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Source: Beosin
Currently, virtual asset service providers (VASPs) face multiple challenges such as aberration of jurisdictions in various countries and regions, inconsistent regulatory maturity, and misalignment of anti-money laundering (AML) guidance.Especially in terms of the legality of virtual assets, conflicts and conflicts between different regions are becoming increasingly significant.The lack or fragmentation of some regional regulation has made the global regulatory framework complex and inconsistent, exacerbating the operational pressure of enterprises.
Complexity and inconsistency of the global regulatory environment
Frequent virtual asset security incidents and compliance issues have promoted continued discussions on the effectiveness of legislation and regulation in various countries.However, the overlap or even conflict between regulatory agencies’ mandates and rules brings higher uncertainty to the industry.This environment forces VASPs to have flexibility to deal with uneven regulatory requirements and navigate a complex global regulatory landscape.At the same time, the expected differences in regulatory standards in different regions have led to VASPs having to bear higher operating costs and resource investment in order to achieve compliance goals.This asymmetry in compliance costs has seriously affected the globalization process of enterprises.
With the gradual advancement of global regulatory standardization, enterprises need to formulate 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 basis for long-term development with clear regulatory guidance and policy support.
Diversity of regulatory development in various regions and its impact
The maturity of regulatory development in various regions is not only related to the legislative situation, but is also affected by the cost of applying for licenses, license requirements and subsequent supervision.Some jurisdictions have adopted policies that strictly restrict or even completely prohibit virtual assets.Such measures can indeed effectively curb illegal activities and regulatory loopholes in the short term, but in the long run, a comprehensive ban on the use of virtual assets may kill technological innovation and market vitality.
At the same time, areas with slow legislation or lack of supervision often find it difficult to support technological innovation and market demand.In this environment, even if VASP attempts to introduce advanced compliance processes and anti-money laundering operations, it is often restricted by the lack of corresponding legal frameworks.On the contrary, in advanced jurisdictions with clearer supervision, such as Hong Kong, Singapore, and parts of Europe and the Middle East, enterprises can effectively promote business development and technological innovation under the guidance of policies.These regions have attracted international capital through tax incentives, business environment optimization and Travel Rules implementation, and have occupied an important position in the global virtual asset industry.
Seeking a dynamic balance between regulation and innovation
Realizing the balance between regulatory and technological innovation globally is the key to promoting the healthy development of the virtual asset industry.Fuzzy or inconsistent regulation may pose a risk to VASP’s operations, but overly strict or inflexible regulation may also inhibit innovation.An ideal regulatory environment should be able to protect consumer interests, maintain financial stability, and at the same time provide 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 offered blockchain technology courses, and have established a complete ecological chain from technical research to commercial applications.
To promote the development of the Web3 industry, it is also necessary to optimize the business environment based on the actual situation in the region.For example, the legislature could balance innovation and risk by setting up a Regulatory Sandbox, giving businesses more flexibility during the testing phase.In addition, the establishment of inter-regional regulatory alliances or mutual recognition frameworks 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 promotion of technological innovation.Countries should use inclusive and flexible policy design to incentivize technological breakthroughs while protecting consumer rights.In particular, cross-border cooperation will become an important means to resolve the differences in compliance and regulatory.For example, by establishing unified regulatory standards, sharing AML data and practical experience, the overall security and sustainability of the industry can be significantly improved.
With the acceleration of globalization, VASPs need to have stronger adaptability to cope with complex and changeable regulatory environments.Through in-depth cooperation with governments, industry associations and scientific research institutions, VASP can not only find development space under strict supervision, but also promote the prosperity and growth of the virtual asset economy globally.
In the next 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 supervision.This will include a review of the legislative framework 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 can seek a balance between technological innovation and compliance requirements, and at the same time summarize experiences and strategies that are instructive to VASP.These insights will provide a strong reference for industry participants in formulating global development plans.
Hong Kong
Regulatory entities and laws
In recent years, Hong Kong’s status as a global financial center has been challenged and questioned to a certain extent.In response to the growing popularity of virtual assets and related activities in Hong Kong’s economic activities, while consolidating its position as an international financial center, the Hong Kong government actively promotes cryptocurrency regulatory policies and strives to take the world’s leading position in Web3 and crypto innovation.status.The Hong Kong government has gradually established a complete regulatory framework by issuing the Policy Declaration on the Development of Virtual Assets in Hong Kong and the corresponding anti-money laundering legislative infrastructure.The Legislative Council of Hong Kong is the core body that approves and adopts legislation related to financial markets.The Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA), and the Hong Kong Financial Affairs and Treasury Bureau are all competent regulatory authorities and play an important role in regulating cryptocurrency and virtual asset service providers to ensure thatMarket transparency and investor protection develop in parallel.
