Due to its decentralized nature, the crypto industry is largely unregulated, unlike traditional financial systems. Sadly, the absence of these global crypto regulations has presented several risks like volatility, fraud, and a higher chance of crypto scams.
For instance, an unregulated crypto platform can easily engage in unethical practices like rug pull scams, misleading token offerings, or Ponzi schemes. More so, vague regulatory structure can make it difficult for consumers to understand and avoid crypto risks.
Hence, there is a need for crypto regulations in 2025 to address various concerns, prevent illicit activities, protect investors, and foster a trustworthy and stable crypto system, especially considering the growing adoption of crypto.
Luckily, governments of different countries have expressed significant regulatory concerns on how cryptocurrencies should be regulated.
Governments at different levels are currently revising their regulatory frameworks to address crypto-related risks, ensure investor protection, and foster innovation.
These revisions involve implementing measures such as AML (Anti-Money Laundering), taxation, stablecoins, CBDCs, investor protection, and DeFi regulations.
Some regulators even go as far as establishing clear rules for cryptocurrency exchanges and licensing requirements for digital service providers.
By examining how different countries approach cryptocurrency, we can gain insights into how regulatory changes would shape the crypto industry.
Hence, this article evaluates the current state of global crypto regulations and the potential future directions for crypto regulatory frameworks.
Why Crypto Regulations Differ Across Countries
At inception, cryptocurrency was designed to be decentralized and unregulated. However, crypto’s excessive volatility, coupled with the involvement of bad actors in the industry, necessitated the involvement of governments and regulatory bodies.
This involvement led to the development of various crypto laws and regulations, which differ across countries due to peculiar factors like varying consumer protection needs, risk appetite, legal frameworks, diverse economic policies, and concerns about financial stability.
For instance, some countries are more concerned with risk mitigation and financial stability, while others prioritize innovation and crypto adoption. All these led to diverse crypto regulatory approaches.
Let's briefly discuss the factors influencing crypto regulations:
- Diverse economic policies: These are the goals that a country aims to achieve within its economy.
For instance, Singapore and Switzerland are currently encouraging cryptocurrency innovations and adoption to boost their economies. On the other hand, China prioritizes financial stability and is hostile towards cryptocurrency to prevent potential financial risks.
Therefore, both China and Singapore, with deferring priorities, can’t adopt the same crypto regulations.
- Relationship with traditional banking: To date, some see cryptocurrency as an opposition to the traditional finance (TradFi) system.
They believe that the growth of the crypto market may lead to the diversion of some liquidity from the TradFi system, which may affect banking stability and monetary policy.
- Risk appetite: Some regions consider cryptocurrencies as a means for financing terrorism or laundering money.
Such countries may focus more on laws that protect citizens and prevent fraud, like Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, while other countries may have more relaxed rules.
- Geopolitical concerns: Geopolitical concerns involve political, geographical, and economic factors that affect borders that separate nations from one another.
Geopolitical concerns can also affect crypto regulation. For instance, some countries like Russia may perceive cryptocurrency as a viable tool to circumvent sanctions.
Some other countries may see it as a tool for financial sovereignty or illegal activities.
- Legal framework: Lastly, some countries classify digital assets as securities and subject them to strict securities laws, while others classify them as commodities, leading to diverse crypto regulatory frameworks.
Cryptocurrency Regulations by Regions
This section focuses on crypto regulations by regions, and explains the current crypto regulations across different countries of the world.
North America
United States (US)
In the US, crypto assets are regulated at two levels, just as the banking system - federal level and state level. While the US lacks consistent crypto legislation at the state level, it is making impressive progress in developing a federal crypto regulatory system.
Although the Financial Crimes Enforcement Network (FinCEN) considers cryptos as “other value that substitutes for currency,” it doesn't consider it as a legal tender in the US. However, crypto exchanges are legal and are considered to be money transmitters.
Hence, crypto exchanges must register with FinCEN, adopt the AML/CFT requirement, and maintain/submit necessary records to the authorities.
