In recent years, as the encryption market has increasingly attracted attention from various sectors, the demand for regulation of the encryption market has become ever more urgent. Different countries and regions, based on their own economic, financial systems, and strategic considerations, have introduced distinctive regulatory policies. From the ongoing battle between the US SEC and encryption enterprises to the EU’s comprehensive regulation of the encryption asset market through the MiCA legislation, and the difficult balancing act of emerging economies between innovation and risk, the global landscape of encryption regulation is presenting unprecedented complexity and diversity. At this moment, let us unfold the world map of encryption regulation together and explore the hidden connections beneath this global regulatory wave.

In the map, we categorize countries into four categories: business hubs, fully compliant, partially compliant, and non-compliant. The criteria for judgment include the legal status of encryption assets (50%), the regulatory framework and the implementation of legislation (30%), and the situation of exchanges (20%).

Asia

Greater China Region

Hong Kong, China

In Hong Kong, cryptocurrency assets are considered “virtual assets” rather than currency, and are regulated by the Securities and Futures Commission (SFC). For stablecoins, Hong Kong implements a licensing system, and the “Stablecoin Ordinance” restricts licensed institutions from issuing Hong Kong dollar stablecoins. As for other tokens, NFTs are regarded as virtual assets; governance tokens are regulated according to the rules of “collective investment schemes.”

In terms of regulatory framework, Hong Kong amended the Anti-Money Laundering Ordinance in 2023, requiring cryptocurrency exchanges to obtain licenses. Additionally, the Securities and Futures Commission (SFC) has also issued rules for virtual asset ETFs. The SFC is responsible for issuing licenses, and currently, HashKey and OSL are the first two to obtain licenses, with over 20 institutions currently applying. In terms of exchange implementation, licensed exchanges are allowed to serve retail investors. Notably, Bitcoin and Ethereum ETFs have been listed in Hong Kong in 2024.

Hong Kong aims to consolidate its status as an international financial center by actively embracing Web3 and virtual assets, particularly by allowing retail trading and launching virtual asset ETFs, in stark contrast to the strict bans in mainland China. The Hong Kong Securities and Futures Commission mandates licensing for exchanges and permits licensed exchanges to serve retail investors, while also launching Bitcoin/Ethereum ETFs. Against the backdrop of a complete ban on encryption in mainland China, Hong Kong has chosen a distinctly different path, actively building a clear and regulated virtual asset market. Allowing retail participation and launching ETFs are key measures in attracting global encryption capital and talent, enhancing market liquidity, and international competitiveness.

Taiwan, China

Taiwan, China maintains a cautious attitude towards cryptocurrency, does not recognize its status as currency, but regulates it as a speculative digital commodity, gradually improving the framework for anti-money laundering and security token offerings (STO).

Legal Status of Cryptocurrency Assets: The Taiwan region currently does not recognize cryptocurrencies as currency. Since 2013, the stance of the Central Bank of Taiwan and the Financial Supervisory Commission (FSC) has been that Bitcoin should not be considered as currency, but rather as a “highly speculative digital virtual commodity.” As for tokens, such as NFTs and governance tokens, their legal status has not been clearly defined; however, in practice, NFT transactions are required to declare capital gains tax. Security tokens are recognized by the FSC as securities and are regulated under the Securities Exchange Act.

Regulatory framework: Taiwan’s Anti-Money Laundering Act regulates virtual assets. The FSC has ordered that since 2014, local banks are not allowed to accept Bitcoin or provide any services related to Bitcoin. There are specific regulations in Taiwan for Security Token Offerings (STO), differentiating the regulatory path based on the issuance amount (NT$30 million). The FSC also announced in March 2025 that it is drafting a law specifically for Virtual Asset Service Providers (VASP), aiming to transition from a basic registration framework to a comprehensive licensing system.

Licensing: In 2024, the FSC introduced new regulations under the Anti-Money Laundering Act, requiring VASPs to register with the FSC before providing any virtual asset-related services (such as operating exchanges, trading platforms, transfer services, custody services, or underwriting activities). Failure to register may result in criminal penalties. For STOs, the issuer must be a publicly held company registered in Taiwan, and the STO platform operator must obtain a securities dealer license and have at least 100 million New Taiwan Dollars in paid-in capital.

Mainland China

Mainland China has imposed a comprehensive ban on the trading of encryption assets and all related financial activities. The People’s Bank of China believes that cryptocurrencies disrupt the financial system and facilitate criminal activities such as money laundering, fraud, pyramid schemes, and gambling.

In judicial practice, virtual currencies have corresponding property attributes, and there is basically a consensus formed in judicial practice. Civil case law generally holds that virtual currencies possess characteristics such as exclusivity, controllability, and circulation in possession, similar to virtual goods, acknowledging that virtual currencies have property attributes. Some cases cite Article 127 of the Civil Code, “Where the law provides for the protection of data and network virtual property, it shall be implemented in accordance with its provisions,” and refer to Article 83 of the “Minutes of the National Court Financial Trial Work Conference,” which states that “virtual currencies possess some attributes of network virtual property,” recognizing virtual currencies as a specific kind of virtual property that should be protected by law. In the criminal field, recent cases entered into the database of the Supreme People’s Court have also clearly stated that virtual currencies belong to property in the sense of criminal law, possessing property attributes in the sense of criminal law.