The Hong Kong government introduced a new virtual asset service provider licensing system in June 2022, in accordance with the Securities and Futures Ordinance (Chapter 571) and the Combat Money Laundering and Terrorist Funding Ordinance (Chapter 615) (The Combating Money Laundering Ordinance (the Regulations) require all institutions that wish to provide virtual asset services to apply for licenses from the SFC.One of the core policies of the system is the Anti-Money Laundering Act, the main legislation that all VASPs must follow to ensure market transparency and compliance.On December 6, 2024, the Hong Kong government announced the highly anticipated “Stablecoin Bill” in its official gazette.The legislation introduces a detailed regulatory framework tailored for issuers of fiat reference stablecoins (FRS) to position Hong Kong as a global leader in virtual assets.
Latest regulatory updates
1. The CSRC issued a license
Currently, Hong Kong SFC has legally licensed seven virtual asset trading platforms (VATP) operations, namely OSL Exchange, HashKey Exchange, HKVAX, HKbitEX, Accumulus, DFX Labs, and EX.io. Another 11 applicants are waiting for approval.The Hong Kong Securities Regulatory Commission’s license list effectively improves transparency in the virtual asset industry, helps the public to verify the status of the license application status of virtual asset trading platforms, and ensures that these platforms do not make misleading or false statements about their application to the Securities Regulatory Commission.Investors should always refer to the “List of Licensed Virtual Asset Trading Platforms” provided by SFC to reduce potential investment risks.This shows that Hong Kong’s VASP license system is facing new regulatory challenges, and will also test the soundness of Hong Kong’s 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 put forward opinions on the legislative proposals for the regulatory system of stablecoin issuers.Subsequently, on March 12, 2024, 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 allow for the official entry into force of relevant legislation.Iterate the regulatory decisions.On July 18, 2024, HKMA announced three stablecoin issuers: JINGDONG Coinlink Technology Hong Kong Limited, RD InnoTech Limited, and joint applications.People: Standard Chartered Bank (Hong Kong) Limited, Animoca Brands Limited and Hong Kong Telecommunications (HKT) Limited.On December 6, 2024, the Hong Kong government announced the highly anticipated “Stablecoin Bill”, which is an important progress in the stablecoin regulatory framework.The draft aims to provide a legal basis for the issuance, trading and use of stablecoins to ensure market transparency and security.The release of this draft marks the progress of Hong Kong in becoming a global leader in virtual assets and lays the foundation for the future digital financial ecosystem.
3. VAOTC Supervision
On February 8, 2024, the Hong Kong government issued a public consultation document on the Legislative Recommendations on Regulating OTC Trading of Virtual Assets, which plans to establish a virtual asset OTC Trading service provider issued by Hong Kong Customs as a regulator.The license system requires that all services that provide any virtual assets and money spot transactions in Hong Kong (cover all virtual assets over-the-counter trading services) must obtain relevant licenses issued by Hong Kong Customs and grant Hong Kong Customs authority to supervise licensees inCompliance with anti-money laundering, implementation of corresponding statutory and regulatory requirements.
4. Exchange-traded funds
On April 30, 2024, Hong Kong launched six spot Bitcoin and Ethereum exchange-traded funds (ETFs) and opened trading, becoming the first Asian fund to provide retail investors with the ability to trade cryptocurrencies at spot prices.These include Huaxia Bitcoin ETF (3042.HK), Huaxia Ethereum ETF (3046.HK), Bose HashKey Bitcoin ETF (3008.HK), Bose HashKey Ethereum ETF (3009.HK), and Jiashi Bitcoin Spot ETF (3439.HK) and CASAC Ethereum Spot ETF (3179.HK).These Hong Kong cryptocurrency ETFs have a unique physical redemption model that allows investors to hold cryptocurrencies indirectly by holding ETF shares.