Following FATF’s guidelines in 2019, FINCEN enforced all cryptocurrency exchanges to comply with the “Travel Rule,” which requires them to collect and share details of originators and beneficiaries of crypto transactions.
The body also places crypto exchanges in the same regulatory category as FIAT money transmitters. Hence, crypto exchanges in the US must abide by the same regulation outlined in the Bank Secrecy Act.
The Notice of Proposed Rulemaking (NPRM) was introduced in 2020 as an adjustment to the Travel Rule. NPRM introduced new compliance requirements for crypto exchanges.
The new rule imposed data collection requirements on all crypto exchanges and wallets operating within the country, which include Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs).
Similarly, the Internal Revenue Service (IRS) does considers crypto as a store of value.” As a result, the IRS taxes crypto as a property.
The US Securities and Exchange Commission (SEC) considers cryptocurrencies as securities, while the Commodities Futures Trading Commission (CFTC) described Bitcoin (BTC) as a commodity and allowed public trading of crypto derivatives.
Currently, the US is tending towards a more friendly crypto regulatory stance, and Trump’s support for cryptocurrencies, stablecoins, and digital tokens could reduce regulatory enforcement and drive crypto adoption.
Some upcoming rulings include establishing clearer regulatory guidelines, shifting away from "regulation by enforcement," resolving jurisdictional disputes between the CFTC and SEC, and revisiting existing legislation.
As stated earlier, crypto assets are taxed as property. That means crypto owners pay taxes on gains when they carry out any crypto transactions.
Cryptocurrencies are entering a new era in the US, and we tend to see more institutional adoption, regulatory clarity, and technological evolution than regulatory crackdowns.
Canada
Canada, being fairly friendly and proactive towards cryptocurrency, is the first country in the world to enact crypto regulations.
Canada does not consider crypto as a legal tender, but permits its use for purchasing goods and services.
Crypto regulations began in Canada in 2014 under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
In 2017, the Canadian Securities Administrators (CSA) moved to apply all its existing securities laws to crypto assets. In 2018, the head of the Bank of Canada “technically” classified crypto assets as securities.
Following an amendment to the PCMLTFA in 2019, crypto platforms operating in Canada were classified and subjected to the same regulations as “money services businesses (MSB).”
The Virtual Currency Travel Rule became effective in Canada in 2020, and required all MSBs and financial institutions to keep a record of all cross-border fund and crypto transactions.
In 2021, the CSA issued guidance for crypto issuers, requiring them to provide details on how they protect their cryptocurrencies against theft and loss. The guidance also included the need to disclose relevant risk factors.
The further amendment to the PCMLTFA in 2021 required all crypto-related businesses in Canada to register with the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC).
The Canada Revenue Agency (CRA) taxes 100% of your crypto income and 50% of capital gains. Mandatorily, all crypto exchanges operating in Canada must report to the CRA.
Europe
European Union
Crypto assets are legal in the European Union (EU). However, crypto regulations differ among individual member states. That means each member state enforces ‘suitable’ crypto regulations within its borders.
Nevertheless, the Court of Justice of the European Union ruled in 2015 that crypto exchanges should be exempt from VAT.
In 2020, the EU’s 5th Anti-Money Laundering Directive (5AMLD) brought all cryptocurrency exchanges under EU AML legislation. This directive required crypto exchanges to comply with KYC and AML requirements and fulfill standard reporting requirements.
The 6AMLD, which became effective in December 2020, further strengthens AML regulations by adding cybercrime to the list of money laundering predicate offenses.
In 2023, the EU adopted the Markets in Crypto-Assets (MiCA) regulation. MiCA aims to establish a unified legal framework for crypto exchanges and digital service providers outside the existing financial regulations.
MiCA focuses on the classification and regulation of crypto assets like utility tokens, e-money tokens, stablecoins, and so on. The body also aims to place strict regulations on how Initial Coin Offerings (ICOs) should work.
While MiCA was drafted to avoid repeating past ugly incidents like the fall of TerraUSD, it brings clarity and caution regarding cryptocurrency.