Since 2013, banks in mainland China have been prohibited from engaging in cryptocurrency activities. In September 2017, China decided to gradually close all domestic virtual currency exchanges within a limited timeframe. In September 2021, the People’s Bank of China issued a notice that comprehensively prohibited services related to virtual currency settlement and providing information to traders, and it was clarified that engaging in illegal financial activities would be subject to criminal liability. In addition, cryptocurrency mining farms have also been shut down, and new mining farms are not allowed to be established. Overseas virtual currency exchanges providing services to residents in China via the internet are also considered illegal financial activities.

Singapore

Legal Status of Cryptocurrency Assets: Singapore views cryptocurrency assets as “payment instruments/goods,” primarily based on its Payment Services Act. For stablecoins, Singapore implements a licensed issuance system, requiring issuers to maintain a 1:1 reserve and conduct monthly audits as mandated by the Monetary Authority of Singapore (MAS). For other tokens, such as NFTs and governance tokens, Singapore adopts a case-by-case determination principle: NFTs are generally not considered securities, while governance tokens that carry dividend rights may be considered securities.

Cryptocurrency Regulatory Framework: The Financial Services and Markets Act, enacted in Singapore in 2022, regulates exchanges and stablecoins. However, the recently effective DTSP regulations significantly reduce the scope of license compliance, which may affect the offshore operations of crypto projects and exchanges. The Monetary Authority of Singapore (MAS) typically issues three types of licenses for crypto businesses: money-changing, standard payment, and major payment institutions. Currently, more than 20 institutions have obtained licenses, including Coinbase. Many international exchanges choose to establish regional headquarters in Singapore, but these institutions will be affected by the DTSP regulations.

South Korea

In South Korea, encryption assets are regarded as “legal assets” but are not considered legal tender, primarily based on the provisions of the Act on Reporting and Use of Specific Financial Information (the “Specific Financial Information Act”). Currently, the draft of the Digital Asset Basic Act (DABA) is actively being promoted, which is expected to provide a more comprehensive legal framework for encryption assets. The existing Specific Financial Information Act mainly focuses on anti-money laundering regulations. For stablecoins, the DABA draft proposes to require transparency in reserves. However, for other tokens, such as NFTs and governance tokens, their legal status has not yet been clarified: NFTs are currently regulated as virtual assets, while governance tokens may be classified as securities.

South Korea implements a real-name trading platform licensing system, and currently, five major exchanges including Upbit and Bithumb have obtained licenses. In terms of exchange establishment, the South Korean market is mainly dominated by local exchanges, and foreign exchanges are prohibited from directly serving South Korean residents. At the same time, the draft of South Korea’s Digital Asset Basic Law (DABA) is being promoted, which aims to require transparency in stablecoin reserves. This strategy not only protects local financial institutions and market share but also facilitates regulatory authorities in effectively monitoring domestic trading activities.

Indonesia

Indonesia is experiencing a shift in the regulation of encryption assets from the Commodity Futures Trading Regulatory Agency (Bappebti) to the Financial Services Authority (OJK), signaling a more comprehensive financial regulation.

Legal Status of Encryption Assets: The legal status of encryption assets in Indonesia has not yet been clarified. With the recent transfer of regulatory authority, encryption assets have been classified as “digital financial assets.”

Regulatory Framework: Previously, the Indonesian Commodity Law regulated exchanges. However, the recently issued OJK Regulation No. 27 of 2024 (POJK 27/2024) transfers the regulatory authority over encryption asset trading from Bappebti to the Financial Services Authority (OJK), and this regulation will take effect on January 10, 2025. This new framework sets strict capital, ownership, and governance requirements for digital asset exchanges, clearing houses, custodians, and traders. All licenses, approvals, and product registrations previously issued by Bappebti remain valid as long as they do not conflict with current laws and regulations.

Licensing: The licensing authority has been transferred from Bappebti to OJK. The minimum paid-in capital for encryption asset traders is 100 billion Indonesian rupiah, and they must maintain at least 50 billion Indonesian rupiah in equity. Funds used for paid-in capital must not originate from illegal activities such as money laundering, terrorism financing, or financing of weapons of mass destruction. All digital financial asset trading providers must fully comply with the new obligations and requirements of POJK 27/2024 by July 2025.

Exchange landing situation: Local exchanges such as Indodax are actively operating in the area. Indodax is a regulated centralized exchange that offers spot, derivatives, and over-the-counter (OTC) services, and requires users to comply with KYC.

Thailand

Thailand is actively shaping its encryption market by encouraging compliant trading through tax incentives and a strict licensing system, solidifying its position as a global financial center.

Legal Status of Encryption Assets: In Thailand, owning, trading, and mining cryptocurrencies is completely legal, and profits must be taxed according to Thai law.

Regulatory Framework: Thailand has established the “Digital Asset Act”. Notably, Thailand has approved a five-year exemption from capital gains tax on cryptocurrency sales revenue conducted through licensed encryption asset service providers, a policy that will last from January 1, 2025, to December 31, 2029. This measure aims to position Thailand as a global financial center and encourage residents to trade on regulated exchanges. The Securities and Exchange Commission (SEC) of Thailand is responsible for regulating the encryption market.

