government
does not consider them to be legal tender and it has taken a
relatively strict approach to the regulation of digital assets. The
Polish Financial Supervision Authority (KNF) has issued various
warnings to the public about investing in cryptocurrencies.
Digital assets are subject to capital gains taxes and VAT.
However, Poland has been more accepting of blockchain
technology itself and has funded blockchain pilot projects

East Asia:
China’s ban on ICOs, which began in 2017, is still in effect.
Violations of the prohibition can result in criminal liability.
Holding bitcoin or other cryptocurrencies is not illegal in China,
but the government’s position is that blockchain technology and
cryptocurrencies should support the national economy. As of
2020, China has begun piloting a state-sponsored national digital
currency.
Since September 2021, following a gradualist approach which
involved The People’s Bank of China (PBOC) has issued rulings
in 2013, 2014, 2017, and 2018; with respect to banning,
regulating, or restricting exchanges. The complete ban in China
20
has had a significant impact on the price trajectory of
cryptocurrencies. In China itself, the introduction of the digital
yuan, as a CBDC is seen as the most appropriate substitute for the
social, economic, technological, and cultural features of the
country.
.

In Hong Kong, informal guidance suggests that regulatory

authorities are monitoring virtual currencies, particularly with
regard to money laundering. Virtual currency is considered a
virtual commodity and not legal tender. Hong Kong’s Securities
and Futures Commission has announced plans to regulate virtual
asset portfolio managers, and virtual asset fund distributors, along
with a regulatory sandbox to study virtual assets. In Hong Kong,
Bitcoin use and trading are legal; while Taiwan allows ownership
but does not allow the banking system to participate/facilitate.

Japan is high-regulated but considered to be generally friendly for

digital assets. As of April 2017, cryptocurrency exchange
businesses operating in Japan have been regulated by the Payment
Services Act. Cryptocurrency exchange businesses have to be
registered, keep records, take security measures, and take
measures to protect customers. The MtGox incident was
particularly influential in triggering this stern and comprehensive
Japanese response. The law on cryptocurrency transactions must
comply with the anti-money laundering law; and measures to
protect users-investors. The Payment Services Act defines
“cryptocurrency” as a property value. The Act also states that
cryptocurrency is limited to property values that are stored
electronically on electronic devices, not legal tender. On May 1,

21
2020, Japan’s updated crypto legislation came into effect, which
included a requirement that crypto exchanges be licensed.

South Korea does not have a holistic regulatory framework for

handing digital assets, and the country does not consider
cryptocurrencies to be an asset class. South Korean regulators
appear to be taking a cautious approach to cryptocurrency
regulation and have sought to ensure cryptocurrency companies,
including exchanges, are subject to equivalent anti-money
laundering measures and tax obligations as other forms of
financial intermediaries. In 2020, South Korea passed the first
legislation regarding crypto assets, in the wake of several large
crypto-exchange hacks. The legislation attempts to ensure market
integrity and Financial Action Task Force (FATF) compliance. In
South Korea, statutory-adult Koreans may trade on registered
exchanges using real-name accounts at a bank where the
exchange also has an account. Both the bank and the exchange
are responsible for the Know Your Customer (KYC) process,
verifying the customer's identity and enforcing other anti-money-
laundering provisions.

In Taiwan, financial institutions are not allowed to facilitate

Bitcoin transactions. Taiwanese Regulators have warned the
public that Bitcoin does not have legal protection, "as the
currency is not issued by any monetary authority and is therefore
not entitled to legal claims or guarantee of conversion". In
November 2018, Taiwan’s Legislative Yuan passed an
amendment to the country’s Money Laundering Control Act and
the Terrorism Financing Prevention Act, giving Taiwan’s
Financial Supervisory Commission (FSC) the power to require
operators of virtual currency platforms to implement a “real-
22
name system” requiring users to register their real names. Banks
will also be required to report suspicious anonymous transactions
to regulators. The Central Bank and Financial Supervisory
Commission warned that virtual currencies are not currencies, but
commodities and have no legal protection. Both plan to regulate
virtual currencies. It is illegal to publicly solicit money through
the sale of digital tokens, but some cryptocurrency platforms are
allowed to trade in cryptocurrency. In 2018, the Taiwan
government has taken a more measured tone regarding
cryptocurrency generally and has suggested that it is considering
a more open regulatory approach.

Bitcoin is legal to some degree in many ASEAN countries. In

Singapore, Bitcoin has been referred to as a digital payment token
for purposes of the Payment Services Act. Singapore is
considered to be one of the most “crypto-friendly” jurisdictions.
The country’s position has historically been acceptance and
regulation regarding cryptocurrency. Singapore has a regulatory
framework for managing digital assets, which it continues to
develop. Regulation (including for tax purposes) typically
categories digital tokens into three groups,
(1) payment tokens;
(2) utility tokens, and
(3) security tokens.
Tokens issued and sold in ICOs are treated separately.

