Since its birth in 2008, cryptocurrency has grown in popularity and become an important part of the global financial system. Cryptocurrencies may significantly alter financial structures as they exist today and transform the next generation of money and payments. However, these changes come with significant concerns around cryptocurrencies for their potential negative impacts on markets, investors, users, and the environment. Governments around the world are looking to create regulations to prevent these harms while encouraging the innovative capabilities of cryptocurrencies.
We look at 60 countries— this includes G20 member states, in addition to countries with the highest rates of cryptocurrency adoption. This new research categorizes and explains how the world’s largest economies and those with high rates of cryptocurrency activity are regulating cryptocurrencies within their jurisdictions.
We analyze how 60 countries have regulated crypto-assets in their jurisdictions. For each country, the regulated actors can be cryptocurrency issuers, cryptocurrency exchanges, traditional financial institutions, service providers, or miners.
Each country is assigned one of the following regulatory statuses: legal (where all activities are permitted), partial ban (where one or more activity is not permitted), and general ban (where all activity is limited).
Countries regulate actors in the crypto sector using tax policy, requirements to combat money laundering and terrorist financing, consumer protection rules, and licensing and disclosure obligations. The map below considers these four categories of regulation.
Click on a country to see status. Click on “see more” to view further details.
Among the 60 countries we studied, cryptocurrency is legal in 32, partially banned in 19, and generally banned in 8. In ten G20 countries, representing 50% of the world’s GDP, crypto-assets are fully legal. Regulation is under consideration in all G20 countries.
Both emerging-market and advanced economies lag on regulatory development. Only 25% of the economies studied have regulations in place on taxation, AML/CFT, consumer protection, and licensing. Only 16% of the emerging market countries have all the above regulations.
Among the countries reviewed, there is a generally weak relationship between cryptocurrency adoption rates and regulatory restrictiveness. Six of the top ten countries in cryptocurrency adoption have partial or general bans in place.
Crypto-asset regulations are changing rapidly around the world. Of the countries reviewed, nearly two-thirds are in the process of making substantial changes to their regulatory framework, often through new and bespoke legislation addressing cryptocurrency markets.
Experimentation is widespread. Countries use regulatory sandboxes to test and co-operate with the private sector. Canada, Italy, Mexico, and Saudi Arabia have developed regulatory sandboxes. Japan has associations for exchanges and issuers to encourage self-regulation.
Since the fall of FTX, cryptocurrency exchanges have come under more scrutiny. Regulatory authorities globally are looking to promote responsible industry standards and prevent negative impacts arising from regulatory arbitrage.
Stablecoins, which are usually backed by a fiat currency, constitute the next frontier of crypto regulation. In the US, UK and Thailand stablecoin regulation is under consideration. In the EU, fiat-backed stablecoins will be regulated under MiCA legislation.
Consumer protection rules that can prevent fraud are lagging behind. Less than one-third of the countries reviewed have rules in place to protect consumers. Such rules include advertising regulations, cybersecurity requirements for service providers, investor accreditation, and others.
Of the 60 countries analyzed, 90% have active central bank digital currency (CBDC) projects in addition to cryptocurrency regulations. This indicates that countries adapt and update cryptocurrency regulations simultaneously as they explore CBDCs.
The Role of Global Governance Institutions
Standard setting bodies play an important role in creating governance and industry standards in addition to promoting global cooperation on crypto-asset regulation.
Click on the legend to see details. Hover and click on a card to view more details.
Development team: Frank Ngoga and Christophe de Jonge
Cryptocurrency adoption rates are from Chainalysis’ “Geography of Cryptocurrency 2023” report.
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