The rise of cryptocurrency from a speculative venture to a recognized asset class has prompted governments worldwide to consider how best to regulate it. As of September 2024, several countries have introduced regulatory frameworks aimed at enhancing user protection, promoting market transparency, and curbing illegal activities. Meanwhile, other governments continue to observe and evaluate the evolving landscape, opting for a more cautious approach before implementing comprehensive regulations.
United States
In 2022, the U.S. introduced a new regulatory framework that broadened the authority of existing financial regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The SEC has been actively asserting its jurisdiction over the crypto space, filing lawsuits and enforcement actions against high-profile entities such as Ripple, Coinbase (COIN), and Binance (BNB).²
In 2023, however, the tide began to shift in favor of the crypto industry. A U.S. District Court of Appeals ruled that Ripple’s XRP token sales to institutions were considered securities offerings—but sales on exchanges were not. Later that year, another court decision overturned the SEC’s denial of Grayscale’s attempt to convert its Bitcoin Trust into a spot ETF, eventually paving the way for the approval of Spot Bitcoin ETFs in January 2024 and Spot Ethereum ETFs in July 2024.³
Despite this progress, regulatory uncertainty persists. SEC Chair Gary Gensler emphasized that these approvals do not signal broader acceptance of crypto assets under federal securities laws. He reaffirmed the SEC’s view that the "vast majority" of crypto assets are investment contracts and therefore subject to securities regulations.³
"We approved the listing and trading of certain spot Bitcoin ETP shares today, but we did not approve or endorse Bitcoin." – Gary Gensler, SEC Chair
China
China maintains one of the strictest stances on cryptocurrency. The People’s Bank of China (PBOC) banned all crypto-related business activities, declaring them unauthorized forms of public financing.⁴
In May 2021, China banned Bitcoin mining, prompting many miners to shut down or relocate.⁵ By September 2021, the government had imposed a blanket ban on all cryptocurrencies, effectively eliminating legal participation in the crypto space within its borders.⁶
Canada
Canada has taken a proactive regulatory approach. While cryptocurrencies are not considered legal tender, the country was the first to approve a Bitcoin ETF, with several now trading on the Toronto Stock Exchange.⁷
Crypto trading platforms must register with provincial regulators under the oversight of the Canadian Securities Administrators (CSA) and the **Investment Industry Regulatory Organization of Canada (IIROC).**⁸
Additionally, Canada classifies all crypto-related firms as Money Services Businesses (MSBs), requiring registration with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).⁹ Cryptocurrencies are taxed similarly to other commodities, and profits are subject to capital gains tax.¹⁰
United Kingdom
The UK formally recognized crypto assets as regulated financial instruments in October 2022, when the Financial Services and Markets Bill passed in Parliament. It became law in June 2023, extending regulatory oversight to all crypto assets, services, and providers.
Crypto firms must comply with Know Your Customer (KYC), Anti-Money Laundering (AML), and Counter-Terrorist Financing (CFT) regulations.¹¹ In addition, crypto exchanges and wallet providers are required to report to the Office of Financial Sanctions Implementation (OFSI) if they suspect a user is subject to sanctions or has committed a financial sanctions offense.¹²
While capital gains tax applies to crypto trading, tax treatment can vary based on the nature of the activity and the entity involved.
Japan
Japan is often cited as a model for progressive crypto regulation. Cryptocurrencies are recognized as legal property under the Payment Services Act (PSA). Crypto exchanges must register with the Financial Services Agency (FSA) and meet strict AML/CFT compliance standards.¹³
The country also established the Japanese Virtual Currency Exchange Association (JVCEA) in 2020—a self-regulatory body whose membership includes all licensed exchanges.
From a tax perspective, gains from cryptocurrency trading are classified as miscellaneous income and taxed accordingly.
