*This article is excerpted from the second chapter of Beosins 2024 Web3 Blockchain Security Situation, Anti-Money Laundering Analysis and Review, and Summary of Key Regulatory Policies in the Crypto Industry. The full version can be read and downloaded:
Currently, virtual asset service providers (VASPs) face multiple challenges such as asynchronous jurisdictions, inconsistent regulatory maturity, and misaligned anti-money laundering (AML) guidelines across countries and regions. In particular, in terms of the legality of virtual assets, the contradictions and conflicts between different regions are becoming more and more significant. The lack or fragmentation of supervision in some regions has made the global regulatory framework complex and uncoordinated, exacerbating the operational pressure on companies.
The complexity and inconsistency of the global regulatory environment
Frequent virtual asset security incidents and compliance issues have driven ongoing discussions on legislation and regulatory effectiveness in various countries. However, the overlap and even conflict of authorizations and rules between regulators have brought greater uncertainty to the industry. This environment forces VASPs to be flexible in order to cope with uneven regulatory requirements and navigate the complex global regulatory landscape. At the same time, the differences in expectations for regulatory standards in different regions have led VASPs to bear higher operating costs and resource investment to achieve compliance goals. This asymmetry in compliance costs has seriously affected the globalization process of enterprises.
As global regulatory standardization gradually advances, companies need to develop long-term cross-regional strategies to effectively adapt to a strict and reputable regulatory environment. For example, in jurisdictions that follow higher standards, such as Europe, Singapore and Hong Kong, companies can build a compliance foundation for long-term development with the help of clear regulatory guidance and policy support.
Diversity of regulatory developments across regions and their impact
The maturity of regulatory development in various regions is not only related to the legislative situation, but also affected by the cost of applying for a license, the requirements for holding a license, and the intensity of subsequent supervision. Some jurisdictions have adopted policies that strictly restrict or even completely ban virtual assets. Such measures can indeed effectively curb illegal activities and regulatory loopholes in the short term, but in the long run, a complete ban on the use of virtual assets may stifle technological innovation and market vitality.
At the same time, regions with slow legislative progress or lack of regulation often find it difficult to support technological innovation and market demand. In this environment, even if VASPs try to introduce advanced compliance processes and anti-money laundering operations, they are often limited by the lack of a corresponding legal framework. On the contrary, in advanced jurisdictions with clearer regulation, such as Hong Kong, Singapore, and parts of Europe and the Middle East, companies can efficiently promote business development and technological innovation under the guidance of policies. These regions have attracted international capital through tax incentives, optimized business environment, and the implementation of Travel Rules, and have occupied an important position in the global virtual asset industry.
Seeking a dynamic balance between regulation and innovation
Achieving a balance between regulation and technological innovation on a global scale is key to promoting the healthy development of the virtual asset industry. Ambiguous or inconsistent regulation may pose risks to VASP operations, but overly strict or inflexible regulation may also inhibit innovation. An ideal regulatory environment should be able to protect consumer interests and maintain financial stability while providing space for the long-term development of the industry.
If VASPs can fulfill their anti-money laundering obligations under a clear regulatory framework while reducing unnecessary compliance costs, this will significantly increase their enthusiasm for doing business in relevant regions. For example, Hong Kong and Singapore not only attract companies through tax incentives and policy support, but also cultivate talents in the blockchain field through the improvement of the education system. Some top universities have already opened blockchain technology courses, establishing a complete ecological chain from technology research to commercial applications.
To promote the development of the Web3 industry, it is also necessary to optimize the business environment in light of the actual regional conditions. For example, legislatures can balance innovation and risk by setting up a regulatory sandbox, allowing companies to enjoy more flexibility during the testing phase. In addition, the establishment of a regional regulatory alliance or mutual recognition framework will also help reduce cross-border compliance costs and inject new vitality into the industry.
Synergy between global regulation and technological development
In the future, the development of the global virtual asset industry will depend on the coordination of regulatory policies and the advancement of technological innovation. Countries should encourage technological breakthroughs while protecting consumer rights through inclusive and flexible policy design. In particular, cross-border cooperation will become an important means to resolve compliance and regulatory differences. For example, by establishing unified regulatory standards and sharing AML data and practical experience, the overall security and sustainability of the industry can be significantly improved.
As the globalization process accelerates, VASPs need to have stronger adaptability to cope with the complex and changing regulatory environment. Through in-depth cooperation with governments, industry associations and scientific research institutions, VASPs can not only find room for development under strict supervision, but also promote the prosperity and growth of the virtual asset economy on a global scale.
In the following section, we will conduct a detailed analysis of active regulatory countries or regions around the world, focusing on the characteristics and progress of these regions in virtual asset regulation. This will include a review of the legislative frameworks of major jurisdictions, the implementation of regulatory policies, and their impact on industry development. Through these analyses, we can fully understand how different countries or regions seek a balance between technological innovation and compliance requirements, and summarize experiences and strategies that are instructive for VASPs. These insights will provide a strong reference for industry participants to formulate global development plans.