In Malaysia, it has been discouraged by the central bank (Bank

Negara Malaysia) but it isn’t actively prohibited. Virtual
currencies were previously not legal tender, but the government
will enforce new cryptocurrency regulations soon.

23
In the Philippines, cryptocurrency issues fall under the central
bank (Bangko Sentral ng Pilipinas) in a general sense, but Bitcoin
and other "virtual currencies" are not recognized by the BSP as
currency as "it is neither issued nor guaranteed by a central bank
nor backed by any commodity.” Exchanges are not regulated by
the Philippines Central Bank or other regulatory authorities in the
country, but The Philippines Securities and Exchange
Commission has proposed draft rules for Initial Coin Offerings.

In Indonesia and Vietnam, it is legal to trade and hold

cryptocurrencies, but Bitcoin is illegal as a payment tool. Under
a February 2019 regulation promulgated by the Indonesian
Commodity Futures Trading Regulatory Agency (Bappebti)
cryptocurrency derivative transactions, and cryptocurrency
exchanges that provide such transactions, may now be subject to
regulatory requirements. This reportedly does not alter the
general position with respect to ‘ICOs.’ In July 2018, Vietnam’s
State Securities Commission (Commission), the country’s
financial security regulatory body, announced that it would not
allow many companies and businesses to engage in virtual
currency business activity. The Commission banned public
companies, investment advisors, and fund management
companies from using or investing in any virtual currency. The
Vietnamese Central Bank has also suspended the import of
cryptocurrency mining hardware.

In Cambodia, it is legal to hold but there is a banking ban on

cryptocurrencies. The buying, selling, trading, and settlement of
cryptocurrency without a license from ‘competent authorities’ is
illegal in Cambodia.

24
For Thailand, locally-based Bitcoin exchanges can only exchange
Digital Currencies for Thai Baht and are required to operate with
a Thailand Business Development Department e-commerce
license. Thailand does not regulate cryptocurrency transactions,
but the position of the SEC in Thailand is that bitcoin is an asset
that can be traded. The SEC does not endorse the status of bitcoin,
and bitcoin is not recognized as legal tender to pay off debt, but
the Bank of Thailand has started to allow banks to open
subsidiaries for crypto dealings but is still banned from directly
dealing with cryptocurrencies.

The Middle East, Central & South Asia:

Bitcoin is not banned, but it is discouraged in Jordan, Saudi
Arabia, and Lebanon. In Israel, its taxation treatment is that of
‘taxable asset’ as opposed to ‘currency’ or ‘financial security’.

The UAE has been influenced by recent FATF guidelines to

amend its regulatory framework to incorporate cryptocurrencies.
Bitcoin is explicitly banned in Bangladesh and Nepal. Nepal’s
Central Bank issued a notice in August 2017 stating that “all
transactions related to or regarding bitcoins are illegal.” Potential
penalties can include civil fines of up to three times the
transaction amount, and a jail term of up to three years.

In Pakistan, cryptocurrencies are illegal in Pakistan and the

government has issued harsh warnings to banks and other
financial institutions against transacting in cryptocurrencies. The
State Bank of Pakistan has maintained a strategic ambiguity about

25
cryptocurrencies since 2018 but should be revisited given the
country’s relationship with the FATF.

In early 2018, the Reserve Bank of India (RBI) announced a ban

on the sale or purchase of cryptocurrency for entities regulated by
RBI. This was pursuant to investigations of fraudulent activities
through a multi-level marketing scheme under OneCoin.
However, in 2019, a petition was filed by the Internet and Mobile
Association of India with the Supreme Court of India challenging
the legality of cryptocurrencies and seeking a direction or order
restraining their transaction. In March 2020, the Supreme Court
of India passed the verdict, overturning the RBI ban on
cryptocurrency trade, in part influenced by the FATF Guidelines.

In Kyrgyzstan, Bitcoin is considered a commodity rather than a

security or currency under the laws of the Kyrgyz Republic, and
so may be legally mined, bought, sold, and traded on a local
commodity exchange. However, the use of Bitcoin as a currency
in domestic settlements is restricted.

Uzbekistan is a crypto-friendly state, in that it has had a decree

(2018) legalizing mining and trading in cryptocurrencies on a tax-
free basis.

