Global Crypto Rules: How Countries Regulate Digital Assets

As cryptocurrencies grow from speculative assets into a mainstream investment class, governments worldwide are working on regulating them. Some have introduced clear rules to protect users, while others remain undecided. Approaches vary greatly, with countries addressing aspects like security, taxation, and user protections.

The European Union has taken a lead in regulating crypto by enforcing rules to stop illegal activities. Its Markets in Crypto-Assets Regulation (MiCA), effective since 2023, requires crypto service providers to get licensed and comply with anti-money laundering (AML) laws. These measures aim to protect users and improve transparency, making the EU a model for crypto regulation.

In the United States, progress is slower, with regulators and the crypto industry clashing in courts. The SEC, empowered to oversee crypto under a 2022 framework, has taken legal action against companies like Ripple, Coinbase, and Binance. Recent rulings, such as the partial approval of Bitcoin and Ethereum ETFs in 2024, show evolving attitudes. However, as SEC Chair Gary Gensler said, the approval of ETFs doesn’t reflect broader acceptance of crypto assets as securities.

China maintains a strict stance. It banned crypto enterprises in 2021 and outlawed Bitcoin mining earlier. Cryptocurrencies are entirely prohibited, with the government focused on controlling financial systems.

Canada has embraced regulation more openly, being the first to approve Bitcoin ETFs and requiring crypto platforms to register with authorities. Crypto investment firms are classified as money service businesses, taxed like commodities, and monitored for AML compliance.

In the United Kingdom, crypto assets became regulated financial instruments in 2023 under the Financial Services and Markets Act. Exchanges must comply with AML, Know Your Client (KYC), and financial sanction rules. Crypto derivatives trading is banned, but gains from trading are taxed depending on the activity.

Japan recognizes cryptocurrencies as legal property under the Payment Services Act (PSA). Exchanges must register with the Financial Services Agency (FSA) and follow AML laws. Trading gains are taxed as income, and additional rules were introduced to prevent money laundering.

Australia classifies crypto as legal property, subject to capital gains tax. Exchanges must register with the financial regulator AUSTRAC. ICOs are strictly regulated, and privacy coins are banned. A licensing framework is being developed and may include the launch of a central bank digital currency (CBDC).

Singapore regulates exchanges under the Payment Services Act and recently introduced a framework for stablecoins. The country taxes crypto companies for business gains but doesn’t impose long-term capital gains taxes, boosting its reputation as a crypto-friendly jurisdiction.

South Korea enforces strict rules, requiring exchanges to register with the Financial Intelligence Unit. The 2023 Virtual Asset Users Protection Act defines the legal uses of crypto and strengthens user safeguards. Privacy coins are banned.

India applies a 30% tax on crypto gains and a 1% transaction tax but hasn’t fully legalized or banned cryptocurrencies. While regulations are being debated, the government focuses on defining crypto assets and taxing them.

Brazil legalized cryptocurrencies as a payment method in 2023 under its “Legal Framework for Virtual Assets.” The Central Bank oversees crypto exchanges and enforces compliance to prevent misuse.

In the European Union, crypto is legal but regulated differently across member states. MiCA and other AML directives have standardized reporting requirements and improved consumer protections. Tax rates vary between countries, ranging from 0% to 48%.

Countries are steadily creating policies to regulate cryptocurrency. Some are leading with innovative frameworks, while others remain cautious, waiting to see how this evolving asset class develops.