Global Encryption Regulatory Trends: Steps Aligning but Divergences Remain

In recent years, with the rapid development of the encryption market, the demand for its regulation has become increasingly urgent. Countries and regions have introduced regulatory policies based on their own economic, financial systems, and strategic considerations, resulting in an unprecedented complexity and diversity in the global encryption regulatory landscape.

Asia

Greater China Region

Hong Kong, China

Hong Kong regards encryption assets as "virtual assets" rather than currency, regulated by the Securities and Futures Commission ( SFC ). A licensing system is implemented for stablecoins, restricting licensed institutions from issuing Hong Kong dollar stablecoins. NFTs are considered virtual assets, and governance tokens are regulated under the "collective investment scheme" rules.

The revised "Anti-Money Laundering Regulations" in 2023 require encryption currency exchanges to obtain licenses. The SFC has issued rules for virtual asset ETFs, responsible for license issuance. Currently, HashKey and OSL have been the first to obtain licenses, with over 20 other institutions applying. Licensed exchanges can serve retail investors. Bitcoin and Ethereum ETFs have been listed in Hong Kong in 2024.

Hong Kong actively embraces Web3 and virtual assets, allowing retail investors to trade and launching virtual asset ETFs, aiming to solidify its status as an international financial center. This stands in stark contrast to the strict bans in mainland China.

Taiwan, China

Taiwan maintains a cautious attitude towards encryption currency, not recognizing its monetary status, but regulating it as a speculative digital commodity, and gradually improving the anti-money laundering and securities token offering (STO) framework.

Since 2013, the Central Bank of Taiwan and the Financial Supervisory Commission (FSC) have regarded Bitcoin as "a highly speculative digital virtual commodity." NFT transactions are subject to capital gains tax. Security tokens are recognized as securities by the FSC and are regulated under the Securities Exchange Act.

The "Anti-Money Laundering Act" regulates virtual assets. The FSC has ordered local banks not to accept Bitcoin-related services. There are specific regulations for STOs. In March 2025, the FSC announced the drafting of laws targeting virtual asset service providers (VASP), shifting from basic registration to a comprehensive licensing system.

Mainland China

Mainland China has全面禁止encryption asset trading and related financial activities. The People's Bank of China believes that cryptocurrency disrupts the financial system and facilitates criminal activities.

In judicial practice, virtual currencies have property attributes. Civil cases recognize that virtual currencies have property attributes. Criminal cases also clearly state that virtual currencies belong to property in the sense of criminal law.

Since 2013, banks have been prohibited from engaging in encryption currency business. In September 2017, it was decided to close all domestic virtual currency exchanges. In September 2021, a comprehensive ban on services related to virtual currencies was implemented. Encryption currency mining sites were shut down, and overseas exchanges providing services to the domestic market are considered illegal financial activities.

Singapore

Singapore views encryption assets as "payment tools/goods", mainly based on the Payment Services Act. A licensed issuance system is implemented for stablecoins, requiring 1:1 reserves and monthly audits. NFTs are generally not considered securities, while governance tokens with dividend rights may be regarded as securities.

In 2022, the Financial Services and Markets Act was enacted to regulate exchanges and stablecoins. The new DTSP regulations reduce the scope of license compliance, affecting encryption projects and the offshore operations of exchanges. The Monetary Authority of Singapore ( MAS ) has issued three types of licenses, with over 20 institutions already obtaining them. Many international exchanges have established regional headquarters in Singapore, but are affected by the new DTSP regulations.

South Korea

South Korea regards encryption assets as "legal assets", but not as legal tender. The "Specific Financial Information Reporting and Utilization Act" ( and the "Specific Financial Act" ) are the main basis. The draft of the "Basic Law on Digital Assets" ( DABA ) is being promoted, intending to provide a comprehensive legal framework for encryption assets.

South Korea implements a real-name system for exchange licensing, with 5 major exchanges having obtained licenses. The market is primarily dominated by local exchanges, prohibiting foreign exchanges from directly serving Korean residents. The DABA draft proposes to require transparency of stablecoin reserves.