North America
Bitcoin is legal in Canada, Mexico, and the United States. In the
United States, the Treasury has classified Bitcoin as a convertible
decentralized virtual currency (2013), the Commodity Futures
Trading Commission has classified Bitcoin as a commodity
(2015), and the IRS taxes Bitcoin as a property. Bitcoin was

26
mentioned in a U.S. Supreme Court opinion (on Wisconsin
Central Ltd. v. United States) regarding the changing definition
of money on 21 June 2018. The Securities & Exchange
Commission (SEC) and Commodities and Futures Trading
Commission (CFTC) of the United States, will set an important
precedent for regulatory authorities around the world. BitLicence
in New York has also been important in setting a high regulatory
bar.

In Canada, companies that deal in virtual currencies are required

to register with the Financial Transactions and Reports Analysis
Centre of Canada (Fintrac), put compliance programs in place,
maintain the necessary records, report transactions that are
suspicious or connected to terrorism, and determine which of their
clients are "politically exposed persons." The rule is extensive
because it covers foreign virtual currency exchangers that accept
Canadian customers. If a company dealing in virtual currencies is
not registered with Fintrac, banks may not open, maintain, or have
a correspondent banking connection with that company. Digital
currency dealers are governed like money services firms.
Some Bitcoin-related business models, including exchanges and
ATMs, are covered by the existing MSB Act, according to the
Quebecian regulator, the Autorite des Marches Financiers. Some
private banks, like Bank of Montreal (BMO) and Toronto-
Dominion (TD), have imposed their own restrictions on using
their credit and debit cards for cryptocurrency transactions.

Canadian lawmakers seem to be taking a lighter approach

towards regulating virtual currencies, with a ‘regulate-and-

27
embrace’ policy, focusing primarily on anti-money laundering
concerns. Virtual currencies are not legal tender in Canada.
No federal law exists in Canada for the regulation of certain
financial transactions, including securities. Each province
passes its own binding laws and provincial regulators have
taken action against certain ‘ICO’ promoters, and the offering
of margin or other forms of derivative products may also be a
focus of regulatory interest.

In Mexico, La Ley Fintech, a complete legal framework, governs

the ownership, exchange, and acquisition of Bitcoin in Mexico.
Virtual currencies are legal for use as payment but the
government does not consider Bitcoin or other cryptocurrencies
to be legal tender. The Bank of Mexico has warned of the risks of
using virtual currencies and is considering regulations that could
ban crypto exchanges.
In 2018, Mexico adopted a law requiring fintech companies to
obtain a license from the Mexican National Banking and
Securities Commission (CNBV) if they hold custody of users’
cryptocurrency or fiat. In addition, the new law created a two-year
“sandbox” period for fintech startups. The CNBV issued the first
license on January 22, 2020.

South & Central America

A number of nations have outlawed bitcoin, notably Bolivia
(2014) and Ecuador (2015). Other nations, including Brazil,
Chile, and Colombia, do not have laws governing them. The
Argentine Civil Code treats Bitcoin as either a "good" or a
"thing," however it is not recognized as legal tender in Argentina.
28
The use of Bitcoins is not restricted in Chile. Venezuela has taken
a particularly proactive stance in the cryptocurrency arena by
developing the Petro, a state-backed digital instrument whose
emission is backed by the nation's oil holdings. In contrast to
Caribbean nations like Jamaica and Trinidad & Tobago,
Nicaragua and Costa Rica explicitly treat Bitcoin as legal.

The Central Bank or the Chilean Monetary Authority do not

appear to regulate cryptocurrencies. The Central Bank of Chile
has maintained the position that cryptocurrencies cannot
substitute traditional money but they are not outlawed or
regulated and cryptocurrency exchanges operate in Chile.
Colombia’s financial regulatory body (SFC) has prohibited banks
from working with virtual currency. The SFC and the Central
Bank have also indicated that bitcoin is not a currency.

The Central Bank of Brazil has not yet regulated virtual

currencies but has issued now-standard warnings about their use.
Brazil’s tax authority announced new regulations for
cryptocurrency exchanges offering services to customers in
Brazil, which will take effect in September 2019.
In Argentina, virtual currencies are not legal tender under the
country’s National Constitution, which designates the Central
Bank as the only authority that may issue legal tender.
Additionally, Argentina’s securities regulator has stated in the
past that ICOs aren’t per se regulated by the agency, but that
certain tokens, depending on their structure, could meet the
securities definition under the regulations.

29
On June 5, 2019, the Cayman Islands Proceeds of Crime
(Amendment) Law, 2019 was signed into law. While there
appears to be no specific legislation geared toward regulating
cryptocurrencies, there are laws that in certain circumstances may
be applicable, such as AML laws, securities laws, and electronic
transaction laws, among others.
As of May 2019, the Securities Commission of the Bahamas has
presented a draft of a new bill that seeking to regulate non-
security token offerings.

30
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