Cryptocurrency and crypto-assets – mapping the regulation

In the past few months, we looked at the regulations around the world which are tackling cryptocurrencies and crypto-assets. With the help of publicly presented data and other research sources, we mapped the regulations of around 140 countries and looked at the solutions implemented. In our research, we looked separately at national regulations around cryptocurrencies, Initial Coin Offerings (ICOs), and/or online exchanges. What follows is a summary of our main findings.

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Clarifying the terms

As with many novel technologies, first efforts are on track towards establishing a common taxonomy and topology for the cryptocurrency system. Apart from cryptocurrencies, crypto-assets are being recognised in many countries as a new financial instrument. This includes crypto tokens issued through the ICO processes. Many companies are using this method to raise money and the main issue for regulators is how to look at these tokens from an investment point of view. Central financial institutions are issuing recommendations for token classification and this is helping informed decisions around consumer protection concerns.Tackling risks

Only a few countries worldwide have imposed a full ban on cryptocurrencies or ICOs. Policymakers are most oriented towards establishing clear procedures around online exchanges for cryptocurrency trading. Across the globe, regulators are enhancing the rules on Anti-Money-Laundering laws to append online cryptocurrency trading platforms. Almost all online exchanges are now implementing Know-Your-Customer procedures and the anonymity of cryptocurrency traders is almost non-existent.Addressing financial concerns

Central banks around the world are being particularly careful about the public risks associated with the use of cryptocurrencies, and almost all have issued warnings on the risks involved in cryptocurrency trading. Tax rules are also being in many countries to include profits for trading cryptocurrencies.

Some of the nations under the toughest financial sanctions have introduced plans on creating national cryptocurrencies as a way to circumvent those sanctions. On the other hand, small states and states with more liberal financial rules are trying to jump in front with progressive regulation and innovative solutions for blockchain-based services.

Dividing by continents or large regions

The EU is focusing on tougher customer protection rules and more transparent user policies. Asia is looking at the model of self-regulation by the industry, while Africa is searching for better consumer protection regulations and a possible leverage of crypto industry towards wider financial inclusion. Latin America is divided between those who believe that cryptocurrencies will bring the financial freedom (Venezuela) and those that are completely banning cryptocurrencies and their use (Bolivia). The MENA region (Middle East and North Africa) is being tough on cryptocurrencies, but quite open towards decentralised data ledger technologies, often called blockchains.