UAE
Regulatory entities and laws
The UAE Cabinet Resolution No. 111 grants the power to regulate virtual assets to the UAE Federal Financial Institution Securities and Commodity Administration (SCA), and the payment service is regulated by the Central Bank of the UAE (CBUAE).SCA’s management responsibilities in the Emirates of Dubai are handed over to the world’s first regulatory body dedicated to the cryptocurrency industry: the Dubai Virtual Assets Regulatory Authority (VARA), which oversees virtual assets in all regions of the Emirates of Dubai (excluding the International Financial Centre)Activities related to virtual assets to protect investors and establish international standards for virtual asset industry governance.The regulator of Abu Dhabi Global Market (ADGM) is the Financial Industry Authority (FSRA), which issues a financial service license (FSP) to VASP.On September 9, 2024, VARA and SCA reached a cooperation agreement to clarify their respective regulatory scopes and formulate VASP licensing and supervision rules.Subsequently, on September 30, 2024, VARA revised several regulations, and the new regulations expanded the scope of supervision to cover the marketing, promotional activities, consulting services, decentralized finance (DeFi) and custodial services of virtual assets.Currently, 23 VASPs are under VARA supervision (21 active and 2 pending status).The relevant legislation “Law No.(4) of 2022 Regulating Virtual Assets in the Emirate of Dubai” provides a basis for legal supervision, “Virtual Assets and Related Activities in 2023The Regulations (Virtual Assets and Related Activities Regulations 2023) provide relevant regulatory frameworks and guidance for applying for licenses and licensing.In addition, the Dubai International Financial Centre (DIFC), a financial free zone established by the UAE, has independent cryptocurrency regulation. The regulator is the Dubai Financial Services Authority (DFSA), and has an independent virtual asset (VA) framework, including investment and cryptocurrency generation.currency system.VARA does not have legal jurisdiction within the DIFC and two regions in 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 currency stablecoins, requiring any token issuance and payment token exchange in the UAE.Local or international institutions that provide services such as Token Conversion, Payment Token Custody and Transfer must obtain permission from the UAE Central Bank in advance.
In October 2024, the Central Bank of the UAE approved AED Stablecoin in principle based on the payment token service regulatory framework, making it the first regulated Dirham-pegged stablecoin in the UAE.If fully approved, AED Stablecoin’s AE Coin will be able to act as a local trading pair on exchanges and decentralized platforms, while allowing merchants to use AE Coin to pay for goods and services.In addition, Tether also plans to launch a stablecoin pegged to Dirham.
Taiwan
Regulatory entities and laws
Taiwan Financial Supervisory Commission (FSC) is the competent authority for anti-money laundering of cryptocurrency platforms and transactions, 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 measures and guiding principles, including the “Measures for the Prevention of Money Laundering and Combating Capital Terrorism in Virtual Currency Platforms and Transactions” promulgated in 2021 and the “Regulations on Banking and Virtual Currency” formulated in 2023Platform and trading business establishment and transaction monitoring self-discipline specifications.Article 6 of the Money Laundering Prevention Law (additional VASP anti-money laundering registration system and criminal liability for illegal operators) revised and passed in July 2024 was officially implemented on November 30 of that year, requiring that registered reporters who have not completed anti-money laundering are not allowed to provide VA services, andNew contents of the anti-money laundering law have been added.At present, the FSC has formulated the “Regulations on the Prevention and Control of Money Laundering for Businesses or Personnel in Providing Virtual Asset Services” (hereinafter referred to as the VASP Registration Measures) in accordance with the second authorization of Article 6 of the Law.At present, FSC has proposed the draft articles of the “Virtual Asset Management Special Law”, and is expected to report the draft special law to the hospital before June 2025 (FSC plans to promote the improvement of VASP supervision through four steps: to manage virtual asset operators and establish guilds to formulateSelf-discipline and standardize, strengthen anti-money laundering management, and formulate special laws).
Regulatory system or other requirements
Since July 2021, Taiwan has issued the “Virtual Currency Platform and Trading Business to prevent money laundering and combat capital against businesses engaged in cryptocurrency acceptance, currency exchange, token transmission/storage, token issuance and sales.”How to Fear”.In 2024, Taiwan’s Executive Yuan passed the amendment to the “New Four Counterfeiting Laws”, including drafts such as the “Regulations on the Prevention and Control of Fraud Crimes (Executive Law on Fraud)” and the “Money Laundering Prevention and Control Law”.Following the formulation of a number of regulatory guidelines for virtual asset service providers in 2023, such as “Banks and Virtual Currency Platforms and Transaction Monitoring Self-Discipline Specifications” for Banks and Virtual Currency Platforms and Transactions Businesses, Taiwan approved Taiwan on March 29, 2024.The establishment of the VASP Association.At present, there are a total of 26 virtual asset service providers that have completed the law-abiding declaration.It is planned to continue to conduct special financial inspections on 6 VASP operators in Q4 2024 (the inspections of 4 VASP anti-money laundering projects have been completed).Currently, the FSC has issued the “Regulations on the Prevention and Control of Money Laundering for Businesses or Personnel” (VASP Registration Measures), which has been implemented on November 30.VASP platform operators must apply for registration before March 31, 2025 and complete the registration before September 30, 2025; if the registration is not completed within the deadline and the business continues, they may be sentenced to a maximum of 2 years in prison, and shall be sentenced to 500 alone or in combination.A fine of less than 10,000 yuan.