MiCA affects both crypto exchanges and investors. Crypto exchanges should expect stricter requirements, which include licensing, operational resilience, compliance with new rules, capital reserves, and possible incurrence of higher compliance costs.
On the other hand, MiCA aims to increase investors’ protection via consumer rights reinforcement, improved cybersecurity measures, and enhanced transparency.
For instance, crypto exchanges in the EU must implement strengthened KYC/AML measures, which include identifying and verifying customers, monitoring ongoing transactions, and preventing terrorist financing and money laundering.
United Kingdom
As of 2013, the United Kingdom mentioned that cryptocurrency is unregulated and treated it as a “foreign currency” or “private money” in most cases.
Therefore, when cryptocurrencies are exchanged for sterling or any other foreign currencies, no VAT is charged. However, when goods or services are sold for crypto, VAT is due. More so, profits and losses on crypto assets are subject to capital gains tax.
Being a member of the EU, the UK abided by the 5AMLD and 6AMLD cryptocurrency regulations in 2019. But when the UK left the EU in 2020, the country turned these regulations into domestic law to pave the way for its regulatory requirements, which included the Travel Rule.
The FCA regulates crypto exchanges, digital asset service providers, crypto-related businesses, and crypto wallet providers, requiring all of them to comply with its KYC/AML regulations.
Accordingly, all crypto exchanges and crypto-related service providers in the UK must register with the FCA, comply with AML/CFT reporting obligations, and comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
Offenders were promptly dealt with. For instance, the FCA declared all crypto ATMs in the country illegal in March 2022. This is because none of the crypto ATM operators had successfully registered with the FCA or complied with its KYC/AML requirements.
Considering the future of cryptocurrency regulations in the UK, the UK has been working towards a more regulated cryptocurrency industry.
One significant step would be the passing of the Property (Digital Assets) Bill, which would recognize digital assets as property in England and Wales. This would give investors and crypto businesses greater protection from fraud and scammers.
Asia
China
Currently, cryptocurrency and crypto exchanges are Illegal in China. In 2013, China’s Central Bank, the People’s Bank of China (PBOC), banned all financial institutions from conducting crypto transactions.
In 2017, the central government banned all domestic crypto trading platforms, crypto exchanges, and Initial Coin Offerings (ICOs). The central government went further to outrightly ban all crypto mining and trading activities, foreign and domestic, in 2021.
Although the PBOC stated that the crypto ban was to prevent economic instability and curtail financial crime, the ban disrupted the global crypto landscape and triggered a drastic plunge in crypto prices.
Notwithstanding the government's restrictions, crypto activities in China didn’t cease entirely, but, instead, it moved underground as savvy crypto investors adopted innovative ways to bypass the ban.
According to Chainalysis in 2024, the total crypto trading volume in China in Q2 2024 through OTC desks exceeded $20B. That was 3x higher than those recorded in the same period of 2021.
However, the 2020 amendment to China’s Civil Code allowed crypto ownership as digital assets are treated as property to determine inheritance.
More so, the country is aggressively promoting its state-backed central bank digital currency (CBDC) - Digital Yuan (eCNY), which was recently piloted. eCNY witnessed impressive adoption and increased corporate use afterward.
However, the Digital Yuan operates under a fully centralized system controlled exclusively by China’s government, which may raise skepticism.
Japan
Japan reportedly has the most progressive crypto regulatory climate in the world. Cryptocurrency is legal in Japan and is treated as property for payments and transactions under the Payment Services Act (PSA).
It is also regulated based on its functions and uses under the Bill for Partial Amendment to the Act on Payment Services Act.
Security tokens are regulated under the Financial Instruments and Exchange Act (the FIEA).
Being progressive, amendments were made to the PSA and to the FIEA, which took effect in May 2020. The amendments replaced “virtual currency” with “crypto-asset,” placed greater restrictions on crypto management, and eased regulation on crypto derivatives trading.