Indonesia

Indonesia is experiencing a shift in the regulatory authority over encryption assets from the Commodity Futures Trading Regulatory Agency ( Bappebti ) to the Financial Services Authority ( OJK ). Encryption assets are classified as "digital financial assets".

The recently issued "2024 No. 27 OJK Regulation" (POJK 27/2024) will come into effect on January 10, 2025, setting strict requirements for digital asset exchanges, clearing institutions, custodians, and traders. All digital financial asset trading providers must fully comply with the new regulations by July 2025.

Thailand

Thailand allows the possession, trading, and mining of encryption currencies, and profits are subject to taxation. The "Digital Assets Act" has been established. It has approved a five-year exemption from capital gains tax on cryptocurrency sales income conducted through licensed encryption asset service providers from 2025 to 2029.

The Thai Securities and Exchange Commission ( SEC ) is responsible for regulating the encryption market and issuing licenses. Exchanges are required to obtain official permits and register as Thai companies. Local exchanges such as Bitkub are active, and the SEC has taken measures against global exchanges that do not have local licenses.

( Japan

Japan is one of the first countries in the world to clearly recognize the legal status of encryption currency. The "Payment Services Act" recognizes encryption assets as "legal means of payment." A strict bank/trust monopoly system is implemented for stablecoins, requiring them to be pegged to the Japanese yen and redeemable, while prohibiting algorithmic stablecoins.

The revised "Payment Services Act" and "Financial Instruments and Exchange Act" officially recognize encryption assets as a legitimate means of payment in 2020. The Financial Services Agency (FSA) is responsible for regulating the encryption market and issuing exchange licenses, with 45 licensed institutions currently in operation.

The Japanese market is mainly dominated by local exchanges. International platforms typically enter the Japanese market through joint ventures.

Europe

) European Union

The EU has established a unified regulatory framework through the "Regulation on Markets in Crypto-Assets" ###MiCA(. MiCA defines crypto assets as "legal payment instruments, but not legal tender." Strict regulations will be imposed on stablecoins, requiring a 1:1 fiat currency peg and sufficient reserves, with issuance allowed only by licensed institutions.

MiCA was passed in June 2023, with the stablecoin rules coming into effect early in June 2024, and the overall legislation taking full effect on December 30, 2024. It applies to 30 countries in Europe. MiCA also integrates the travel rules of the Funds Transfer Regulation )TFR(.

MiCA adopts the "one license, universal application" model, allowing CASPs to operate in all member states with authorization obtained in just one member state. The USDC and EURC issued by Circle have received MiCA compliance approval, while Tether)USDT### has faced delisting due to non-compliance with regulations.

( UK

The UK views encryption assets as "personal property". The Financial Services and Markets Bill )2023( brings encryption assets under regulatory oversight. The Bank of England regulates stablecoins, requiring issuers to obtain FCA authorization.

The FCA is responsible for issuing relevant licenses. Companies engaged in encryption asset business must obtain FCA authorization. Although there is no mandatory license for cryptocurrency exchanges, encryption asset enterprises must register with the FCA and comply with AML and CTF regulations.

) Russia

Russia classifies encryption assets as "property" for confiscation, while stating that digital financial assets (DFA) "are not a means of payment." The "Federal Law No. 259-FZ" regulates the issuance and circulation of DFAs.

In October and November 2024, two bills related to cryptocurrency mining will be implemented, introducing legal definitions and registration requirements for mining businesses. However, by the end of 2024, only 30% of miners are registered with the federal tax authority.

Switzerland

The Swiss Financial Market Supervisory Authority ( FINMA ) classifies encryption assets based on their economic and practical use, mainly divided into payment tokens, utility tokens, and asset tokens. The "Blockchain Act" was passed in 2020, comprehensively defining token rights and amending multiple federal laws.

FINMA is responsible for issuing VASP licenses. The provision of custody, exchange, trading, and payment services for payment tokens falls under the jurisdiction of anti-money laundering laws. The Zug region is piloting a "encryption-friendly" regulatory sandbox.