Licensing: The Thai SEC is responsible for issuing licenses. Exchanges must obtain official permission and register as a limited or public company in Thailand. Licensing requirements include minimum capital (50 million THB for centralized exchanges, 10 million THB for decentralized exchanges) and board members, executives, and major shareholders must meet the “fit and proper” standards. KuCoin has obtained the SEC license through acquisition.

Exchange landing situation: Local exchanges such as Bitkub are active in the area and have the highest cryptocurrency trading volume in Thailand. Other major licensed exchanges include Orbix, Upbit Thailand, Gulf Binance, and KuCoin TH. The Thai SEC has taken action against five global encryption exchanges, including Bybit and OKX, to prevent them from operating in Thailand because they have not obtained local licenses. Tether has also launched its tokenized gold digital asset in Thailand.

Japan

Japan is one of the first countries in the world to clearly recognize the legal status of encryption currency, with a mature and prudent regulatory framework.

Legal status of encryption assets: In the “Payment Services Act”, encryption assets are recognized as “legal means of payment”. For stablecoins, Japan implements a strict banking/trust monopoly system, requiring them to be pegged to the yen and redeemable, while clearly prohibiting algorithmic stablecoins. As for other tokens, such as NFTs, they are regarded as digital goods; governance tokens may be classified as “collective investment plan rights”.

Regulatory Framework: Japan officially recognizes encryption assets as a legal means of payment through the revision of the Payment Services Act and the Financial Instruments and Exchange Act (2020). The Financial Services Agency (FSA) is responsible for regulating the encryption market. The revised Payment Services Act also added a “domestic holding order” clause, allowing the government to require platforms to keep a portion of user assets within Japan when necessary to prevent the risk of asset outflow. In terms of licensing, the FSA is responsible for issuing exchange licenses, and there are currently 45 licensed institutions. Key requirements for obtaining a cryptocurrency license in Japan include: having a legal entity and office locally, meeting minimum capital requirements (over 10 million yen with specific capital holding regulations), complying with AML and KYC rules, submitting detailed business plans, and conducting ongoing reporting and audits.

Exchange landing situation: The Japanese market is primarily dominated by local exchanges such as Bitflyer. If international platforms want to enter the Japanese market, they usually need to do so through joint ventures (such as Coincheck).

Europe

European Union

As one of the jurisdictions with relatively完善 judicial regulation in the global encryption field today, Europe is becoming the primary compliance destination for many encryption projects. The EU has demonstrated its leadership as a significant global jurisdiction in the field of cryptocurrencies by establishing a unified regulatory framework through the Markets in Crypto-Assets Regulation (MiCA).

Legal Status of Encryption Assets: Under the MiCA framework, encryption assets are defined as “legal payment instruments, but not legal tender.” For stablecoins, MiCA implements strict regulations, requiring them to have a 1:1 fiat currency peg and sufficient reserves, and only licensed institutions are allowed to issue them. MiCA regulates stablecoins as asset-referenced tokens (ARTs) and electronic money tokens (EMTs). For other tokens, such as non-fungible tokens (NFTs) and governance tokens, the EU adopts a categorized regulatory approach: NFTs are generally considered to be “unique digital assets” and are exempt from securities rules, while governance tokens are regarded as securities based on their functions and the rights they confer. MiCA currently does not cover security tokens, NFTs, and central bank digital currencies (CBDCs).

Regulatory Framework: The European Union passed the MiCA legislation in June 2023, with stablecoin rules coming into effect early in June 2024, while the legislation will be fully effective by December 30, 2024. This legislation applies to 30 countries in Europe, including 27 EU member states as well as Norway, Iceland, and Liechtenstein from the European Economic Area. MiCA aims to address issues such as legal ambiguity, risks associated with stablecoins, and insider trading, by providing unified rules to protect investors, maintain market integrity, and ensure financial stability. It lays out detailed provisions regarding the issuance of encryption assets, the authorization and operation of service providers, management of reserves and redemptions, and anti-money laundering (AML) regulations. Additionally, MiCA integrates the travel rules of the Transfer of Funds Regulation (TFR), requiring crypto asset service providers (CASP) to include sender and receiver information in each transfer to enhance traceability.

Licensing: MiCA adopts a “single license, universally applicable” model, which means that a CASP only needs to obtain authorization in one member state to operate legally across all member states, greatly simplifying the compliance process. CASP must obtain authorization from its national regulatory authority. Licensing requirements include a good reputation, capability, transparency, data protection, and compliance with the minimum capital requirements set out in Annex IV of MiCA, which range from €15,000 to €150,000 depending on the type of service. CASP is also required to have a registered office in an EU member state and at least one director must be a resident of the EU.

Stablecoin landing situation: Circle’s USDC and EURC have obtained MiCA compliance approval and are regarded as stablecoins that meet EU standards. Tether (USDT) has faced delisting actions by major exchanges such as Coinbase and Binance for its users in the EU due to non-compliance with MiCA’s strict stablecoin regulations.

United Kingdom

After Brexit, the UK did not completely adopt MiCA, but instead chose an independent yet equally comprehensive regulatory path aimed at maintaining its competitiveness as a global financial center.