South Korea
Regulatory entities and laws
On July 19, 2024, South Korea’s Virtual Asset User Protection Act (PVAU) officially came into effect. It was passed by the South Korean National Assembly and granted the South Korean Financial Services Commission (FSC) the power to supervise the cryptocurrency industry.The bill aims to protect the interests of domestic investors and enhance market integrity: define virtual assets as digital assets that can be traded or transferred electronically, and stipulates the fundamental rights and obligations of users and service providers (such as requiring VASP to purchase commercial purposes).Insurance, setting up reserves, setting up transaction monitoring and reporting systems, paying interest income from Korean won deposits to customers, etc.), and the reverse list excludes the supervision of certain assets (such as NFT and CBDC).Under the Implementation Order Amendment Act 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 payment supervision from 2025fee.
The South Korean FSC and the Korea Financial Intelligence Office (KoFIU) (an institution established under the Financial Transaction Reporting Act) are responsible for specializing in the supervision of virtual assets to ensure that virtual asset service providers comply with laws and regulations and protect the interests of investors.Among them, 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-Terrorism Financing Business Regulations”, including customer identity identification, transaction monitoring and other measures.According to the revised Financial Transaction Information Reporting and Use Act, the FSC implements travel rules requirements for VASP starting from March 25, 2022.The travel rule is designed to prevent money laundering activities using virtual assets, requiring VASPs to provide information about the user sending and receiving virtual assets when 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 conducting analysis and sending them to the corresponding law enforcement agencies.
Regulatory system or other requirements
South Korea implements a license system for cryptocurrency transactions.VASP not only has basic anti-money laundering obligations and obligations to declare to FIU, but also has additional obligations such as user classification and transaction details classification.Virtual asset operators also need to set acceptance conditions, such as issuing deposit and withdrawal accounts confirmed by real-name financial company operators, information protection management system certification (ISMS), representing no criminal experience, etc.Those who fail to declare operation will be sentenced to fixed-term imprisonment of not more than 5 years and a fine of not more than 50 million won.The obligations that financial companies that deal with VASP must comply with include: checking the operator’s representative and transaction purposes, checking whether the operator submits a declaration, whether the funds are managed separately, etc.Recently, KoFIU announced the report status of virtual asset business of 40 virtual currency operating companies as of January 3, 2025.
Japan
Regulatory entities and laws
In Japan, cryptocurrency regulatory entities include national regulatory agencies and virtual asset self-regulatory organizations, namely Japan Financial Services Agency (FSA), Financial Information Center (JAFIO), Japan Cryptocurrency Trading Association (JVCEA), and Japan Securities ConnectCertificate Issuance Association (JSTOA), Japan Blockchain Association (JBCA).In Japan, the Finance Agency (FSA) is the main body that regulates the activities of digital currency business such as Bitcoin.While strengthening its own supervision, the Japan Financial Agency also gave the industry organization the Japan Cryptocurrency Trading Association greater power, giving it the right to regulate and punish industry enterprises.The government and the industry work in depth to promote the healthy development of the industry.The Japan Finance Department is responsible for licensing and registering cryptocurrency trading platforms to ensure that the platform has the necessary compliance requirements and security measures; supervising and monitoring cryptocurrency trading platforms to ensure that the platform’s trading activities are compliant, fair and transparent; responsibleAssess and manage risks of cryptocurrency trading platforms, including cybersecurity risks, market risks and investor risks; punish and punish violations to maintain market order and investor rights.The Cryptocurrency Anti-Money Laundering Act, implemented in Japan from June 2023, contains the Financial Action Task Force’s “travel rules” that require financial institutions handling the transfer of crypto assets to pass on customer information to the next institution, including senders and receivers.The person’s name and address, the target crypto assets include stablecoins or cryptocurrencies pegged to currencies such as US dollars or commodities, and violators will face criminal penalties if they do not obey the authorities’ corrective order.Starting from April 2024, Japanese companies will no longer pay taxes on the unrealized gains in the cryptocurrency they hold.This will make the tax obligations of companies more consistent with the tax obligations of retail investors stipulated by current Japanese laws.