Hong Kong
Regulatory bodies and laws
In recent years, Hong Kongs status as a global financial center has been challenged and questioned to a certain extent. In response to the trend of virtual assets and related activities becoming increasingly popular in Hong Kongs economic activities and consolidating its position as an international financial center, the Hong Kong government has actively promoted cryptocurrency regulatory policies and strived to occupy a global leading position in Web3 and crypto innovation. The Hong Kong government has gradually established a sound regulatory framework through the publication of the Policy Declaration on the Development of Virtual Assets in Hong Kong and the corresponding anti-money laundering legislative infrastructure, taking a multi-institutional collaborative approach. The Legislative Council of Hong Kong is the core institution for approving and passing legislation related to the financial market. The Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA), and the Financial Services and the Treasury Bureau of Hong Kong are all authorized regulatory authorities, playing an important role in regulating cryptocurrency and virtual asset service providers, ensuring that market transparency and investor protection develop in parallel.
The Hong Kong government introduced a new licensing regime for virtual asset service providers in June 2022, requiring all institutions wishing to provide virtual asset services to apply for a license from the SFC under the Securities and Futures Ordinance (Chapter 571) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Chapter 615) (the Anti-Money Laundering Ordinance). One of the core policies of the regime is the Anti-Money Laundering Act, which is the main legislation that all VASPs must follow to ensure market transparency and compliance. On December 6, 2024, the Hong Kong government published the much-anticipated Stablecoin Bill in the Official Gazette. The legislation introduces a detailed regulatory framework tailored for issuers of legal reference stablecoins (FRS) with the aim of positioning Hong Kong as a global leader in the virtual asset space.
Latest regulatory developments
1. Licensing by the Securities and Futures Commission
Currently, the Hong Kong SFC has legally licensed seven virtual asset trading platforms (VATPs) to operate, namely OSL Exchange, HashKey Exchange, HKVAX, HKbitEX, Accumulus, DFX Labs, and EX.io, and another 11 applicants are awaiting approval. The Hong Kong SFCs license list has effectively increased the transparency of the virtual asset industry, helping the public to verify the license application status of virtual asset trading platforms and ensuring that these platforms do not make misleading or false statements about their applications to the SFC. Investors should always refer to the List of Licensed Virtual Asset Trading Platforms provided by the SFC to reduce potential investment risks. This shows that Hong Kongs VASP licensing system is meeting new regulatory challenges and will also test the soundness of Hong Kongs cryptocurrency regulatory framework.
2. Stablecoin Regulation
On December 27, 2023, the Hong Kong Treasury Bureau and the Hong Kong Monetary Authority (HKMA) jointly issued a public consultation document, inviting the public to comment on the legislative proposals for the regulatory regime for stablecoin issuers. Subsequently, on March 12, 2024, the HKMA launched an innovative measure called the Sandbox Program to provide a pilot environment for entities preparing to issue stablecoins in the Hong Kong market to iterate regulatory decisions before the relevant legislation officially takes effect. On July 18, 2024, the HKMA announced three stablecoin issuers: JINGDONG Coinlink Technology Hong Kong Limited, RD InnoTech Limited, and joint applicants: Standard Chartered Bank (Hong Kong) Limited, Animoca Brands Limited and Hong Kong Telecommunications (HKT) Limited. On December 6, 2024, the Hong Kong government published the highly anticipated Stablecoin Bill, which is an important progress in the regulatory framework for stablecoins. The bill aims to provide a legal basis for the issuance, trading and use of stablecoins to ensure market transparency and security. The publication of this bill marks Hong Kongs progress in becoming a global leader in the field of virtual assets and lays the foundation for the future digital financial ecosystem.
3. VAOTC Regulation
On February 8, 2024, the Hong Kong government released a public consultation document on Legislative Proposals for Regulating Over-the-Counter Transactions of Virtual Assets. The proposal plans to establish a licensing system for virtual asset over-the-counter service providers with the Hong Kong Customs as the regulatory agency, requiring all services that provide any virtual asset and cash spot transactions in the form of business in Hong Kong (covering all virtual asset over-the-counter trading services) must obtain relevant licenses issued by the Hong Kong Customs, and empower the Hong Kong Customs to supervise the licensees compliance with anti-money laundering and enforce corresponding statutory and regulatory requirements.
4. Exchange Traded Funds
On April 30, 2024, six spot Bitcoin and Ethereum exchange-traded funds (ETFs) were launched and opened for trading in Hong Kong, becoming the first funds in Asia to provide retail investors with the ability to trade cryptocurrencies at spot prices. These include China Asset Management Bitcoin ETF (3042.HK), China Asset Management Ethereum ETF (3046.HK), Bosera HashKey Bitcoin ETF (3008.HK), Bosera HashKey Ethereum ETF (3009.HK), Harvest Bitcoin Spot ETF (3439.HK) and Harvest Ethereum Spot ETF (3179.HK). These Hong Kong cryptocurrency ETFs have a unique physical redemption model, allowing investors to indirectly hold cryptocurrencies by holding ETF shares.