Legal Status of Cryptocurrency Assets: In the UK, cryptocurrency assets are explicitly regarded as “personal property,” a legal status that has been confirmed in the parliamentary bill of 2024. This bill aims to provide digital assets with the same legal protections as traditional property, thereby enhancing certainty for owners and traders. For stablecoins, the UK adopts a prudent regulatory approach, requiring them to obtain approval from the Financial Conduct Authority (FCA), and the reserve assets must be held in segregated custody. As for other tokens, such as NFTs, they are also considered property according to court cases. The legal status of governance tokens is determined based on their specific use, and they may be classified as securities or utility tokens.

Regulatory Framework: The Financial Services and Markets Bill (2023) has included encryption assets within the regulatory scope and revised the definition of “designated investments” in the Financial Services and Markets Act 2000 to include encryption assets. The Bank of England has also synchronized regulations for stablecoins, treating them as digital payment tools and requiring issuers to obtain FCA authorization. Additionally, the Economic Crime and Corporate Transparency Act 2023 grants law enforcement agencies the power to freeze and recover illegal encryption assets. The Treasury has also released detailed proposals aimed at creating a financial services regulatory system for encryption assets, including new regulated activities such as “operation of encryption asset trading platforms.”

Licensing: The FCA is responsible for issuing relevant licenses. Companies engaged in encryption asset businesses, including operating trading platforms, trading encryption assets as a principal, or providing custody services, must obtain authorization from the FCA. Although there is currently no mandatory cryptocurrency exchange license in the UK, encryption asset enterprises must register with the FCA and comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. Registration requirements include registering a company in the UK, having a physical office, maintaining detailed records, and appointing a resident director.

Russia

Legal Status of Encryption Assets: Russia classifies encryption assets as “property” for the purpose of confiscation, while also stating that DFA “is not a means of payment,” and the central bank does not recognize cryptocurrency as a means of payment. The legal framework in Russia distinguishes between digital financial assets (DFA) and digital currency. DFA is defined as digital rights, including monetary claims or rights related to securities, based on distributed ledger technology. According to the law, DFA is not considered a means of payment. The Federal Law No. 259-FZ, promulgated on July 31, 2020, regulates the issuance and circulation of DFA. In addition, this law also recognizes hybrid rights, which simultaneously include DFA as well as rights to require the transfer of goods, intellectual property, or services.

Industry landing situation: As an energy powerhouse, the encryption mining industry is quite prevalent in Russia, and the Russian government will implement two bills related to cryptocurrency mining in October and November 2024, introducing legal definitions and registration requirements for mining businesses. According to the new legislation, only registered Russian legal entities and individual entrepreneurs are allowed to engage in cryptocurrency mining. Individual miners can operate without registration as long as their energy consumption does not exceed the limits set by the government.

Despite these laws, since the end of 2024, only 30% of cryptocurrency miners have registered with the Federal Tax Service, which means that 70% of miners remain unregistered. Measures to encourage registration include harsher penalties, such as a new bill that increases fines for illegal mining from 200,000 rubles to 2,000,000 rubles (approximately $25,500). Law enforcement actions are underway, and recent reports indicate that illegal mining farms have been shut down and equipment confiscated. The Russian Ministry of Internal Affairs has opened cases on such matters under Article 165 of the Russian Criminal Code.

Switzerland

Switzerland has always been at the forefront of cryptocurrency regulation, known for its flexible token classification and support for blockchain innovation.

Legal Status of Cryptocurrency Assets: Although cryptocurrencies are legal in Switzerland, there are no specific regulations regarding the buying and selling of virtual cryptocurrency assets or their use as a means of payment for goods and services. Therefore, these activities generally do not require special financial market licenses. The Swiss Financial Market Supervisory Authority (FINMA) classifies cryptocurrency assets based on their economic and practical use, primarily into payment tokens, utility tokens, and asset tokens, and regulates them accordingly. FINMA points out that these categories are not mutually exclusive and hybrid tokens may exist. Asset tokens are generally considered securities, while utility tokens are not considered securities if they have a practical function at the time of issuance, but may be regarded as securities if they have an investment purpose.

Regulatory Framework: Switzerland passed the Blockchain Act in 2020, which comprehensively defines token rights and amends several existing federal laws to integrate Distributed Ledger Technology (DLT). FINMA has applied anti-money laundering laws to Virtual Asset Service Providers (VASP) and issued Travel Rule guidelines in August 2019, which took effect on January 1, 2020. Additionally, the Act improves the framework for bookkeeping securities on the blockchain and increases legal certainty in bankruptcy law by clearly stipulating the segregation of encryption assets in the event of bankruptcy.

Licensing: FINMA is responsible for issuing VASP licenses. Providing custody, exchange, trading, and payment services for payment tokens falls under the jurisdiction of anti-money laundering legislation, and relevant service providers must join a self-regulatory organization (SRO) in advance. In certain specific cases, a FinTech license may be sufficient to replace a banking license, thereby reducing licensing requirements. The requirements for obtaining a Swiss encryption license include establishing a legal entity in Switzerland, meeting capital adequacy requirements (ranging from 20,000 to 100,000 Swiss francs depending on the license type), implementing AML and KYC procedures, and complying with FATF travel rules. Zug has also piloted a “encryption-friendly” regulatory sandbox. Traditional banks like ZKB and exchanges like Bitstamp are licensed to provide encryption services.