Regulatory system or other requirements
The Japan Financial Agency adopts a registration system for cryptocurrency trading institutions.Registration and establishment of a Japanese digital currency dealer must meet certain conditions, including establishing a Japanese legal entity company, leasing a Japanese firm, hiring Japanese employees (one of which is a director of a Japanese company), opening a bank account for Japanese companies, and having normal transactionsSystem (Japanese version is not required), KYC information is provided, etc.According to data on May 13, 2024, there are currently 29 cryptocurrency exchange service providers registered in Japan.Since 2018, the Japan Finance Agency has become very strict in its approval of cryptocurrency exchanges.At the same time, the Japan Financial Agency requires digital currency exchanges, including Bitcoin, to implement a stricter KYC policy than the current one, and the exchange must begin checking the identity of the account opening user, keeping transaction records, and reporting suspicious transactions to regulators.
Stablecoin Issuance and Supervision
On March 4, 2022, the “Act that partially amends the Payment Services Act” and other aspects to introduce new regulations on stablecoins was submitted to Congress.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., stablecoins denominated in currency) directly to Japanese residents are limited to licensed banks, fund transfer service providers, trust banks or trust companies in Japan.This is because the issuance and redemption of EPI constitutes a “fund remittance transaction” (kawase-torihiki).Without registering as an EPIESP (Electronic Payment Institution License) CAESP, it is impossible to list EPIs on any exchange, nor to manage EPIs for its users.EPIESP is subject to anti-money laundering/anti-terrorist financing regulations, including “travel” rules.In addition, EPIESPs that regularly send or receive EPIs to overseas virtual asset service providers (VASPs) need to check whether these VASPs are conducting appropriate anti-money laundering/anti-terrorist financing due diligence on their users.
Singapore
Regulatory entities and laws
Singapore’s cryptocurrency regulation is jointly responsible for multiple government agencies, the most important regulatory authority is the Monetary Authority of Singapore (MAS), which is responsible for supervising activities related to the entire financial market, including cryptocurrency (cryptocurrency) andFormulate corresponding policies.Cryptocurrency exchanges and wallet service providers are required to obtain permission under the Payment Services Act (PSA) to ensure the security and consumer protection of digital payment tokens.The payment service law provides regulatory certainty for industries with unclear definitions. Payment services defined by PSA include account issuance services, electronic currency issuance services (comparable with stablecoin issuance in the context of cryptocurrencies), and cross-border remittances.There are seven types of services, domestic remittance services, merchant collection services, digital payment tokens (DPT) services and currency exchange services. All enterprises 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. This guide lists what MAS should do for digital payment token service providers to address consumer protection risks.In October 2024, MAS released a consultative document outlining the regulatory regime applicable to digital token service providers providing services outside Singapore under the Financial Services and Markets Act (FSMA), towards a thriving regulationThe digital asset market has taken an important step.
Regulatory system or other requirements
Under the Payment Services Act, cryptocurrency service providers need to register and obtain a MAS license to operate.Currently, the 3 Class PSA licenses are: Money-Changing License currency exchange license, Standard Payment Institution (SPI) standard payment license and Major Payment Institution (MPI) large payment license.Currently SPI and MPI can be used on digital currency exchanges.This includes but is not limited to cryptocurrency exchanges, e-wallet providers, etc.Service providers also need to demonstrate their abilities and procedures to meet anti-money laundering requirements, such as risk-based assessment methods, strict customer identity identification (KYC), transaction monitoring (identification of suspicious transactions, large transactions, frequent small transactions,or transactions with high-risk countries or regions), suspicious activity (if service providers find signs of money laundering or terrorist financing, they must go to the finance of the Monetary Authority of Singapore (MAS) and Singapore Police ForceCrime Investigation Department reports suspicious transactions), keeping complete records (cryptocurrency platforms need to keep transaction records for at least five years), etc.In addition, the Singapore Central Bank issued a digital payment token (DPT) service license, allowing companies to provide cryptocurrency services.It is reported that Crypto.com, Genesis and Sparrow Exchange have obtained this license.