Americas

America

The regulation of cryptocurrency assets in the United States exhibits interstate differences and a lack of unified legislation at the federal level. The IRS classifies it as "property," while New York State defines it as "financial assets." The SEC primarily regulates tokens based on securities law.

The GENIUS stablecoin bill is under review. New York State has a strict BitLicense licensing system. Many states have enacted or are considering their own encryption asset legislation. Cryptocurrency businesses engaged in currency transmission, exchange, and other activities must register as MSBs with FinCEN.

Major cryptocurrency exchanges such as Coinbase, Kraken, and Crypto.com operate in compliance in the United States. However, some international exchanges choose not to enter the U.S. market or only offer limited services.

( El Salvador

El Salvador recognized Bitcoin as legal tender in 2022, but later abandoned it under pressure from the IMF. Currently, Bitcoin is not legal tender, but private use is allowed. The "Digital Asset Issuance Law" ) was enacted, and the National Digital Asset Committee ### NCDA ( is responsible for regulation. A comprehensive licensing system has not yet been established.

) Argentina

Argentina allows the use and trading of encryption currencies but does not consider them as legal tender. Encryption assets can be classified as currency for trading purposes. The new government supports encryption currencies, but there is no specific legislation yet.

The law No. 27739 will be enacted in 2024, incorporating VASP into the legal and financial framework. Starting from 2024, VASP must register with CNV to provide encryption services. Non-compliance will face fines, legal actions, or revocation of licenses.

Middle East

UAE

The UAE has a positive attitude towards encryption currencies and blockchain technology. The DFSA defines encryption tokens as a digital representation of value, rights, or obligations. The ADGM classifies stablecoins as virtual assets.

The main regulatory bodies include CBUAE, SCA, VARA, DFSA, and ADGM. VARA 2.0### introduced several updates on June (, including strengthening margin trading controls and regulating token distribution, among others. The FSRA of ADGM supervises the implementation of virtual asset regulations, and the 2025 revised version simplifies the AVA certification process. DFSA regulates financial services related to encryption tokens within DIFC.

) Saudi Arabia

Saudi Arabia takes a cautious approach to encryption currency. The banking system prohibits the use of encryption currency, and financial institutions are forbidden from conducting encryption currency transactions. Private ownership is not prosecuted, but trading and exchange are strictly restricted.

SAMA and CMA emphasize taking a "prudent approach" to innovation in encryption. SAMA is promoting the adoption of blockchain and attracting international financial institutions to participate in tokenization projects. Saudi Arabia is promoting its own digital currency and participating in cross-border CBDC pilot projects.

CMA announced that the STO regulations will be released by the end of 2022. STOs are subject to strict securities regulations supervised by the CMA, with key considerations including registration requirements, disclosure obligations, and anti-fraud measures.

( Bahrain

Bahrain has established a comprehensive regulatory framework through the "encryption asset module" )CRA###. It defines encryption assets as a digital representation of value or rights in a secure manner. The CRA sets legal and operational standards for encryption asset providers, revised in March 2023 to strengthen customer asset protection and anti-money laundering measures.

To engage in regulated encryption asset services within the territory, one must obtain a CBB encryption asset license. VASP licenses are divided into four categories, corresponding to different minimum capital requirements and annual fees.

Israel

Israel does not have specific comprehensive laws on encryption currency, and for tax purposes, encryption currency is viewed as an asset rather than currency. The CMA requires virtual currency brokers and custodians to be licensed. The ISA regulates activities related to encryption currency securities, and in August 2024, non-bank members will be allowed to provide encryption services.

The Bank of Israel released principles for stablecoins in 2023, proposing full reserves and licensed regulation. Encryption service providers must be licensed, required to be Israeli entities, meet capital requirements, and have no criminal record.

Africa

( Nigeria

Nigeria has undergone a transition from restrictions to regulation. In December 2023, the CBN lifted restrictions, allowing banks to provide services to SEC-licensed encryption companies. ISA 2025 clearly defines digital assets as securities and commodities.

The SEC's digital asset rulebook provides legal support for regulating VASPs. The VASP license is strong for platforms that facilitate order matching, convert fiat currency, or hold assets on behalf of users.