The global regulatory landscape for crypto assets remains cautious, with authorities agreeing that service providers offering critical functions must obtain proper licensing, registration, and authorization.
Introduction
The crypto industry faced severe disruptions in 2022 due to sudden market crashes, shifting rapid growth into decline. Participants witnessed market failures from unregulated stablecoins, hedge funds, and trading platforms. They also recognized potential systemic risks as crypto became more intertwined with core financial systems.
In this context, robust global crypto regulations are essential. Strengthened oversight and globally consistent standards can address many challenges preemptively.
Crypto markets develop unevenly worldwide. Some emerging economies leverage crypto to address local economic issues, while others treat it with extreme caution. Its innovative potential is undeniable, but so is the need for regulation. Major jurisdictions are now balancing risk management with innovation support.
This article summarizes recent regulatory policies in key global markets and outlines the legal and licensing requirements for operating crypto businesses locally.
United Kingdom
The Financial Conduct Authority (FCA), headquartered in London, regulates crypto asset exchange providers, custodian wallet providers, and firms engaged in crypto asset activities. Since January 2020, the FCA has received over 300 registration applications. As of early 2023, 195 were withdrawn, 41 approved, and 29 rejected.
Approved companies include exchanges like Coinbase and Kraken, crypto-native firms such as Circle, and traditional financial institutions like Fidelity Digital Assets.
Dubai
In February 2022, Dubai enacted a key virtual assets law, establishing the Virtual Assets Regulatory Authority (VARA) as an independent regulator. VARA oversees exchanges, wallets, issuers, and all crypto-related activities.
Virtual asset service providers must comply with four mandatory rulebooks covering company policies, compliance, technology, and market conduct. Additional activity-specific rules apply to consulting, brokerage, custody, and more.
Notable companies with VARA licenses include Binance, Crypto.com, and OKX.
United States: New York Example
The U.S. employs a dual state-federal regulatory system. Federally, the SEC regulates securities-like digital assets, while the CFTC oversees commodities. FinCEN focuses on anti-money laundering, and the IRS handles taxation.
At the state level, New York stands out with its BitLicense framework, introduced in 2015 by the New York State Department of Financial Services (NYSDFS). This license allows firms to engage in virtual currency activities.
Over 20 entities hold BitLicenses, including crypto firms like Coinbase and Circle, and fintech companies like PayPal and Robinhood.
Singapore
The Monetary Authority of Singapore (MAS) centrally regulates crypto, categorizing digital assets into existing frameworks like securities or currencies.
MAS offers three license types: Money-Changing, Standard Payment Institution (SPI), and Major Payment Institution (MPI). SPI and MPI licenses apply to digital currency exchanges.
Additionally, MAS issues Digital Payment Token (DPT) service licenses. Companies like Crypto.com and Genesis have received these approvals.
Hong Kong
Hong Kong adopts a cautious regulatory approach. The Securities and Futures Commission (SFC) and other bodies classify digital assets into existing categories like securities or currencies.
The SFC allows crypto exchanges to apply for existing license types, such as Type 1 (securities trading) and Type 7 (automated trading services). Currently, only two platforms—OSL Exchange and HashKey Pro—are licensed.
Japan
Japan’s Financial Services Agency (FSA) and a self-regulatory organization oversee crypto. The country employs a layered approach, prioritizing anti-money laundering and user protection.
Japan has comprehensive legal provisions for crypto assets, combining administrative licensing, mandatory disclosures, and industry self-regulation.
Thirty companies are registered as crypto asset exchange service providers, including Coinbase and local platforms like Huobi Japan.
Spain
The Bank of Spain requires crypto firms to register as Virtual Asset Service Providers (VASPs). This registration enables companies to offer exchange and custody services under anti-money laundering rules.
Sixty-six companies hold this registration, including Binance, eToro, and Bitpanda.
Bermuda
Bermuda’s Digital Asset Business Act (DABA) requires anyone conducting digital asset business to obtain a license. Licenses are categorized as Class F (full) or Class M (regulatory sandbox for innovation).
Seventeen companies hold licenses, including Coinbase and fintech firm Cash App.
Gibraltar
Gibraltar introduced a licensing regime for blockchain companies in 2018. Firms must obtain a Distributed Ledger Technology (DLT) provider license to operate legally.
Crypto projects enjoy tax exemptions, with only a 10% corporate tax on relevant income. Twelve companies hold DLT licenses, including Huobi and eToro.
Estonia
Estonia tightened crypto regulations in 2021. The Financial Supervision Authority (Finantsinspektsioon) now oversees crypto businesses, requiring firms to reapply for licenses under new rules.
Companies must comply with anti-money laundering regulations and existing securities laws.
Frequently Asked Questions
What is a BitLicense?
A BitLicense is a business license for virtual currency activities, issued by New York’s financial regulator. It allows companies to offer crypto services in New York, subject to strict compliance standards.
Which countries have the clearest crypto regulations?
Japan, Singapore, and Switzerland are known for their clear regulatory frameworks. These countries classify digital assets under existing laws and provide specific licensing guidelines.
Do all crypto businesses need a license?
Most jurisdictions require licenses for services involving exchange, custody, or payment processing. However, requirements vary by country and service type.
How does anti-money laundering apply to crypto?
Crypto businesses must implement know-your-customer (KYC) procedures, monitor transactions, and report suspicious activities to comply with global anti-money laundering standards.
What is a VASP?
A Virtual Asset Service Provider (VASP) offers services like exchange, transfer, or custody of virtual assets. Many countries require VASP registration for compliance.
Can a company operate globally with one license?
No, most licenses are jurisdiction-specific. Firms must obtain approvals in each country they operate, though some regions have mutual recognition agreements.