America

United States

The regulatory landscape for encryption assets in the United States shows significant interstate differences and a lack of unified legislation at the federal level, leading to high market uncertainty. However, with the rise of Trump and the turnover of the SEC, the push for policy has accelerated significantly, and federal cryptocurrency regulation bills are already in the pipeline.

Legal Status of Cryptocurrency Assets: The legal status of cryptocurrency assets in the United States shows significant interstate differences. At the federal level, the Internal Revenue Service (IRS) classifies them as “property,” while New York State defines them as “financial assets.” For stablecoins, the GENIUS bill draft proposes that payment stablecoins should not be considered securities, but requires that they must have 100% high liquidity reserves. For other tokens, such as NFTs and governance tokens, the Securities and Exchange Commission (SEC) leads their classification, with NFTs potentially being classified as securities, while governance tokens are mostly recognized as securities.

Regulatory Framework: Currently, there is no unified cryptocurrency legislation at the federal level in the United States. The SEC primarily regulates tokens under securities laws. In addition, New York has a BitLicense regime. The GENIUS stablecoin bill is currently under consideration. In terms of licensing, the U.S. mainly implements state-level licenses (such as the New York Department of Financial Services NYDFS) and registration for Money Services Businesses (MSB) for anti-money laundering purposes. For example, New York has a strict BitLicense regime that requires cryptocurrency businesses operating in the state to obtain this license. Many other states have also enacted or are considering their own cryptocurrency legislation, such as some states that have amended the Uniform Commercial Code (UCC) to accommodate digital assets or have imposed specific requirements on operators of cryptocurrency self-service terminals. Furthermore, cryptocurrency businesses engaged in money transmission, exchange, and other services need to register as Money Services Businesses (MSB) with FinCEN and comply with federal anti-money laundering and anti-terrorism financing requirements. This includes implementing KYC procedures, monitoring suspicious transactions, and reporting them.

Exchange landing situation: Major cryptocurrency trading platforms such as Coinbase, Kraken, and Crypto.com are operating in compliance in the United States, and Binance US has also recently opened the USD deposit feature for the US region. However, due to previous regulatory uncertainties, some international cryptocurrency exchanges have chosen not to enter the US market or only provide limited services. The SEC has also taken enforcement actions against some exchanges that claimed to operate unregistered securities trading in previous administrations.

El Salvador

El Salvador has gone through a unique journey regarding the legal status of encryption assets. The country recognized Bitcoin as legal tender in 2022, but later abandoned this position due to pressure from the International Monetary Fund (IMF). Currently, Bitcoin is legally not considered legal tender, but private use is still allowed after reforms in 2025.

In terms of regulatory framework, El Salvador has enacted the “Digital Assets Issuance Law” (2024). The National Digital Assets Commission (NCDA) is responsible for regulation and plans to issue licenses. However, the country has not yet established a comprehensive licensing system. Although the government actively promotes taxation of cryptocurrencies, there are currently no mainstream exchanges operating on a large scale.

Argentina

Argentina’s severe economic instability and high inflation have driven the widespread adoption of encryption, prompting the government to gradually improve its regulatory framework, particularly concerning virtual asset service providers (VASP).

Legal Status of Encryption Assets: In Argentina, cryptocurrencies are legal, allowing their use and trading, but due to the constitutional provision that the central bank is the sole issuer of currency, cryptocurrencies are not considered legal tender. Encryption assets can be classified as currency for trading purposes, and contracts can be settled using encryption assets. Currently, there is no specific legislation in Argentina to clarify the legal status of stablecoins and tokens (such as NFTs and governance tokens).

Regulatory Framework: Despite the new government (President Milei) supporting encryption, there is currently no specific cryptocurrency legislation. However, Argentina enacted Law No. 27739 in 2024, incorporating virtual asset service providers (VASP, referred to as PASV in Argentina) into its legal and financial framework. This framework mandates VASP to comply with anti-money laundering (AML) and know your customer (KYC) processes to combat money laundering and regulate the industry, aligning with the international standards set by the Financial Action Task Force (FATF).

Licensing: Starting in 2024, VASP must register with the Argentine financial regulatory authority Comisión Nacional de Valores (CNV) to provide encryption services. Registration requirements include: screening and verifying customer identities, reporting new customer registrations, conducting risk assessments, maintaining detailed records (including transaction and customer data), monitoring suspicious transactions, and establishing internal controls. Entities that do not comply with the regulations will face fines, legal action, or revocation of licenses.

Middle East

United Arab Emirates

Legal Status of Encryption Assets: The UAE has adopted a proactive approach towards cryptocurrencies and blockchain technology, aiming to position itself as a global center for financial technology and digital innovation. Under a clearly defined regulatory framework, cryptocurrencies are legal in the UAE. The Dubai Financial Services Authority (DFSA) defines encryption tokens as digital representations of value, rights, or obligations that can be used as a medium of exchange, for payment, or for investment purposes. It explicitly excludes “excluded tokens” and “investment tokens.” Only encryption tokens recognized by the DFSA are allowed for use in the DIFC, with limited exceptions. The Abu Dhabi Global Market (ADGM) classifies stablecoins as virtual assets when they belong to regulated activities.