Regulations for crypto exchanges were also progressive. Crypto exchanges were previously legal in Japan and they had free operations. However, after a series of hack attacks, Japan’s Financial Services Agency (FSA) stepped in to regulate crypto trading and exchanges.
The body made amendments to the PSA, requiring crypto exchanges to undergo registration before they can operate. FSA also imposed stricter AML/CFT and cybersecurity requirements.
In 2020, Japan created the Japanese Virtual Currency Exchange Association (JVCEA) and the Japan STO Association to promote compliance and provide necessary advice to crypto exchanges seeking licenses in the country.
Japan's stablecoin legal framework imposes stringent conditions, permitting only banks, trust firms, and fund transfer services to issue stablecoins.
India
The status of cryptocurrency, crypto exchanges, and crypto regulations remains “deliberately unclear” in India.
For instance, Arun Jaitley, India’s finance minister, mentioned in his speech in 2018 that the Indian government does not consider cryptocurrency as legal tender, and would take measures to discontinue its use for criminal purposes.
Later in 2018, the Reserve Bank of India (RBI) banned crypto sales or purchases for all entities it regulates.
However, following the petition filed by the Internet and Mobile Association of India in 2019, the Supreme Court of India revoked the RBI’s ban on crypto trading in 2020.
Since then, India has not publicly declared whether it prohibits or allows investment in the crypto market. While crypto investment seems “legitimate,” issues surrounding the extent and payment of income tax from crypto transactions remain ambiguous.
Currently, the proposed legislation by the Indian Parliament is pending. Hence, there are no solid regulatory controls in place or assurance of crypto adoption at the moment.
However, the Reserve Bank of India issued a state-backed digital currency, the Digital Rupee (e₹).
Middle East & Africa
UAE
The UAE is a well-known crypto hub, thanks to its crypto-friendly regulations (Virtual Asset Regulatory Authority (VARA) framework). Currently, cryptocurrencies and crypto exchanges are legal in the country.
In 2018, Dubai Multi Commodities Centre (DMCC) became the first firm in the Middle East to get a license to trade crypto assets.
According to Dubai’s Securities and Commodities Authority in November 2020, all crypto-related service providers must be incorporated onshore within the UAE.
The UAE Securities and Commodities Authority (SCA) and the Dubai Financial Services Authority (DFSA) regulate and control all the UAE cryptocurrency regulations.
Also, the Dubai International Free Zone Authority (IFZA) allows all crypto service providers to operate within the free zone with specific approvals from VARA.
As an incentive for crypto adoption, Dubai does not impose any capital gains or income taxes on crypto transactions for individuals. Also, individuals can buy and sell cryptocurrencies without incurring taxes.
Nigeria
To date, Nigeria has not made a final decision on its crypto legislation, but has been swinging forth and back between crypto acceptance and rejection.
Wide crypto adoption started in Nigeria in 2015 following the collapse in the price of crude oil and the Naira. However, the demand for crypto assets further exerted more pressure on the naira exchange rate.
This prompted the Central Bank of Nigeria (CBN) to direct all banks to close all bank accounts associated with crypto trading in 2017.
While this hostile move was not an outright ban, it significantly shook crypto trading. Forcing traders to resort to peer-to-peer (P2P) crypto trading, with Binance becoming the major platform.
In mid-2023, following the installation of a new governor, the CBN seemingly softened its stance on crypto assets. The Nigerian Security and Exchange Commission (SEC) also requires all crypto exchanges to be regulated under the SEC.
However, this was short-lived, as the government soon accused Binance of currency manipulation and money laundering. Nigeria cracked down on Binance and detained two of its executives - one escaped, and one was later released following Joe Biden’s intervention.
Nigeria has its digital currency, the eNaira, which has been poorly adopted and is currently performing poorly. Recently, the country passed a new crypto bill, which is awaiting presidential approval.
Latin America
El Salvador
El Salvador made Bitcoin (BTC) a legal tender via its Bitcoin Law in 2021. The country permitted citizens to use BTC in all their transactions alongside Dollars. To facilitate BTC transactions, El Salvador issued a government digital wallet app - The Chivo wallet.
