Regulation is one of the core foundations for everything we build at Fideum. But regulations are ever-changing and fluid. Global crypto markets are not a simple one-size-fits-all, and legal frameworks change from region to region, and from country to country. This is the same for traditional financial markets, but there have been many centuries of cooperation between these different entities, as well as wide-reaching financial administrative networks. This has yet to happen with crypto. And with differing opinions of blockchain and digital assets, and the creation of somecentral bank digital currencies, it will take some time for regulatory bodies to sync globally. In the meantime, we have rounded up a brief breakdown of every region and their crypto regulations, openness, and recent updates.
East Asia and Pacific
Crypto regulations across Asia are inconsistent. While some have stringent regulations and strict crypto bans, others are much more welcoming - many more remain uncertain. The East Asia region includes some of the most varied opinions about crypto. Crypto has been banned in China since 2017, although many citizens find ways to circumvent the rules. However, the country is one of the first creators of a central bank digital currency (CBDC), the digital yuan. Myanmar and Thailand are examples of other countries in the region focused on launching a CBDC.
North Korea has used crypto to evade financial sanctions, but it’s unclear what the regulatory framework for retail or institutional customers is.
In the Philippines, remittances make up a large portion of the national economy. This has fuelled the country’s interest in cryptocurrency, as the technology makes cross-border transactions cheaper, safer, and quicker. For this reason, the Philippines often tops the charts of the biggest users of crypto in Asia.
Japan is extremely crypto-friendly with no restrictions on owning and investing in crypto, and has a strong regulatory framework under the Japanese Payment Services Act. Singapore, Hong Kong, and Malaysia regulate crypto through their nation’s financial institutions, and despite different interpretations of crypto as a commodity or legal tender, it is possible to trade and invest in crypto in all of these countries.
The Pacific region struggles with access to reliable data connections, which makes crypto activity tricky. Infrastructure such as underwater data cables or satellites used for internet connection are vulnerable to the extreme weather conditions suffered during certain seasons of the year. Despite that, some nations in the Pacific are very positive about their future with crypto. Vanuatu, for example, will be approving a digital asset and service provider bill in September. This makes the country compliant with the Financial Action Task Force (FATF) regulations, making them attractive to crypto and fintech companies in the region. An entire island exists amongst Vanuatu’s territory dubbed Satoshi Island, ‘A real-world private island transforming into a sustainable, regenerative smart ecosystem through the use of blockchain and cryptocurrency.’ Satoshi Island is still in progress as of summer 2024.
On the other hand, Fiji’s Reserve Bank of Fiji issued a warning against citizens owning or investing in crypto and threatened penalties for those who did.
In New Zealand, regulations are technology-neutral, which means that there are no laws that are specific to crypto, but it can be governed by laws not specific to crypto. Crypto is considered a form of property, so it is subject to income tax. Australia has a similar outlook on crypto but is known for embracing innovation in the industry with incentives. Recent AML and KYC regulations have regulated the industry for the safety of consumers.
South Asia
In Bangladesh, Nepal, and India cryptocurrency is banned to lesser or greater extents. India, for example, has banned foreign crypto exchanges - however recently a number of the largest exchanges including Binance and Kraken have shown interest in opening operations in the country, and India has begun working to facilitate their opening. In Afghanistan, the Taliban banned all forms of crypto and digital assets, declaring it haram and not an allowed Muslim practice due to its speculative nature.
Meanwhile in Pakistan and Sri Lanka, crypto is neither legal or regulated, but neither is it illegal. The Maldives has a similarly unclear situation around crypto’s legality.
In Iran, crypto is popular - especially as a tool to circumnavigate the strict economic sanctions from the United States and other nations. Bitcoin mining has become a popular alternative to other industries such as oil that have been also sanctioned heavily. In June 2024 the Central Bank of Iran unveiled a pilot launch of the digital rial as the country’s Central Bank Digital Currency.
Europe and Central Asia
Central Asia’s crypto market is rapidly expanding. The region has become a leader in crypto mining, with favorable legal conditions for mining in countries such as Kazakstan and Uzbekistan as a means to diversify their economies - although issues of aging Soviet power grids being able to cope with these demands have meant strict regulation on mining activities.
In a different move for crypto outside of mining and production, Uzbekistan recently doubled fees for cryptocurrency exchanges and retailers after seeing the potential for revenue increase in the industry.
Beyond Kazakstan and Uzbekistan, the Kyrgyz Republic has been creating and updating crypto rules and regulations since 2022. Currently, any company that wants to carry out crypto transactions in the country has to obtain a license from the government authorities.
CBDCs are one way that we can see cryptocurrency usage work well in the region. This month, the National Bank of the Kyrgyz Republic released draft legislation to create a Kyrgystani som central bank digital currency. The digital tenge is being piloted in Kazakhstan, and they are sharing research with China, which has one of the most prominent rollouts of CBDCs in the world currently with their digital yuan.
However, in other countries, the regulatory situation around crypto is not as clear. In Tajikistan, crypto is neither legal nor illegal. Turkmenistan is essentially a closed country, with no independent travel allowed in its borders and not a lot of cooperation except with immediate neighbors and Russia. Crypto has little penetration in Turkmenistan, predominantly because digital currencies can only be bought in foreign currencies, which the government is limiting access to - so crypto is impacted indirectly.
The European Union is implementing the Markets in Crypto-Assets regulation in 2024. Now established, each national government is responsible for implementing these regulations. There will be a delay as each country interprets the rules into its own legal frameworks, and 2024 will be a busy year for crypto regulation updates across the European Union. Fideum has talked a lot about the impact of MiCA, and our strategy is to ensure compliance with MiCa while preventing market instability.