Regulatory framework: The main regulatory authorities in the UAE include:

• Central Bank of the UAE (CBUAE): Regulates financial activities within the UAE, including cryptocurrency trading and banking services, to ensure financial stability and consumer protection. Responsible for overseeing the transactions from fiat currency to encryption.
• Securities and Commodities Authority (SCA): Regulates the financial markets within the UAE, including digital securities and commodities. Collaborates with the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) and the Virtual Assets Regulatory Authority (VARA) of Dubai to maintain consistent standards.
• Virtual Assets Regulatory Authority (VARA): Dubai’s dedicated regulatory authority for virtual assets, established in 2022. Focused on compliance, investor protection, and market stability.
• Dubai Financial Services Authority (DFSA): Regulates financial services involving encryption tokens within the Dubai International Financial Centre (DIFC).
• Abu Dhabi Global Market (ADGM): It has a comprehensive regulatory framework for virtual assets, digital securities, and derivatives within its financial free zone, supervised by the Financial Services Regulatory Authority (FSRA).

This collaborative regulatory approach ensures that digital assets are integrated into the legal system, facilitating innovation while preventing abuse.

Licensing: In terms of licensing, Dubai VARA 2.0 (June 2025) introduces multiple updates, including strengthened margin trading controls (limited to qualified and institutional investors, retail leveraged products are prohibited, VASP must adhere to strict collateral management, monthly reporting, and mandatory liquidation mechanisms), formal recognition of Asset Reference Virtual Assets (ARVA), regulation of token distribution (issuance/distribution requires VARA permission, white papers must be transparently disclosed and misleading advertising is prohibited), establishment of a structured licensing system for eight core activities (consulting, brokerage trading, custody, etc.) (each activity requires separate licensing, with clear capital adequacy, risk control, and other requirements), and enhanced supervision measures (expanding on-site inspections, quarterly risk assessments, fines, and criminal referrals, with a transition period of 30 days, full enforcement by June 19, 2025); Abu Dhabi Global Market (ADGM) FSRA oversees the enforcement of virtual asset regulations, with licensing requirements that include clearly defining service types (custody, trading, etc.), compliance with capital/anti-money laundering/cybersecurity standards, submission of business plans and other documents, and the 2025 revised version simplifies the ‘Accepted Virtual Assets (AVA)’ certification process, grants FSRA product intervention rights, and prohibits privacy tokens and algorithmic stablecoins; Dubai Financial Services Authority (DFSA) regulates cryptocurrency-related financial services within the DIFC, requiring tokens to meet identification standards such as regulatory status and transparency, stablecoins must be price-stable, reserve-isolated, and verified monthly, privacy/algorithm tokens are prohibited, and mainstream tokens such as Bitcoin have been identified, initiating a tokenization regulatory sandbox.

Saudi Arabia

Saudi Arabia has taken a cautious stance on cryptocurrency, with its regulatory framework influenced by both Islamic law principles and the maintenance of financial stability.

Legal Status of Cryptocurrency Assets: Saudi Arabia has adopted a cautious attitude towards cryptocurrency, largely due to restrictions related to Islamic law. The banking system completely prohibits the use of cryptocurrency, and financial institutions are also banned from engaging in cryptocurrency transactions. Private ownership of cryptocurrency is not prosecuted, but trading and exchange are strictly limited. The Saudi Arabian Monetary Authority (SAMA) issued a warning about the risks of cryptocurrency in 2018 and tightened the ban on cryptocurrency financial transactions in 2021. Religious interpretations (for example, the fatwa issued by Dar al-Ifta, declaring it haram due to fraud and lack of real collateral) have influenced these bans. Some stablecoins or tokens are considered halal (permissible) if they are linked to real assets.

Regulatory Framework: The Saudi Arabian Monetary Authority (SAMA) and the Capital Market Authority (CMA) emphasize a “prudent approach” to cryptocurrency innovation, balancing technological advancement with financial system stability. In July 2024, Mohsen AlZahrani was appointed to lead SAMA’s virtual asset initiative, highlighting its commitment to the controlled integration of fintech innovations. This is part of a broader regulatory shift aimed at avoiding a comprehensive ban, instead engaging with global trends and regional success stories (such as the UAE’s VARA system). SAMA is actively promoting the adoption of blockchain and attracting international financial institutions like Rothschild and Goldman Sachs to participate in tokenization projects. Saudi Arabia is advancing its own digital currency as part of the “Vision 2030.” In 2019, SAMA and the Central Bank of the UAE conducted interoperability testing for cross-border CBDC transactions as part of the “Aber Project.” Saudi Arabia joined the mBridge CBDC pilot project in 2024. The country is at the forefront of wholesale CBDC pilot projects aimed at facilitating domestic settlements and cross-border transactions for financial institutions.

Licensing: The Saudi Capital Market Authority (CMA) has announced that regulations for Security Token Offerings (STO) will be released by the end of 2022, and applications can be submitted through the CMA’s digital platform. The CMA’s fintech lab was launched in 2017 and has been dedicated to creating a conducive business environment for fintech startups. STOs in Saudi Arabia are subject to strict securities regulations enforced by the CMA. Key considerations for STOs include: registration requirements (detailed documentation, prospectus), disclosure obligations (transparent and accurate information, financial statements, risk factors), and anti-fraud measures. The CMA’s regulations also include investor certification requirements, limiting participation in STOs to qualified investors who can independently assess risks. The tokenization of traditional financial assets is a key focus area that requires a legal framework to address ownership, transferability, and regulatory issues related to tokenized assets, ensuring that smart contracts comply with legal principles.