EU
Regulatory entities and laws
The Sixth Anti-Money Laundering Directive (6AMLD), adopted by the EU in 2020, expands the definition of “money laundering” crime, covering more criminal activities, including the use of cryptocurrencies.After long-term negotiations and revisions, the MiCA regulations were approved by the European Parliament on April 20, 2023.However, its entry into force is not immediately because a transition period is set up to allow market participants to adapt to the new rules.The date of publication of MiCA regulations in the official EU communiqué is June 9, 2023, marking the beginning of this transition period.The implementation of MiCA regulations will be carried out in phases, setting a transition period of 24 to 36 months for 27 EU countries.This gradual implementation is designed to ensure a smooth transition to new systems and give businesses the necessary time to comply with these new requirements.Prior to the full implementation of MiCA, EU member states had established their respective cryptocurrency service provider (VASP) licenses and registration requirements.Financial regulators of each member state (such as the Financial Conduct Authority FCA in the UK, BaFin in Germany, etc.) implement specific registration and regulatory requirements in accordance with the EU’s anti-money laundering directive (such as 6AMLD).Once MiCA officially takes effect (in effect in 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 has established a unified regulatory framework for cryptocurrency service providers, including regulatory licensing systems for cryptocurrency issuers and virtual asset service providers (VASPs).
Regulatory system or other requirements
The CASP regulatory rules came into effect in December 2024 to ensure that virtual asset providers comply with anti-money laundering regulations and further strengthen the supervision of cryptocurrencies.Any company that provides virtual asset services in the EU (such as cryptocurrency exchanges, wallet service providers, custodial service providers, etc.) will need to obtain permission from EU regulators.These service providers are required to apply for licenses from relevant regulatory agencies and comply with a range of compliance requirements, including consumer protection, anti-money laundering (AML), customer due diligence (KYC), transaction monitoring identification, suspicious activity reporting, employee training, andCapital adequacy requirements, etc.MiCA has made a detailed classification of cryptocurrency-related activities, including issuance of crypto assets (such as initial token issuance (ICO), transactions and exchanges of crypto assets (activity involving cryptocurrency exchanges), and cryptocurrency wallet management (including digitalAsset storage and management), and other related services such as cryptocurrency clearing, settlement, investment advisor, etc.At the same time, MiCA provides cryptocurrency service providers with the possibility of cross-border operation within the EU market, that is, the license of a member state can be valid in other EU member states without repeated application.This means that once a company is licensed in a member state, it can operate across the EU.Meanwhile, the European Securities and Markets Authority ESMA has the power to take compulsory measures against non-compliant CASPs.
Stablecoin Issuance and Supervision
The governance rules for stablecoins came into effect in June 2024, which provide stablecoin issuers with guidance on clear provisions such as the provision requirements and redemption mechanism for fiat stablecoins issuance.Multiple standards are used to define whether the requirements are met, such as market size, business scenarios, customer base, transaction volume, etc.
USA
Regulatory entities and laws
The US virtual currency regulatory system is relatively complex, involving two levels of federal and state supervision.The SEC is responsible for supervising virtual assets of securities, while the CFTC is responsible for supervising virtual assets of commodities and their derivatives.The U.S. anti-money laundering measures are closely linked to international anti-money laundering standards such as the Financial Action Task Force, and FinCEN, a network of financial crime enforcement, is responsible for the regulation of anti-money laundering and anti-terrorism financing. May 22, 2024,The U.S. House of Representatives passed the Financial Innovation and Technology Act of the 21st Century (FIT 21), proving that both parties support clear crypto policies and provide clearer guidelines for the division of jurisdictions between CFTC and SEC. This is for the U.S.The cryptocurrency and virtual assets industry provides a clearer regulatory framework that enhances market transparency and compliance. It also provides more effective regulatory tools to prevent cryptocurrency abuse, protect consumers, and maintain financial stability.For cryptocurrency platforms and exchanges, the FIT 21 Act could bring higher compliance costs, including strengthening compliance teams, system development and compliance audits. For some small or startup crypto companies, they may faceNot small burden. And since cryptocurrency transactions are usually cross-border, the implementation of FIT 21 may require global cooperation to ensure international regulatory coordination and information sharing. This constitutes the regulation of the global cryptocurrency marketChallenge. While the bill helps prevent cryptocurrency abuse, overly strict regulation may have a dampening effect on blockchain technology and cryptocurrency innovation, especially in the development of new decentralized finance (DeFi) applications and innovationsProduct time. Under the leadership of the new government, there may be more new encryption legislation to be implemented.
Regulatory system or other requirements
There is no unified national licensing system for cryptocurrencies in the United States, but rather relies on multiple federal and state-level regulatory frameworks, with specific licensing and licensing requirements varying according to the 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 (over $10,000) and Suspicious Activity Reports.Although the United States does not have a unified cryptocurrency license system, other federal regulators, SEC and CFTC, also have different regulatory requirements for certain specific businesses.For example, the SEC may require that certain cryptocurrencies be classified as securities in certain circumstances, meaning that these cryptocurrencies must comply with securities laws and registration requirements.CFTC is responsible for regulating the cryptocurrency futures and derivatives markets.