Latin America and Caribbean
Sentiment around crypto in the Caribbean is very positive. Many consider the area a ‘crypto hub’. The Bahamas is a pioneer in the region by being the first in the Caribbean to create a CBDC. The Sand Dollar has been fully implemented since 2020 and is the digital representation of the Bahamian dollar, which is pegged to the US dollar. One of its key aims was to bring financial inclusion to some of the most remote parts of the country, which includes three thousand islands and a population spread all across them. In the aftermath of Hurricane Dorina in 2020, Bahamian Sand Dollars were used to provide financial relief to those in the Abaco Islands. Following the success of the Sand Dollar, Jamaica created the JAM-DEX in 2023. However, CBDCs and cryptocurrencies in general do have a low adoption rate. Much more user education is needed, and better infrastructure for data access so that more citizens can use digital currencies.
Haiti is suffering from a crisis of violence and poverty. Inflation and financial instability have been rife in the country for many years. Several Bitcoin initiatives have grown in the country to try to bring some economic relief and stability. There is no outright ban, but the central financial authority of Haiti is both curious and cautious of the potential impact at a time of such instability.
In Latin America, the growth of cryptocurrency is being accelerated by a large unbanked or underbanked population. Crypto is allowing various communities around the region without traditional access to financial resources to engage in digital currencies. Many also use it as a means to protect against economic instability. Crypto assets are used to help cushion against the rise and fall of fiat currencies as inflation rises. Crypto is regulated in Cuba and Argentina, although only very recently in the latter. In many other countries, crypto’s status is unclear, including Panama, Guatemala, and Nicaragua. Bolivia, Ecuador, and Venezuela have banned crypto, and Venezuela eventually folded its petro currency after repeated scandals and a lack of uptake.
Middle East and North Africa
Growth in crypto in the MENA region has been rapid and yet controlled. In 2023, only 10% of people in the region were using cryptocurrency, but that is now reported to have since increased by 51%. The United Arab Emirates is leading adoption, with a strong regulatory framework that aims to grow crypto safely and securely. The Central Bank of the United Arab Emirates has established plans for a framework for stablecoin issuance.
Other countries in the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) are similarly amenable to crypto and are creating strong regulatory frameworks, creating a blockchain hub in the Gulf region.
Outside of this area, we can see that rising inflation in Turkey in 2023 fuelled crypto adoption. In 2024 the country enacted crypto-asset regulations, which were adopted by parliament in June. This puts Turkey’s Capital Markets Board (SPK) in charge of regulating the crypto ecosystem.
Morocco was the first North African country to ban crypto in 2017, but since then the opinion on crypto by financial authorities has been ambiguous. New draft legislation is being created, and with the city of Casablanca becoming a ‘fintech hub’ for the North African region, it seems the government is starting to comprehend the popularity and appetite for crypto. Meanwhile, Algeria has maintained its crypto ban since 2017.
North America
Canada was one of the first countries to recognize digital assets by law, back in 2014. As crypto has grown, so have regulations for crypto in the country. Canada has a thriving crypto industry, and the Canadian Securities Administrators have created a CSA Regulatory Sandbox to encourage crypto entrepreneurism.
The United States regulation of crypto has been hanging in the balance in recent months. This article was written before the election in November 2024, which many believe will be the deciding factor in how crypto continues to grow in the country. In January of this year, the United States Securities and Exchange Commission (SEC) announced that some bitcoins had been granted the same status as exchange-traded products (ETPs) and that there would be more regulatory oversight of the crypto industry by the SEC.
In Mexico, regulation is also a key debating topic for crypto. While Mexico acknowledges and accepts crypto for payments, it is not a legal currency. Mexico has recently implemented strict AML compliance through registration and reporting. This makes it more challenging for unregulated bodies to operate in Mexico’s crypto market. The country is climbing lists of crypto adoption, and while these KYC regulations aim to keep consumers safe, there have been complaints of slowed-down transaction times and increased costs.
Sub Saharan Africa
The region has a high adoption rate of crypto, but a varied approach to regulation. This area is well suited to crypto adoption, as there is a large unbanked population who would benefit from access to digital currencies. People who are already using crypto are doing so to protect against inflation, as research from Chainalysis shows. But with that opportunity has come a lot of anxiety. Early on, many countries banned cryptocurrencies for fear of creating even more economic disparity and concerns over scams.
Now, there is a patchwork of promising regulatory frameworks appearing, even out of countries that originally approached negatively. Many of these concerns are being addressed with legal bills on digital safety and security, and once these are established, it’s expected that many more countries will participate in crypto regulation.
Nigeria is the clearest example of that swing in opinion, with a very changeable and volatile relationship with crypto. Nigeria tops the charts in regional use of crypto and ranks high in global adoption indexes. Regulation, however, has been marked by wild ups and downs. Earlier this year, Nigeria announced a ‘crackdown’ on crypto, which led to the arrest of Binance executives in the country and the wide scale closure of crypto exchanges. And yet just a few days ago, in August 2024, the country’s financial authorities announced plans to tax cryptocurrency and prepare to license issuers of virtual assets. It will likely take some time before the regulation of crypto and blockchain in Nigeria is clear enough for users to feel confident.
South Africa is aiming to become a leading crypto market in Africa. This year, the South African government issued 59 crypto licenses and the industry is growing steadily. The future of crypto in the country may depend on the wider economic picture. When economic instability occurs, crypto interest and adoption increases, but it can also come under heavier scrutiny from regulators.
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