United Arab Emirates
Regulatory bodies and laws
UAE Cabinet Resolution No. 111 gives the power of virtual asset regulation to the Securities and Commodities Authority (SCA), a federal financial institution of the UAE, while payment services are regulated by the Central Bank of the UAE (CBUAE). SCAs management responsibilities in the Emirate of Dubai are handed over to the worlds first regulator dedicated to the cryptocurrency industry: the Dubai Virtual Asset Regulatory Authority (VARA), which is responsible for regulating virtual assets and virtual asset-related activities in all regions of the Emirate of Dubai (excluding the Dubai International Financial Center) to protect investors and establish international standards for the governance of the virtual asset industry. The regulator of the Abu Dhabi Global Market (ADGM) is the Financial Sector Regulatory Authority (FSRA), which issues financial services licenses (FSPs) to VASPs. On September 9, 2024, VARA and SCA reached a cooperation agreement to clarify their respective regulatory scopes and formulate licensing and supervision rules for VASPs. Subsequently, on September 30, 2024, VARA amended a number of regulations, and the new regulations expanded the scope of regulation to cover the marketing, promotional activities, consulting services, decentralized finance (DeFi) and custody services of virtual assets. Currently, 23 VASPs are regulated by VARA (21 active and 2 pending). The relevant legislation, Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai, provides the basis for legal supervision, and the Virtual Assets and Related Activities Regulations 2023 provides the relevant regulatory framework and guidance for license application and holding. In addition, the Dubai International Financial Center (DIFC), a financial free zone established by the UAE, has independent cryptocurrency supervision. The regulator is the Dubai Financial Services Authority (DFSA), which has an independent virtual asset (VA) framework, including investment and crypto token systems. VARA does not have legal jurisdiction within DIFC, and the two regions of Dubai operate independently under different regulations.
Stablecoin Regulation
In June 2024, the Payment Token Services Regulation issued by CBUAE provides a regulatory framework for fiat stablecoins, requiring any local or international institution operating in the UAE and providing services such as payment token issuance, payment token conversion, and payment token custody and transfer to obtain prior permission from the UAE Central Bank.
In October 2024, the Central Bank of the United Arab Emirates approved AED Stablecoin in principle under the Payment Token Services Regulatory Framework, making it the first regulated dirham-pegged stablecoin in the UAE. If fully approved, AED Stablecoins AE Coin will be able to be used as a local trading pair on exchanges and decentralized platforms, while allowing merchants to use AE Coin for payment of goods and services. In addition, Tether also plans to launch a stablecoin pegged to the dirham.
Taiwan
Regulatory bodies and laws
Taiwans Financial Supervisory Commission (FSC) is the competent authority for anti-money laundering of cryptocurrency platforms and trading businesses, and is responsible for the supervision and regulation of local cryptocurrency transactions.
In order to strengthen the supervision of virtual assets, the FSC has formulated a number of management methods and guidelines, including the Virtual Currency Platform and Trading Business Anti-Money Laundering and Anti-Terrorism Measures promulgated in 2021 and the Self-Discipline Code for Banks to Establish Business Relationships and Transaction Monitoring between Virtual Currency Platforms and Trading Businesses formulated in 2023. Article 6 of the Anti-Money Laundering Act (Addition of VASP Anti-Money Laundering Registration System and Criminal Liability of Illegal Operators), which was revised and passed in July 2024, was officially implemented on November 30 of that year, requiring those who have not completed the anti-money laundering registration not to provide VA services, and adding new revisions to the Anti-Money Laundering Act. At present, the FSC has formulated the Money Laundering Prevention Registration Measures for Businesses or Personnel Providing Virtual Asset Services (hereinafter referred to as the VASP Registration Measures) in accordance with the second authorization of Article 6 of the Act. Currently, the FSC has been researching and proposing the draft of the Special Law on Virtual Asset Management and is expected to submit the draft law to the court before June 2025 (the FSC plans to promote the improvement of VASP supervision through four steps: regulating virtual asset operators, establishing an association to formulate self-regulatory norms, strengthening anti-money laundering management, and formulating special laws).