There were early successes, as about 12% of Salvadoran consumers reportedly used Bitcoin in the first month. Also, the policy raised tourism and global attention in the country.
However, the policy also attracted foreign and domestic criticism, and failed to improve financial inclusion despite El Salvador’s planned “Bitcoin City” and “Freedom Visa” initiatives.
Recent reports suggested minimal use and acceptance of Bitcoin by 2024 in the country. For instance, about 93% of Salvadorans did not use BTC for transactions, and only a few firms accepted it.
Worse still, the Chivo wallet faced hack attacks and technical difficulties, which eroded public trust. While Bitcoin as a legal tender wasn’t much of a success in El Salvador, it revealed that any country can enact laws that establish cryptocurrency's legal status to match their needs.
Sadly, BTC is no longer a legal tender in El Salvador, and entities are no longer required to accept it. The country reversed this decision following pressure from the International Monetary Fund (IMF). The reversal was the IMF’s condition for a $1.4B loan.
Nevertheless, BTC is still legal in El Salvador for private trade, and even the government is still purchasing it. This signals that the policy change hasn’t stopped the country’s ongoing interest in crypto assets.
Brazil
While cryptocurrency is not a legal tender in Brazil, it is a legal means of payment in the country. Previously, cryptocurrency had a rough start in Brazil.
For instance, the Banco Central do Brasil moved to regulate cryptocurrency in 2014 but was later discouraged due to operational risks. Three years later, the Banco Central do Brasil reiterated the unregulated and discouraged status of cryptocurrency.
Even without regulations or legislation specifically regulating cryptocurrency, the Special Department of Federal Revenue of Brazil released a document on crypto taxation in the country.
In late 2022, Brazil passed a new licensing framework for virtual asset service providers (VASPs) to legalize cryptocurrency as a payment method. The framework came into effect in June 2023.
Although the framework does not explicitly legalize cryptocurrency as a payment method, it defines virtual assets and regulates VASPs, paving the way for its use in making payments.
The law also protects consumers, safeguards financial stability, and combats money laundering in the crypto market.
Earlier this year, the Securities and Exchange Commission of Brazil (CVM) gave the green light to Hashdex’s spot XRP ETF, which was a seismic shift in the crypto ETF landscape.
As mentioned earlier, the Brazilian government introduced cryptocurrency taxation in 2019 to regulate crypto-related transactions. From a tax perspective, cryptocurrency is a movable good. Hence, any profits made from selling cryptocurrency are subject to Capital Gains Tax.
According to the new tax laws, Brazilians are required to pay taxes on crypto profits earned from foreign exchanges as follows:
- Profit earned up to R$ 6,000 - 0%
- From R$ 6,001 to R$ 50,000 - 15%
- R$ 50,001 and above - 22,5%
Implications of Regulatory Approaches
The need for regulatory approaches arises from the rapid growth and widespread adoption of cryptocurrencies. However, regulatory approaches, like in other industries, present both risks and opportunities within the cryptocurrency industry.
Regulators are faced with the delicate task of fostering crypto industry growth while safeguarding the interests of businesses and consumers.
This section explains how these evolving crypto regulatory approaches affect businesses and consumers in relation to innovations, crypto adoption, and market stability.
Impact on Businesses
Here’s how regulations affect crypto-related businesses:
Compliance burden: Crypto-related businesses must comply with know-your-customer (KYC) and anti-money laundering (AML) regulations. Implementing these procedures can significantly add compliance costs for crypto-related businesses.
Regulations may require crypto services providers to comply with tax laws and securities laws. Complying with these laws can sometimes be burdensome, especially for smaller crypto-related businesses with limited resources.
Also, compliance with regulations may lead to the adoption/creation of new financial tools/products. Adopting/creating these new tools/products may not only increase compliance costs but also introduce some operational challenges.