U.K.
Regulatory entities and laws
The UK has an independent virtual asset legal framework rather than a MiCA framework.The Financial Conduct Authority (FCA) is one of the major institutions in the UK that regulates cryptocurrencies.It is responsible for regulating specific crypto-related activities to prevent financial crimes, protect consumer rights and ensure market integrity.For example, companies engaged in crypto-related businesses are required to register and comply with relevant regulations such as anti-money laundering (AML) and anti-terrorism financing (CTF), and supervise cryptocurrency trading platforms, wallet providers, etc. to ensure that their operations comply with regulatory requirements and preventIt is used for illegal activities.
Regulatory system or other requirements
The UK regulates cryptocurrencies in the form of registration and licensing.Companies that provide crypto services to the UK need FCA approval.After the new system is implemented, registered companies need to be re-evaluated and confirmed according to the new requirements.In addition, foreign companies may apply for UK authorization from their UK branches if they want to conduct regulated crypto business in the UK.At present, 48 crypto asset companies have been registered with the FCA.
Issuance and Supervision of Stable Coins
The Financial Services and Markets Act was passed in 2023. The passage of the bill laid the foundation for the UK’s regulation of cryptocurrencies including stablecoins, and clarified that the Ministry of Finance, the Bank of England and the Financial Conduct Authority (FCA) have the right to regulate cryptocurrencies andStablecoin.Stablecoin issuers will need to obtain FCA authorization to engage in stablecoin issuance activities.The FCA has the right to require stablecoin issuers to deposit all reserves in a fiat trust to protect the stability of the value of the stablecoin and the rights and interests of investors.The government plans to develop a financial market infrastructure sandbox to support enterprises to use blockchain and other technologies to provide financial market infrastructure services, which also provides a certain experimental environment for the innovative issuance and application of stablecoins.
Türkiye
Regulatory entities and laws
As the world’s fourth largest cryptocurrency market, Turkey’s trading volume in 2023 reached US$170 billion, surpassing Russia and Canada, demonstrating its important position in the cryptocurrency field.However, Türkiye still faces many challenges between regulation and market development.Although buying, holding and trading cryptocurrencies are legal in Turkey, the use of cryptocurrencies as payment tools has been banned since 2021.This means that while investors are free to trade, they cannot directly apply cryptocurrency to daily consumption scenarios.
The Capital Markets Board of Turkey is the national financial management and supervision agency, also known as SPK (Sermaye Piyasası Kurulu).On July 2, 2024, CMB officially announced No. 7518, the Capital Market Law Amendment (Law No. 32590) to incorporate provisions on crypto asset service providers “CASPs” and crypto assets into the legislation.Going further, on December 25, 2024, the main provisions of the new anti-money laundering regulations were clarified, focusing on transaction threshold setting, risk transaction processing and restrictions on unregistered wallets, and striving to improve the transparency and security of cryptocurrency transactions.
Regulatory system or other requirements
Crypto Asset Service Providers (CASPs) must obtain the CMB’s license. Activities related to crypto assets will require the CMB to issue an activity authorization certificate and comply with the standards set by TUBITAK (Turkey Science and Technology Research Council).As of December 2024, 77 cryptocurrency companies have applied for operating licenses from the Turkish Capital Markets Commission.According to the new regulations, when users perform cryptocurrency transactions of more than 15,000 Turkish lira (about 425 US dollars), they need to submit complete identity information to the service provider.For transactions below this threshold, service providers can selectively collect relevant information.This provision is intended to ensure traceability of large transactions and thus effectively curb illicit capital flows.If the cryptocurrency sender fails to provide sufficient information, its transaction will be marked as “high risk”.Service providers have the right to take a variety of measures in this case, including refusal to deal, restrict cooperation with relevant financial institutions, and even terminate business relationships with the transaction parties.This provision provides service providers with greater discretion and helps improve the security of the overall transaction system.Wallet addresses that are not registered on the platform are also strictly regulated.The service provider needs to collect the sender’s identity information, otherwise the relevant transactions will be restricted.This measure aims to combat illegal activities through anonymous wallets, such as money laundering and terrorism financing.
Through the above measures, the Turkish government hopes to establish a more transparent and secure trading environment in the cryptocurrency field to lay the foundation for the future standardized development of the industry.