Regulatory or other requirements
Since July 2021, Taiwan has promulgated the Virtual Currency Platform and Trading Business Anti-Money Laundering and Anti-Terrorism Measures for businesses engaged in cryptocurrency acceptance, currency exchange, token transmission/storage, token issuance and sales. In 2024, the Executive Yuan of Taiwan passed the amendment to the Four New Anti-Fraud Laws, which included the Fraud Crime Prevention Regulations (Anti-Fraud Special Law) and the Money Laundering Prevention Law. Following the formulation of a number of regulatory guidelines such as the Self-Discipline Norms for Banks to Establish Business Relationships and Transaction Monitoring between Virtual Currency Platforms and Trading Business Enterprises for virtual asset service providers in 2023, on March 29, 2024, Taiwan approved the establishment of the Taiwan VASP Association. At present, a total of 26 virtual asset service providers have completed the declaration of compliance. It is planned to continue to conduct special financial inspections on 6 VASP operators in Q4 2024 (previously, 4 VASP anti-money laundering special inspections have been completed). At present, the FSC has issued the Money Laundering Prevention Registration Measures for Businesses or Personnel Providing Virtual Asset Services (VASP Registration Measures), which came into effect on November 30. VASP platform operators must apply for registration before March 31, 2025, and complete the registration before September 30, 2025; if they fail to complete the registration and continue to operate after the deadline, they may be sentenced to a maximum of 2 years in prison, a fine of up to NT$5 million or a fine of up to NT$5 million.
South Korea
Regulatory bodies and laws
On July 19, 2024, South Koreas Virtual Asset User Protection Act (PVAU) officially came into effect. It was passed by the National Assembly of South Korea and gave the Financial Services Commission (FSC) of South Korea the power to regulate the cryptocurrency industry. The bill aims to protect the interests of domestic investors and enhance market integrity: it defines virtual assets as digital assets that can be traded or transferred electronically, and stipulates the basic rights and obligations of users and service providers (such as requiring VASPs to purchase commercial insurance, set up reserves, establish transaction monitoring and reporting systems, and pay interest income on Korean won deposits to customers, etc.), while listing the opposite and excluding certain assets (such as NFTs and CBDCs) from regulation. According to the amendment to the executive order of the Financial Services Commission (FSC) Establishment Act, virtual asset operators are required to pay corresponding regulatory fees based on operating income, among which cryptocurrency exchanges such as Upbit, Bithumb and Coinone will start paying regulatory fees from 2025.
The Korean FSC and the Korean Financial Intelligence Unit (KoFIU) (an agency established under the Financial Transaction Reporting Act) are responsible for special supervision of virtual assets, ensuring that virtual asset service providers comply with laws and regulations and protect the interests of investors. Among them, the FSC is responsible for formulating policies and has the right to supervise, inspect and punish virtual asset service providers (VASPs) to ensure that VASPs comply with the Anti-Money Laundering and Counter-Terrorist Financing Business Regulations, including customer identification, transaction monitoring and other measures. According to the revised Specific Financial Transaction Information Reporting and Use Act, the FSC will implement travel rule requirements for VASPs from March 25, 2022. The travel rule is designed to prevent money laundering activities using virtual assets and requires VASPs to provide relevant information about users sending and receiving virtual assets when they are asked to transfer virtual assets to another VASP. KoFIU is responsible for processing business activity declaration information and receiving suspicious transaction reports (STRs) submitted by financial institutions and sending them to the relevant law enforcement agencies after analysis.
Regulatory or other requirements
South Korea implements a licensing system for cryptocurrency transactions. VASPs not only have basic anti-money laundering obligations and obligations to report to the FIU, but also additional obligations such as classification by user and transaction details. Virtual asset operators must also set acceptance conditions, such as the issuance of deposit and withdrawal accounts with real-name confirmation of financial company operators, information protection management system certification (ISMS), and representatives with no criminal record. Failure to report operating companies will be sentenced to fixed-term imprisonment of not more than 5 years and a fine of not more than 50 million won. Financial companies that trade with VASPs must comply with obligations including: checking the representative of the operator and the purpose of the transaction, checking whether the operator has submitted a declaration, and whether the funds are managed separately. Recently, KoFIU announced the status of virtual asset business reports of 40 virtual currency operating companies as of January 3, 2025.
Japan
Regulatory bodies and laws
In Japan, the regulatory bodies of cryptocurrencies include two types: national regulatory agencies and virtual asset self-regulatory organizations, namely the Financial Services Agency (FSA), the Japan Financial Intelligence Center (JAFIO), the Japan Cryptocurrency Exchange Association (JVCEA), the Japan Securities Token Issuers Association (JSTOA), and the Japan Blockchain Association (JBCA). In Japan, the Financial Services Agency (FSA) is the main agency that regulates the business activities of digital currencies such as Bitcoin. While strengthening its own supervision, the Japanese Financial Services Agency has also given the industry organization Japan Cryptocurrency Exchange Association greater power to regulate and punish industry companies. The government and the industry have in-depth collaboration to jointly promote the healthy development of the industry. The Japanese Financial Services Agency is responsible for licensing and registering cryptocurrency trading platforms to ensure that the platforms have the necessary compliance requirements and security measures; supervising and monitoring cryptocurrency trading platforms to ensure that the trading activities of the platforms are compliant, fair and transparent; responsible for assessing and managing the risks of cryptocurrency trading platforms, including network security risks, market risks and investor risks; punishing and disciplining violations to maintain market order and investor rights. Japans cryptocurrency anti-money laundering law, which will be implemented from June 2023, includes the Financial Action Task Forces travel rule, requiring financial institutions that handle crypto asset transfers to pass customer information to the next institution, including the names and addresses of senders and receivers. Target crypto assets include stablecoins or cryptocurrencies pegged to currencies such as the U.S. dollar or commodities. Violators who fail to comply with the authorities corrective orders will face criminal penalties. From April 2024, Japanese companies will no longer pay taxes on the unrealized gains of their cryptocurrency holdings. This will bring corporate tax obligations more in line with those of retail investors under current Japanese law.
