Following a speculative boom in cryptocurrency prices that peaked in December 2017, regulation of cryptocurrencies has been rapidly changing. The pace of change has been driven in part by incidents of cybertheft, trading halts, and possible market manipulation.
Cryptocurrencies are based on distributed ledger technologies which enable anyone to purchase or transfer their cryptocurrency holdings to any other person without the need for an intermediary (such as an exchange) or to update a central record of ownership. Cryptocurrencies can be transferred easily across national and jurisdictional boundaries. This makes it difficult for central authorities to control and monitor the ownership and movement of holdings of cryptocurrencies.
Countries have different approaches to how they regulate cryptocurrencies. This can depend on the nature of the cryptocurrency itself.
There are two main types of cryptocurrencies from a regulatory perspective: utility tokens and asset-backed tokens. Utility tokens may have value because they enable the holder to exchange the token for a good or service in the future, such as Bitcoin. Asset-backed tokens may have value because there is an underlying asset which the holder of the token can attribute value to. In many countries it is uncertain whether utility tokens require regulation, but it is more likely that asset-backed tokens do require regulation.
This makes it complex for the issuers of cryptocurrencies to analyse which countries their tokens (or coins) can be sold into, and for the prospective purchasers of cryptocurrencies to understand which regulations, if any, should apply.
The Gibraltar British Overseas Territory Financial Services Commission announced in early February 2018 that regulations are being developed to qualify "authorized sponsors" of ICOs, who are supposed to be "responsible for assuring compliance with disclosure" and compliance with "financial crimes rules".
|Australia||ASIC issued guidance in September 2017 stating that the legality of an ICO depends upon its detailed circumstances.|
|Canada||Working on regulating ICOs.|
|France||As of October 2017, the Autorité des marchés financiers (AMF) was working on regulations governing the use of blockchain technology in capital raising transactions.|
|Hong Kong||The Securities and Futures Commission released a statement in September 2017 explaining that tokens may constitute securities for purposes of the Securities and Futures Ordinance, in which case dealing in such tokens would be a regulated activity under Hong Kong law.|
|Isle of Man||Working on regulating ICOs.|
|Jersey||In December 2017, Arc Fiduciary Ltd, based in Jersey, launched the "Arc Reserve Currency", an asset-backed cryptocurrency based on the Ethereum blockchain, working closely with the Jersey Financial Services Regulator to achieve a workable regulatory solution for the ICO The Arc Reserve Currency does not have a continuing regulatory status, but it is a notable example of how cryptocurrency operators are increasingly working with regulators to improve the investment landscape for holders of cryptocurrencies.|
|New Zealand||In October 2017, the Financial Markets Authority (FMA) released guidelines on the current regulatory environment in regards to ICOs.|
|Gibraltar||In October 2017, the government of Gibraltar established a framework for regulating distributed ledger technology (DLT) companies, which came into law on January 1, 2018. It encompasses ICOs and subjects them to financial controls and standards.|
|Switzerland||Although Switzerland was previously viewed as a friendly jurisdiction to coin offerings, the Swiss Financial Market Supervisory Authority announced an investigation of an unspecified number of coin offerings in September 2017, and would examine whether these offerings were in compliance with Swiss regulations.|
|United Arab Emirates||The Abu Dhabi Global Market issued official guidance on ICOs in October 2017.|
|United States||In July 2017 the U.S. Securities and Exchange Commission (SEC) indicated that it could have the authority to apply federal securities law to ICOs. The SEC did not state that all blockchain tokens (ICOs) would necessarily be considered securities, but that determination would be made on a case-by-case basis. The SEC action may encourage more mainstream investors to invest in ICOs, although ICOs typically prevent U.S. investor participation in order to remain out of the jurisdiction of the United States government.|