Bahrain

Legal Status of Encryption Assets: Bahrain is a pioneer in cryptocurrency and blockchain regulation in the Middle East, establishing a comprehensive regulatory framework through the Central Bank of Bahrain (CBB) Capital Market Rules Manual under the Crypto Asset Module (CRA). It clearly defines encryption assets as a digital representation of value or rights secured by encryption (excluding central bank digital currencies).

Regulatory Framework: The CRA establishes legal and operational standards for encryption asset providers, covering licensing, risk management, consumer protection, and more, with amendments in March 2023 reinforcing customer asset protection and anti-money laundering measures. The regulations ensure transparency and compliance, aligning with FATF standards, promoting innovation through fintech hubs and regulatory sandboxes, while clearly exempting certain virtual asset businesses from regulation.

Licensing: Engaging in regulated encryption asset services within Bahrain requires obtaining a CBB encryption asset license, covering services such as order processing and trading. The VASP license is divided into four categories, with different types corresponding to varying minimum capital requirements and annual fees. Applicants must be Bahraini companies and must meet various requirements including registration, business plans, and compliance. Violations will face heavy fines, revocation of licenses, and even imprisonment.

Israel

Legal Status of Encryption Assets: Israel does not have a comprehensive law specifically for cryptocurrencies; it treats cryptocurrencies as assets rather than currency for tax purposes. Profits from sales are subject to a 25% capital gains tax, and cryptocurrency exchanges are considered taxable events. Revenue from encryption businesses is taxed as ordinary income. Cryptocurrency transactions generally do not incur value-added tax, but exchange service platforms may be required to pay it. Mining activities are subject to corporate income tax, and transactions must be documented.

Regulatory Framework:

• CMA: Since 2016, the regulatory authority requires virtual currency brokers and custodians to be licensed, with a standard of 1 million new shekels in capital, and supervises the stablecoin pilot.
• ISA: Regulate activities related to cryptocurrency securities, issue guidelines applicable to regulations, allow non-bank members to engage in encryption services in August 2024, regulate by token type, and promote legislative reform.
• Bank of Israel: Principles for the issuance of stablecoins in 2023, proposing full reserve and licensed regulation, researching the “Digital Shekel”, with testing and challenge activities starting in 2024.

Licensing: According to relevant laws, encryption service providers must be licensed, requiring them to be Israeli entities with sufficient capital and no criminal record. After the revision by the ISA, non-bank institutions are allowed to conduct encryption business, implementing a “closed garden” model. Anti-money laundering regulations will be enforced, and the pilot for stablecoins will be regulated by the CMA.

Africa

Nigeria

Nigeria’s cryptocurrency regulatory landscape has undergone a significant transformation, shifting from an initially restrictive stance to a more formal and comprehensive regulatory framework.

Legal Status of Cryptocurrency Assets: The Central Bank of Nigeria (CBN) initially imposed restrictions in February 2021, instructing banks and financial institutions to close accounts involving cryptocurrency transactions, although individuals were not prohibited from owning cryptocurrencies. However, in December 2023, the CBN lifted the restrictions, allowing banks to provide services to cryptocurrency companies licensed by the Securities and Exchange Commission (SEC). Banks are now required to open designated accounts for Virtual Asset Service Providers (VASP), conduct extensive KYC procedures, and monitor the flow of funds. This shift acknowledges the necessity of regulating VASPs. The ISA 2025 (Investment and Securities Act of 2025) explicitly defines digital assets as securities and commodities, expanding the SEC’s regulatory scope. The SEC’s stance is that cryptocurrency assets are considered securities unless proven otherwise, with the burden of proof resting on the operator, issuer, or promoter. This encompasses a wide range of digital and cryptocurrency assets, including stablecoins, utility tokens, asset-referenced tokens, and electronic money tokens.

Regulatory Framework: Nigeria’s regulatory environment has undergone a significant shift from a ban to regulation. The CBN’s initial “ban” was deemed ineffective, pushing transactions towards P2P networks and creating regulatory conflicts with the SEC’s early recognition of digital assets. The new government’s ascension may have played a role in the policy shift, prioritizing regulation over prohibition to achieve oversight and taxation. This evolution signifies the maturation of a regulatory approach aimed at integrating the encryption economy into the formal financial system for better oversight, risk management (AML/CFT), and potential taxation.

Licensing: The SEC’s digital asset rulebook “New Rules for Digital Asset Issuance, Platforms, and Custody” (2022), consolidated by ISA 2025, provides statutory support for SEC regulation of VASPs. A VASP license is mandatory for any platform that matches orders, converts cryptocurrencies to fiat, or holds assets on behalf of users (including over-the-counter platforms operated via social media). Non-compliance may result in penalties, including cessation of operations, fines, and prosecution of directors. The SEC has expanded its Accelerated Regulatory Incubation Program (ARIP) to expedite the approval of VASPs, and ARIP is now incorporated into the “Revised Digital Asset Rules” as a pathway for registration. The duration in ARIP must not exceed 12 months. Section 30 of Nigeria’s 2022 Anti-Money Laundering Act (Financial Institutions) classifies cryptocurrency operators as reporting entities. Mandatory requirements include registration with the Nigeria Financial Intelligence Unit (NFIU), submitting Suspicious Activity Reports (SARs), monitoring transactions, and risk-based customer classification. Non-compliance may result in fines or enforcement actions.