Regulatory or other requirements
The Japanese Financial Services Agency uses a registration system to regulate cryptocurrency trading institutions. Certain conditions must be met to register and establish a Japanese digital currency trader, including the establishment of a Japanese legal person company, the leasing of a Japanese office, the employment of Japanese employees (one of whom is a director of a Japanese company), the opening of a bank account for a Japanese company, a normal trading system (Japanese version is not required), and the provision of KYC information. According to data from May 13, 2024, there are currently 29 cryptocurrency exchange service providers registered in Japan. Since 2018, the Japanese Financial Services Agency has become very strict in approving cryptocurrency exchanges. At the same time, the Japanese Financial Services Agency requires digital currency exchanges, including Bitcoin, to implement stricter KYC policies than the current ones. Exchanges must begin to verify the identities of account opening users, keep transaction records, and report suspicious transactions to regulators.
Stablecoin issuance and regulation
On March 4, 2022, the Bill to Partially Amend the Payment Services Act, etc. to Establish a Stable and Efficient Fund Settlement System was submitted to the Diet to introduce new regulations for stablecoins. The bill was approved on June 3, 2022 and came into effect on June 1, 2023. Institutions that are allowed to issue EPI (i.e., currency-denominated stablecoins) directly to Japanese residents are limited to banks, money transfer service providers, trust banks or trust companies licensed in Japan. This is because the issuance and exchange of EPI constitute fund remittance transactions (kawase-torihiki). Without registering as an EPIESP (Electronic Payment Institution License), CAESP cannot list EPI on any exchange or manage EPI for its users. EPIESP is subject to AML/CTF regulations, including the travel rule. In addition, EPIESPs that regularly send or receive EPI to overseas virtual asset service providers (VASPs) will need to check whether these VASPs are conducting appropriate AML/CFT due diligence on their users.
Singapore
Regulatory bodies and laws
Cryptocurrency regulation in Singapore is jointly managed by multiple government agencies, the most important of which is the Monetary Authority of Singapore (MAS), which is responsible for regulating the entire financial market, including cryptocurrency (cryptocurrency)-related activities and formulating corresponding policies. Cryptocurrency exchanges and wallet service providers are required to obtain licenses under the Payment Services Act (PSA) to ensure the security and consumer protection of digital payment tokens. The Payment Services Act provides regulatory certainty for an industry that is not clearly defined. Payment services defined under the PSA include account issuance services, electronic money issuance services (which can be compared with stablecoin issuance in the context of cryptocurrencies), cross-border remittance services, domestic remittance services, merchant collection services, digital payment token (DPT) services, and currency exchange services. All businesses classified as payment service providers need to obtain a PSA license. In April and September 2024, the Guidelines on Consumer Protection Measures by DPT Service Providers were revised. The guidelines set out MASs expectations on what measures digital payment token service providers should take to address consumer protection risks. In October 2024, MAS published a consultation paper outlining the regulatory regime applicable to digital token service providers providing services outside Singapore under the Financial Services and Markets Act (FSMA), taking a significant step towards regulating the burgeoning digital asset market.
Regulatory or other requirements
Under the Payment Services Act, cryptocurrency service providers need to register and obtain a license from MAS before they can operate. Currently, there are three types of PSA licenses: Money-Changing License, Standard Payment Institution (SPI) and Major Payment Institution (MPI). Currently, SPI and MPI can be applied to digital currency exchanges. This includes but is not limited to cryptocurrency exchanges, e-wallet providers, etc. Service providers also need to demonstrate their ability and procedures to meet anti-money laundering requirements, such as risk-based assessment methods, strict customer identification (KYC), transaction monitoring (identifying suspicious transactions, large transactions, frequent small transactions, or transactions with high-risk countries or regions), reporting of suspicious activities (if service providers find signs of money laundering or terrorist financing activities, they must report suspicious transactions to the Financial Crime Investigation Department of the Monetary Authority of Singapore (MAS) and the Singapore Police Force), complete record keeping (cryptocurrency platforms need to keep transaction records for at least five years), etc. In addition, the Central Bank of Singapore issues digital payment token (DPT) service licenses, enabling companies to provide cryptocurrency services. It is reported that Crypto.com, Genesis and Sparrow Exchange have obtained this license.