Malaysia
Regulatory entities and laws
The Malaysian Securities Regulatory Commission (SC) is one of the important entities in cryptocurrency regulation and is responsible for overseeing the securities market, including cryptocurrency trading.It supervises cryptocurrency trading platforms, digital asset custodians, etc. in accordance with relevant laws and guidelines to ensure that market participants meet regulatory requirements.Bank of Malaysia (BNM): It is mainly responsible for formulating anti-money laundering and anti-terrorism financing policies. Although it does not regard cryptocurrencies as legal currency or payment tools, it will pay attention to the risks in the cryptocurrency field and monitor key indicator trends to maintain finance.Stablize.
Regulatory system or other requirements
The Securities Regulatory Commission of Malaysia (SC) requires companies engaged in cryptocurrency-related businesses to comply with the license system: the relevant companies must be recognized by the Securities Regulatory Commission of Malaysia and meet their regulatory standards. If a digital asset exchange must accept the registration application for SC, it can only beMalaysia operates legally.As of December 2024, there were 12 institutions under the supervision of SC, including 6 Digital Asset Exchange (DAX) Operators, 2 Initial Exchange Offering (IEO) Operators, and 4 Digital Asset Custodians (DAC).
Thailand
Regulatory entities and laws
The Securities and Exchange Commission of Thailand (SEC) is one of the core entities of cryptocurrency regulation in Thailand. It is responsible for licensing and supervision of cryptocurrency-related businesses and market participants, including cryptocurrency exchanges, brokers, dealers, etc., and for digital tokens.The issuance, trading and other activities are reviewed and supervised.The Digital Assets 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”, which clarifies the legal status of digital assets.It stipulates the legal framework for digital asset-related businesses, providing an important basis for Thailand’s cryptocurrency regulation.
Regulatory system or other requirements
The Securities and Exchange Commission of Thailand (SEC) requires that businesses must be registered under Thai law and have a paid-in capital of a certain amount ranging from 1 million baht (approximately US$30,000) to 50 million baht, depending on the licensetype.Engaged in digital asset trading centers, brokers, dealers and other businesses must obtain approval from the Securities and Exchange Commission of Thailand.
Operators of related business such as cryptocurrency exchanges must obtain permission from the Thai Securities and Exchange Commission and must have at least 50 million baht of starting funds. The platform needs to have strong security measures to ensure the security of user assets and prevent hacker attacks.Digital asset business operators and digital token portal service providers follow strict anti-money laundering and counter-terrorism financing requirements, including due diligence on customers, implementing 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 entities and laws
The Central Bank of the Philippines (BSP) is one of the important entities in the regulation of cryptocurrency in the Philippines. It regulates cryptocurrency transactions by issuing relevant guidelines and regulations, such as BSP Circular No. 944, etc., requiring cryptocurrency exchanges to register with them as remittances andTransfer companies and comply with relevant operational requirements, including consumer protection measures, anti-money laundering and anti-terrorism financing regulations, etc., and are also responsible for supervising the pilot of stablecoins.
The Philippines Securities and Exchange Commission (SEC) regulates activities such as initial token issuance (ICO) and cryptocurrency investment in the cryptocurrency sector.The SEC will issue relevant guidelines and warnings requiring companies that conduct ICOs to register with them and comply with securities regulations to protect investors’ rights and interests and prevent fraud and market manipulation.
Regulatory system or other requirements
The Philippines adopts a licensing system for cryptocurrency regulation. VASPs such as cryptocurrency exchanges need to obtain a BSP license to operate in the Philippines. Different businesses may also require additional licenses, such as electronic currency issuers (EMIs) and remittances andTransfer Company (RTC) and other licenses.In addition, the Philippine Special Economic Zone Cagayan Economic Zone Administration (CEZA) has also planned to issue a limited number of cryptocurrency exchange licenses and set strict investments and investments for licensed exchanges and their subordinate traders and brokers.Operational requirements, however, are regulations of specific economic zones.So far, 14 cryptocurrency service providers have obtained licenses.
BSP sets travel rules to trigger the rules for cryptocurrency transactions with transactions of at least 50,000 Philippine pesos (approximately US$1,000) or equivalent foreign currencies, requiring VASPs to share information from parties to cryptocurrency transactions to prevent the use of cryptocurrencyCarry out illegal fund transfer and other activities.
Issuance and Supervision of Stable Coins
On May 9, 2024, BSP approved a pilot project for the PHP C, a Philippine Peso-backed stablecoin issued by Coins.ph, which will be conducted within the BSP’s regulatory sandbox to evaluate the functionality of stablecoins and their efforts to the Philippines.Potential impact of the financial system.
