Crypto Licenses and Regulations in Countries Around the World—What Does It All Mean?

As the use of cryptocurrencies grows worldwide, so do the rules that regulate them. The crypto environment is continuously changing, and keeping up with the legislation in the various global jurisdictions can be a real challenge.

Recently, governments have started taking action, having initially held off on any acknowledgment of exchanges. At the start of March, President Biden issued the long-awaited Executive Order on Ensuring Responsible Development of Digital Assets, a high-profile recognition of the bitcoin industry’s potential. Per the Executive Order, the White House has agreed to participate in cryptocurrency research and engage with agencies throughout the government to develop a regulatory framework for digital assets. 

Some countries such as Singapore and The Bahamas have chosen to have their own crypto license, whereby crypto exchanges and cryptocurrency trading are entirely legal—Singapore’s tax office considers Bitcoin tokens to be “goods,” and so they are charged under the Goods and Services Tax (the country’s equivalent of VAT. Fewer than ten countries are operating in this way, but are we on track to see more countries adopt a similar model? 

Let’s take a closer look at some of the circumstances that allow exchanges to operate in particular countries and whether other countries will soon follow suit.

Dubai, Singapore, The Bahamas, and Bahrain—what they are getting right

Protecting consumers, preventing illegal funding, safeguarding market integrity, and promoting innovation appear to be common goals for these countries. Singapore’s latest regulatory actions indicate a resurgence of foreign interest in the country’s cryptocurrency sector. Many high-profile Chinese service providers, including ByBit, Huobi, Cobo, and OKCoin, and their consumers, migrated to Singapore in 2021 due to China’s crackdown on cryptocurrencies.

In The Bahamas, the Digital Assets and Registered Exchanges Act (DARE) has paved the way for businesses to conduct digital asset transactions in an organized and supervised environment. The act establishes a comprehensive regulatory framework based on rules and norms of conduct, allowing safe and continued growth for companies eyeing digital assets expansion. Delchain and FTX are two examples of organizations with recent DARE registration.

In addition, Binance was awarded a license to operate as a crypto asset service provider in Bahrain in March this year, bolstering its presence in the Middle East as its trading platform comes under increasing scrutiny from financial regulators worldwide. This followed the announcement that Binance would also be conducting operations in Dubai, having been awarded the Virtual Asset Licence from Dubai’s Virtual Asset Regulatory Authority (VARA). This signified a huge step forward for crypto activities in the region and could be part of a broader movement to have more exchanges be fully licensed and regulated around the world.

Who could be next to offer crypto licenses?

Some countries are likely to be unwavering in their stance against cryptocurrency—China will continue to maintain a crypto ban, while India still plans to prohibit all private cryptocurrencies. However, there are indications that positive changes are in the works elsewhere in the world.

The EU is still exploring making licenses easier to obtain, perhaps even creating their own cryptocurrency. Back in late 2020, they created the Markets in Crypto-Assets Regulation (MICA) proposal. This plan included proposed cryptocurrency regulation measures such as a new licensing system for crypto-asset issuers, industry behavior guidelines, and additional consumer safeguards across the European Union.

In Gibraltar, investors are looking to take advantage of the country’s recent progressive regulatory environment. Valereum, a blockchain company, revealed plans to open a cryptocurrency stock exchange in Gibraltar in 2022, purchasing a 90% interest in the Gibraltar Stock Exchange. If the Gibraltar Financial Services Commission approves the plan, it will open the way for a fully regulated exchange that will deal in both fiat and digital currencies.

While there are many positive regulatory steps in the pipeline, countries and international organizations must collaborate to achieve a genuinely global coordinated strategy, incorporating best practices and lessons learned from one another. That way, the digital assets industry will continue to grow, provided that applicable regulations and licenses are in place to support it. 

For a deeper dive into regulations specific to the US, check out our recent blog on the subject!

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