European Union
Regulatory bodies and laws
The Sixth Anti-Money Laundering Directive (6 AMLD), adopted by the European Union in 2020, expanded the definition of the crime of money laundering to cover more criminal activities, including the use of cryptocurrencies. After long negotiations and revisions, the MiCA Regulation was approved by the European Parliament on April 20, 2023. However, its entry into force is not immediate, as a transition period is established to allow market participants to adapt to the new rules. The publication date of the MiCA Regulation in the Official Journal of the European Union is June 9, 2023, marking the beginning of this transition period. The implementation of the MiCA Regulation will be carried out in stages, setting a transition period of 24 to 36 months for the 27 EU countries. This gradual implementation is intended to ensure a smooth transition to the new system, giving businesses the necessary time to comply with these new requirements. Before MiCA is fully implemented, EU member states have established their own licensing and registration requirements for cryptocurrency service providers (VASPs). Financial regulators in each member state (such as the UKs Financial Conduct Authority FCA, Germanys BaFin, etc.) have implemented specific registration and regulatory requirements in accordance with the EUs anti-money laundering directives (such as 6 AMLD). Once MiCA officially comes into effect (which will take effect gradually from 2024), all EU member states will follow a unified virtual asset service provider licensing framework to ensure consistent regulatory standards in the cryptocurrency industry. MiCA establishes a unified regulatory framework for cryptocurrency service providers, including a regulatory licensing system for cryptocurrency issuers and virtual asset service providers (VASPs).
Regulatory or other requirements
The CASP regulatory rules will come into effect in December 2024 to further strengthen the regulation of cryptocurrencies to ensure that virtual asset providers comply with anti-money laundering regulations. Any company that provides virtual asset services in the EU (such as cryptocurrency exchanges, wallet service providers, custody service providers, etc.) needs to obtain a license from the EU regulator. These service providers need to apply for licenses from relevant regulators and comply with a series of compliance requirements, including consumer protection, anti-money laundering (AML), customer due diligence (KYC), transaction monitoring identification, suspicious activity reporting, employee training, and capital adequacy requirements. MiCA divides cryptocurrency-related activities in detail, including the issuance of crypto assets (such as initial coin offerings (ICOs), crypto asset trading and exchanges (activities involving cryptocurrency exchanges), cryptocurrency wallet management (involving digital asset storage and management), and other related services such as cryptocurrency clearing, settlement, investment consulting, etc. At the same time, MiCA provides cryptocurrency service providers with the possibility of cross-border operations in the EU market, that is, a license from one member state can be valid in other EU member states without the need for repeated applications. This means that once a company obtains a license in one member state, it can operate throughout the EU. At the same time, the European Securities and Markets Authority ESMA has the power to take enforcement measures against non-compliant CASPs.
Stablecoin issuance and regulation
The governance rules for stablecoins will take effect in June 2024, providing guidance to stablecoin issuers on clearly defined reserve requirements and redemption mechanisms for issuing fiat stablecoins. Multiple criteria are used to determine whether requirements are met, such as market size, business scenarios, customer base, and transaction volume.
USA
Regulatory bodies and laws
The US virtual currency regulatory system is relatively complex, involving two levels of supervision at the federal and state levels. The US Securities and Exchange Commission (SEC) is responsible for regulating securities-related virtual assets, while the US Commodity Futures Trading Commission (CFTC) is responsible for regulating commodities and their derivative virtual assets. The United States anti-money laundering measures are closely linked to international anti-money laundering standards such as the Financial Action Task Force, and the Financial Crimes Enforcement Network FinCEN is responsible for anti-money laundering and anti-terrorist financing-related supervision. On May 22, 2024, the U.S. House of Representatives passed the 21st Century Financial Innovation and Technology Act (FIT 21), proving that both parties support clear encryption policies and provide clearer guidelines for the jurisdictional division of the CFTC and SEC. This provides a clearer regulatory framework for the cryptocurrency and virtual asset industries in the United States and enhances market transparency and compliance. At the same time, it also provides more effective regulatory tools to prevent cryptocurrency abuse, protect consumers, and maintain financial stability. However, for cryptocurrency platforms and exchanges, the FIT 21 Act may bring higher compliance costs, including strengthening compliance teams, system development, and compliance audits. For some small or start-up crypto companies, they may face a considerable burden. And because cryptocurrency transactions are usually cross-border, FIT 21 The implementation of the bill may require global cooperation to ensure international regulatory coordination and information sharing. This poses a challenge to the regulation of the global cryptocurrency market. Although the bill will help prevent the abuse of cryptocurrencies, overly strict regulation may have a suppressive effect on innovation in blockchain technology and cryptocurrencies, especially in the development of new decentralized financial (DeFi) applications and innovative products. Under the leadership of the new government, perhaps more new crypto legislation will be implemented.