South Africa

South Africa has taken a pragmatic and evolving approach to cryptocurrency regulation, viewing it as a financial product and striving to establish a comprehensive compliance framework.

Legal Status of Encryption Assets: In South Africa, the use of encryption assets is legal, but they are not considered legal tender. For regulatory purposes, encryption assets are formally recognized as financial products under the Financial Advisory and Intermediary Services Act (FAIS) of 2002. This classification requires providers offering financial services related to encryption assets to obtain a Financial Services Provider (FSP) license.

Regulatory Framework: South Africa has declared encryption assets as “financial products” rather than currency, providing a clear legal basis for regulation within the existing financial services legal framework. The South African Reserve Bank (SARB) has stated that “exchange control regulations do not regulate the inflow and outflow of cryptocurrency within South Africa,” suggesting a need for reform. The Intergovernmental Fintech Working Group (IFWG) has also recommended amending Excon to include encryption assets in the definition of capital. The tax stance on cryptocurrency has been clarified: income tax and capital gains tax (CGT) will apply. The South African Reserve Bank (SARB) prefers to use the term “encryption assets” rather than “currency.”

Licensing: The Financial Sector Conduct Authority (FSCA) is the main regulatory body for encryption service providers. The licensing process for Crypto Asset Service Providers (CASP) commenced on June 1, 2023, and existing institutions are required to submit their license applications by November 30, 2023. As of December 10, 2024, the FSCA has approved 248 out of 420 CASP license applications, with 9 being rejected. Licensing requirements include company registration, FSP license application (including encryption asset subcategories), meeting “suitability” requirements, and mandatory anti-money laundering / combating the financing of terrorism (AML/CFT) compliance. CASP was officially designated as a responsible institution under the Financial Intelligence Centre Act (FICA) on December 19, 2022. As a responsible institution, CASP is required to: register with the Financial Intelligence Centre (FIC), implement customer identification and verification (KYC/CDD), appoint a compliance officer, train employees, conduct business risk assessments for anti-money laundering / terrorist financing / proliferation financing, establish and maintain risk management and compliance programs, submit regulatory reports (SAR), and conduct sanctions screening. The FIC has issued directives mandating the implementation of the “travel rule” for crypto asset transfers by April 30, 2025. The travel rule applies to all transactions, regardless of amount, and for transactions of 5000 rand or more, a broader range of information is required.

Summary

The global encryption currency regulatory landscape is undergoing continuous evolution, showing a clear trend of coexistence between convergence and differentiation.

convergence trend

Globally, anti-money laundering (AML) and counter-terrorism financing (CFT) have become a common consensus and core requirement in cryptocurrency regulation. The comprehensiveness of the European Union’s Markets in Crypto-Assets Regulation (MiCA) and its “single license, universal applicability” model are becoming an important reference for other jurisdictions around the world to formulate their own regulations.

In addition, regulators generally tend to classify encryption assets based on their functions and economic substance, rather than adopting a “one-size-fits-all” regulatory approach. This classification includes payment tokens, utility tokens, asset tokens, security tokens, and commodity tokens, among others. This refined asset classification method helps to impose regulation more accurately, avoiding excessive or insufficient regulation, and promotes global consensus on asset characterization.

differentiation trend

Despite the convergence, the legal status of encryption assets still varies greatly around the world. From complete prohibition (such as in mainland China and Egypt) to being recognized as a legal payment tool (like in Japan), and being regarded as personal property (such as in the UK) or financial products (like in South Africa), the fundamental legal classifications of encryption assets differ significantly across countries. This fundamental difference means that global encryption companies still face a complex legal environment and compliance challenges when operating cross-nationally.

challenge

The main challenges facing global cryptocurrency regulation currently include:

• Coordination difficulties across jurisdictions: Although initiatives like FATF and MiCA have promoted some convergence, countries still find it challenging to achieve fully consistent regulation due to their own economic, political, and legal system considerations. This fragmentation leads to regulatory arbitrage, high compliance costs, and the existence of regulatory vacuums.
• The speed of technological development and regulatory lag: The development speed of blockchain and encryption technology far exceeds the update speed of traditional legislation and regulatory frameworks. The continuous emergence of new encryption products, services, and business models (such as DeFi, NFT, DAO) makes it difficult for regulatory agencies to quickly formulate adaptive and forward-looking regulations.
• The ongoing game of balancing innovation and risk: Governments and regulatory agencies around the world are striving to find a balance that encourages fintech innovation to seize opportunities brought by the digital economy while effectively preventing money laundering, terrorist financing, insufficient consumer protection, and financial stability risks. This process of balancing is complex and filled with uncertainty, requiring continuous policy adjustments and market feedback.

In summary, global cryptocurrency regulation is developing towards a more mature and refined direction, but its inherent complexity and dynamism, along with the diversification brought by the differences in national conditions, will continue to be an important backdrop for the development of the global cryptocurrency market in the coming years.

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