Operational challenges: Most time, adapting to new regulations creates operational challenges. For instance, Norway enacted a law in 2014 that aimed to implement higher electricity fees for crypto-mining operators, thus creating operational challenges for these operators.
Also, the need to implement new technology, hire new personnel, and so on can lead to operational challenges.
Regulatory uncertainty: There are variations in crypto regulations across different countries. These variations often lead to jurisdictional or regulatory uncertainties for crypto-related businesses.
Hence, crypto-related businesses may have to move their operations to countries with softer or more friendly regulations - regulation arbitrage
Impact on Consumers
Here's are some impact of crypto regulations on consumers:
Market restrictions: Some potential consumers (investors) may be faced with crypto market restrictions, which may prevent them from accessing certain crypto assets, products, or platforms.
Higher fees: Sometimes, crypto regulations may lead to an increase in compliance costs for crypto-related businesses. This may subsequently lead to higher fees for consumers.
Potential risks and uncertainties: Most times, variations in crypto regulations across different countries often create potential risks, complexities, and uncertainties.
Enhanced protection: Here is a positive impact though. Crypto regulations help protect consumers from market manipulations, fraud, and scams - consumer protection.
Global Trends in Crypto Regulations (2025)
As crypto regulations gain traction, here are key global trends to stay watchful of:
The Rise of CBDCs (Central Bank Digital Currencies): Many more countries are exploring or already developing CBDCs. Hence, we should expect the rise of CBDCs in the near future.
CBDCs, issued and regulated by Central Banks, can coexist with cryptocurrencies and traditional fiat currencies, creating a broader financial system.
The introduction of CBDCs may likely create new competition, reduce the need for certain crypto assets as payment methods, influence current crypto regulations, and offer insights into the future trend of crypto regulatory approaches.
Stricter KYC & AML Rules for Crypto Exchanges: Stricter KYC/AML requirements for crypto exchanges may come into play. This ensures that crypto exchanges and digital service providers deal with genuine users, preventing illicit and illegal activities like fraud, scams, terrorist financing, and money laundering.
Enhanced Consumer Protections: An important trend to expect is an increased emphasis on consumer protection. Likely protections include potential risk reporting, clearer and more accurate crypto marketing materials, precise guidelines for dispute resolution, and possibly a compulsory crypto insurance scheme.
Stablecoin Regulations & Their Future: Stablecoins have their market value pegged 1:1 to a corresponding fiat currency. Hence, legislative frameworks may be currently underway to treat stablecoin issuers like depository institutions.
Different governments and financial regulators around the world are currently introducing rules and frameworks for stablecoins.
For instance, MiCA has opened the door for EU banks to consider stablecoins. The US is also on track to establish a comprehensive federal regulatory framework for payment stablecoins via the GENIUS Act of 2025. Also, the UK’s FCA and Bank of England (BoE) are working on regulations for stablecoins to be used as a means of payment.
Decentralized Finance (DeFi) Regulation: By nature, DeFi operates on a decentralized network, which makes it difficult to apply regulations.
However, with the increase in DeFi platforms, financial regulators may soon develop and implement DeFi regulations, considering DeFi’s role in offering financial services without intermediaries.
Growing Institutional Adoption Amid Regulatory Clarity: One major barrier to institutional crypto adoption is the lack of clear regulations in the industry. However, as governments introduce clearer regulatory guidelines, we tend to see an increase in institutional adoption.
For instance, when the US SEC approved crypto ETFs in 2021, it promoted institutional adoption, attracting more institutional investors to invest in cryptocurrency.
Conclusion
Since its inception, various governments and regulators in the world have been working out ways to regulate cryptocurrency.
Crypto regulation is a good thing and holds many benefits, which include deterring illegal activities, boosting investor protections, and encouraging mass crypto adoption.
However, the implications for crypto-related businesses and consumers are profound. Hence, it is important to understand the current trend and regulatory landscape, challenges, and potential future directions to navigate the complex world of cryptocurrency.
As crypto regulations gain traction, be watchful of key global trends as policy frameworks will, inevitably, continue to change.