Regulatory or other requirements
In the United States, cryptocurrency regulation does not have a unified national licensing system, but relies on multiple federal and state regulatory frameworks, with specific license and permit requirements varying by state and business type. According to FinCEN regulations, cryptocurrency trading platforms (such as Bitcoin exchanges) and other cryptocurrency service providers (such as wallet service providers, payment service providers) need to comply with anti-money laundering regulations including MSB (Money Services Business) registration and reporting, customer due diligence (CDD), large amounts (over $10,000) and suspicious transaction reports (Suspicious Activity Reports). Although the United States does not have a unified cryptocurrency licensing system, other federal regulators, the SEC and the CFTC, also have different regulatory requirements for certain specific businesses. For example, the SEC may require certain cryptocurrencies to be classified as securities in certain circumstances, which means that these cryptocurrencies must comply with securities laws and registration requirements. The CFTC is responsible for regulating the cryptocurrency futures and derivatives markets.
U.K.
Regulatory bodies and laws
The UK has an independent legal framework for virtual assets rather than under the MiCA framework. The Financial Conduct Authority (FCA) is one of the main institutions regulating cryptocurrencies in the UK. It is responsible for regulating specific crypto-related activities to prevent financial crimes, protect consumer rights, and ensure the integrity of the market. For example, it requires companies engaged in crypto-related businesses to register and comply with relevant regulations such as Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF), and regulates cryptocurrency trading platforms, wallet providers, etc. to ensure that their operations comply with regulatory requirements and prevent them from being used for illegal activities.
Regulatory or other requirements
The UK regulates cryptocurrencies in the form of registration and licensing. Companies that provide crypto services to the UK need to obtain FCA approval. Registered companies must also re-evaluate and confirm according to the new requirements after the implementation of the new system. In addition, foreign companies that want to conduct regulated crypto business in the UK can apply for UK authorization for their UK branches. Currently, 48 crypto asset companies have been registered with the FCA.
Issuance and Regulation of Stablecoins
The Financial Services and Markets Act was passed in 2023. The passage of this bill laid the foundation for the UKs regulation of cryptocurrencies, including stablecoins, and clarified that the Treasury, the Bank of England and the Financial Conduct Authority (FCA) have the authority to regulate cryptocurrencies and stablecoins. Stablecoin issuers will need to obtain authorization from the FCA to engage in stablecoin issuance activities. The FCA has the right to require stablecoin issuers to deposit all reserves in a statutory trust to ensure the stability of the stablecoin value and the rights of investors. The government plans to develop a financial market infrastructure sandbox to support companies in using technologies such as blockchain to provide financial market infrastructure services, which also provides a certain experimental environment for the innovative issuance and application of stablecoins.
Türkiye
Regulatory bodies and laws
As the worlds fourth-largest cryptocurrency market, Turkeys trading volume in 2023 reached $170 billion, surpassing Russia and Canada, demonstrating its important position in the cryptocurrency field. However, Turkey still faces many challenges between regulation and market development. Although buying, holding and trading cryptocurrencies are legal in Turkey, using cryptocurrencies as a payment tool has been banned since 2021. This means that although investors can trade freely, they cannot directly apply cryptocurrencies to daily consumption scenarios.
The Capital Markets Board of Turkey (CMB) is the national financial management and supervision agency, also known as SPK (Sermaye Piyasası Kurulu). On July 2, 2024, the CMB officially announced the Capital Markets Law Amendment No. 7518 (Article No. 32590), which incorporated the provisions on crypto asset service providers (CASPs) and crypto assets into legislation. Furthermore, on December 25, 2024, the main provisions of the new anti-money laundering regulations were clarified, focusing on the setting of transaction thresholds, risky transaction processing and restrictions on unregistered wallets, striving to improve the transparency and security of cryptocurrency transactions.
Regulatory or other requirements
Crypto-asset service providers (CASPs) must obtain a license from the CMB, and activities related to investment advisory and asset management related to crypto-assets will require a certificate of authorization issued by the CMB and comply with the standards set by TUBITAK (Scientific and Technological Research Council of Turkey). As of December 2024, 77 cryptocurrency companies have applied for operating licenses from the Turkish Capital Markets Board. Under the new regulations, when a user performs a cryptocurrency transaction exceeding 15,000 Turkish lira (about $425), they must submit complete identity information to the service provider. For transactions below this threshold, service providers can selectively collect relevant information. This regulation is intended to ensure the traceability of large transactions, thereby effectively curbing illegal capital flows. If the sender of cryptocurrency fails to provide sufficient information, its transaction will be marked as high risk. The service provider has the right to take a variety of measures in this case, including refusing transactions, restricting cooperation with relevant financial institutions, and even terminating the business relationship with the transaction party. This regulation provides service providers with greater discretion and helps to improve the security of the overall trading system. Wallet addresses that are not registered with the platform are also strictly regulated. Service providers are required to collect the senders identity information, otherwise the relevant transactions will be restricted. This measure is aimed at combating illegal activities such as money laundering and financing of terrorism carried out through anonymous wallets.
Through the above measures, the Turkish government hopes to establish a more transparent and secure trading environment in the field of cryptocurrency, laying the foundation for the standardized development of the industry in the future.
