The crypto industry has experienced significant turbulence since 2022, with several sudden market crashes highlighting systemic vulnerabilities. These events revealed the risks associated with insufficient oversight of stablecoins, hedge funds, and trading platforms. As the crypto ecosystem becomes increasingly intertwined with traditional finance, the potential for broader financial instability has intensified.
In response, global regulators are prioritizing the development of comprehensive frameworks. These aim to mitigate risks while fostering innovation, ensuring that crypto-asset service providers are licensed, registered, and subject to robust oversight.
This article provides an overview of key regulatory approaches and licensing requirements in major jurisdictions worldwide.
United Kingdom
The Financial Conduct Authority (FCA) is the primary regulatory body overseeing crypto activities in the UK. It mandates that crypto asset exchange providers and custodian wallet providers register with them.
Since January 2020, the FCA has received over 300 registration applications. As of early 2023, 41 firms (15%) have been approved, 29 (11%) were rejected, and 195 (74%) withdrew their applications. Approved entities include major exchanges like Coinbase and Kraken, crypto-native companies such as Circle, and traditional financial firms like Fidelity Digital Assets.
Dubai
In February 2022, Dubai established the Virtual Assets Regulatory Authority (VARA) as an independent regulator. VARA oversees exchanges, wallets, issuers, and all crypto-related activities within the Dubai World Trade Centre.
Licensed providers must comply with four mandatory rulebooks covering company governance, compliance, technology, and market conduct. Additionally, seven activity-specific rulebooks address risks related to consulting, brokerage, custody, and more.
VARA has granted licenses to no fewer than 11 companies, including Binance, Crypto.com, and OKX.
United States (New York Example)
The US employs a dual state and federal regulatory system. At the federal level, the SEC regulates securities-like digital assets, while the CFTC oversees commodities. FinCEN focuses on anti-money laundering (AML), and the IRS handles taxation.
New York State has one of the clearest regulatory frameworks: the BitLicense. Issued by the New York State Department of Financial Services (NYSDFS), this license is required for virtual currency businesses.
Over 20 entities currently hold a BitLicense, including crypto companies like Coinbase and Circle, and fintech firms such as PayPal and Robinhood.
Singapore
The Monetary Authority of Singapore (MAS) regulates the crypto market, categorizing digital assets into existing frameworks like securities or currencies.
MAS offers three relevant license types: the Money-Changing License, the Standard Payment Institution (SPI) license, and the Major Payment Institution (MPI) license. The latter two apply to digital currency exchanges.
Additionally, MAS issues Digital Payment Token (DPT) service licenses. Companies like Crypto.com and Genesis have received this approval, with at least 11 providers holding full or in-principle licenses.
Hong Kong
Hong Kong adopts a cautious regulatory approach. The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) are the primary regulators.
The key strategy involves classifying digital assets into existing categories. Digital securities fall under the SFC's purview, while other digital assets are overseen by the HKMA.
Centralized virtual asset trading platforms can apply for Type 1 (securities trading) and Type 7 (automated trading services) licenses. Currently, only two platforms—OSL Exchange and HashKey Pro—are fully licensed.
Japan
Japan’s Financial Services Agency (FSA) and a self-regulatory organization, the Japan Virtual Currency Exchange Association, oversee the crypto market.
The country employs a layered regulatory approach, prioritizing AML/CFT measures and user protection. Japan has integrated crypto assets into its existing legal framework, creating a comprehensive model that combines licensing, disclosure, and industry self-regulation.
Thirty companies are currently registered as crypto asset exchange service providers, including Coinbase, Huobi Japan, and OKCoin Japan.
Spain
The Bank of Spain requires crypto companies to register as Virtual Asset Service Providers (VASPs). This registration permits firms to offer crypto exchange and custody services while complying with AML/CFT rules.
As of the latest update, 66 companies have obtained this registration, including Binance, eToro, and Bitpanda.
Bermuda
The Bermuda Monetary Authority (BMA) enacted the Digital Asset Business Act (DABA) in 2018. This legislation mandates that all digital asset businesses operating in Bermuda must obtain a license.
There are two license types: Class F (full license) and Class M (regulatory sandbox license for innovative projects). Seventeen companies currently hold a license, including Coinbase, Circle, and Block’s Cash App.
Gibraltar
Gibraltar introduced a licensing regime for blockchain companies in 2018. Firms using distributed ledger technology must obtain a DLT license from the Gibraltar Financial Services Commission (GFSC).
Crypto projects benefit from tax exemptions, paying only 10% corporate tax on relevant income. Twelve companies currently hold a DLT license, including Huobi and eToro.
Estonia
Estonia tightened its crypto regulations in 2021. The Financial Supervision Authority (Finantsinspektsioon) now oversees the sector, requiring crypto firms to reapply for licenses and comply with stringent AML rules.
Previously, over 1,000 licenses were revoked due to non-compliance. Companies offering virtual currency services must obtain authorization from the Financial Intelligence Unit.
👉 Explore global licensing requirements
Frequently Asked Questions
What is a BitLicense?
A BitLicense is a business license for virtual currency activities, issued by the New York State Department of Financial Services. It applies to companies operating in New York or serving New York residents.
Which country has the most crypto-friendly regulations?
Singapore, Switzerland, and Gibraltar are often considered friendly due to clear guidelines and supportive policies. However, "friendly" varies based on business type; each jurisdiction has specific strengths.
Do all crypto exchanges need a license?
In most regulated jurisdictions, yes. Exchanges typically need to register or obtain a license to operate legally, ensuring compliance with AML and consumer protection laws.
What is the purpose of a VASP registration?
VASP registration ensures that virtual asset service providers comply with local anti-money laundering and counter-terrorism financing regulations. It is mandatory in many countries, including Spain.
How does Dubai’s VARA regulate crypto?
VARA provides a comprehensive framework through multiple rulebooks. These cover company governance, technology, market conduct, and specific activities like custody and trading.
Are decentralized exchanges (DEXs) required to be licensed?
Regulation of DEXs is still evolving. Some jurisdictions may not currently require licenses, but this is changing as regulators focus on all facets of the crypto ecosystem.