Malaysia
Regulatory bodies and laws
The Securities Commission of Malaysia (SC) is one of the important entities in cryptocurrency regulation and is responsible for regulating the securities market, including cryptocurrency trading. It regulates cryptocurrency trading platforms, digital asset custodians, etc. in accordance with relevant laws and guidelines to ensure that market participants meet regulatory requirements. Bank Negara Malaysia (BNM): Mainly responsible for formulating anti-money laundering and anti-terrorist financing policies. Although it does not regard cryptocurrency as a legal currency or payment tool, it will pay attention to the relevant risks in the cryptocurrency field and monitor the trends of key indicators to maintain financial stability.
Regulatory or other requirements
The Securities Commission of Malaysia (SC) requires companies engaged in cryptocurrency-related businesses to comply with the licensing system: relevant companies must obtain the approval of the Securities Commission of Malaysia and meet its regulatory standards. For example, digital asset exchanges must accept SC registration applications before they can legally operate in Malaysia. As of December 2024, there are 12 institutions under the supervision of the SC, including 6 Digital Asset Exchange (DAX) Operators, 2 Initial Exchange Offering (IEO) Operators, and 4 Digital Asset Custodians (DAC).
Thailand
Regulatory bodies and laws
The Securities and Exchange Commission of Thailand (SEC) is one of the core entities for cryptocurrency regulation in Thailand. It is responsible for regulating cryptocurrency-related businesses and market participants, including the licensing and supervision of cryptocurrency exchanges, brokers, dealers, etc., and for reviewing and supervising the issuance and trading of digital tokens. The Digital Asset Business Act is the basic law for cryptocurrency regulation in Thailand. It came into effect on May 14, 2018. The Act defines cryptocurrencies and other digital tokens as digital assets, clarifies the legal status of digital assets, and stipulates the legal framework for digital asset-related businesses, providing an important basis for cryptocurrency regulation in Thailand.
Regulatory or other requirements
The Thai Securities and Exchange Commission (SEC) requires that businesses must be registered under Thai law and have a certain amount of paid-in registered capital, ranging from 1 million baht (approximately $30,000) to 50 million baht, depending on the type of license. Businesses such as digital asset trading centers, brokers, and dealers must obtain approval from the Thai SEC.
Cryptocurrency exchanges and other related business operators must obtain a license from the Thai Securities and Exchange Commission and have a starting capital of at least 50 million baht. The platform must have strong security measures to protect user assets and prevent hacker attacks. Digital asset business operators and digital token portal service providers follow strict anti-money laundering and counter-terrorist financing requirements, including due diligence on customers, implementation of risk-based internal controls, and reporting suspicious transactions to the authorities. In addition, cryptocurrency exchanges must disclose user information in a timely manner to protect investors right to know. Currently, a total of 38 Digital Asset-related operating licenses have been issued.
the Philippines
Regulatory bodies and laws
The Bangko Sentral ng Pilipinas (BSP) is one of the important regulatory bodies for cryptocurrencies in the Philippines. It regulates cryptocurrency transactions by issuing relevant guidelines and regulations, such as BSP Circular No. 944, which requires cryptocurrency exchanges to register with it as remittance and transfer companies and comply with relevant operational requirements, including consumer protection measures, anti-money laundering and anti-terrorist financing regulations, etc. It is also responsible for supervising the pilot of stablecoins and other work.
The Securities and Exchange Commission (SEC) of the Philippines is responsible for regulating activities such as initial coin offerings (ICOs) and cryptocurrency investments in the cryptocurrency field. The SEC will issue relevant guidelines and warnings, requiring companies conducting ICOs to register with it and comply with securities regulations to protect the rights of investors and prevent fraud and market manipulation.
Regulatory or other requirements
The Philippines adopts a licensing system for the regulation of cryptocurrencies. VASPs such as cryptocurrency exchanges need to obtain a license issued by the BSP to operate in the Philippines. Different businesses may also require additional licenses, such as electronic money issuers (EMI) and remittance and transfer companies (RTC) licenses. In addition, the Cagayan Economic Zone Authority (CEZA), a special economic zone in the Philippines, also planned to issue a limited number of cryptocurrency exchange licenses and set strict investment and operation requirements for licensed exchanges and their subordinate traders and brokers, but this is a regulation of a specific economic zone. So far, 14 cryptocurrency service providers have been licensed.
The BSP set a travel rule that triggers cryptocurrency transactions of at least 50,000 Philippine pesos (about $1,000) or its equivalent in foreign currency, requiring VASPs to share information on all parties involved in cryptocurrency transactions to prevent the use of cryptocurrencies for illegal fund transfers.
Issuance and Regulation of Stablecoins
On May 9, 2024, the BSP approved a pilot project for the Philippine Peso-backed stablecoin PHP C issued by Coins.ph. The pilot will be conducted within the BSP’s regulatory sandbox to evaluate the functionality of stablecoins and their potential impact on the Philippine financial system.
