Crypto Regulations
The more mainstream cryptocurrency becomes, the louder the calls for rules and regulations get. We unpack the history of government action and discuss the future of crypto regulations, as well as the impact rules could have on active traders.
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How Regulations Are Evolving
Government policies and crypto regulations vary by country as authorities aren’t globally coordinated on the matter. There has been a lack of agreement on what type of asset cryptocurrencies actually are – securities, commodities, or something else? – and this has led to numerous “grey areas” while regulating the crypto sector.
For example, cryptocurrencies stored online may not have the same legal protections as the money in your bank account, and since crypto exchanges are not always regulated in the same way as crypto brokers, clients may find that their funds are not protected in the case of business insolvency.
New crypto regulations are continuously being updated so it’s important to stay abreast of trading exchange requirements, along with rules around crypto mining, lending, custody and taxes. And while there aren’t too many blanket prohibitions or bans on crypto trading, governments always recommend caution when investing due to market volatility and the risk of losses.
Rules For Day Traders
Day traders should check the regulations in their local jurisdiction to see how they deal with:
- Spot crypto trading – are there any restrictions on buying and selling digital assets on spot markets, and are there any consumer protections?
- Derivatives – are crypto derivatives such as CFDs allowed for retail traders in your jurisdiction, and if so, what are the leverage limits and other rules?
- Platform regulation – does your local regulator license crypto exchanges, and if not, are there licensed brokers that support crypto trading? What are the rules for anti-money-laundering (AML) and know-your-customer (KYC) checks for customers, and what will happen if you don’t complete these?
- Regulatory changes – crypto rules have been quickly evolving in recent years, so you should check whether and when any new rules and regulations are due to come into effect, and where to look for new updates on the field.
Generally, we’ve found that crypto brokers are more often licensed than crypto exchanges, which usually aren’t as strongly regulated even if they are “registered” with a regulatory body.
For example, day traders in EU countries can access crypto CFDs through a broker like the CySEC-regulated Pepperstone, while enjoying consumer safeguards such as negative balance protection, segregated client funds and a compensation fund covering up to 20,000 euros in case of business insolvency.
These regulations often extend to restrictions on leveraged trading of cryptocurrencies, with, for example, leverage on crypto instruments limited to 1:2 in EU countries. If you want to access higher leverage, you’ll need to sign up with an exchange or an unregulated crypto broker, though you should be very careful as doing so exposes you to higher risk.
Regulations In the US
US cryptocurrency regulation remains complex due to overlapping federal agencies and varying state laws. Digital assets are not legal tender and are not covered by deposit-insurance protections.
The Securities and Exchange Commission (SEC) applies securities laws where a digital asset qualifies as an investment contract under federal rules, while the Commodity Futures Trading Commission (CFTC) treats virtual currencies such as Bitcoin as commodities and oversees related derivatives markets.
State-level requirements also apply, with jurisdictions such as New York requiring crypto firms to obtain a BitLicense or equivalent authorisation to operate.
Regulations In the UK
The UK’s cryptocurrency regulations allow users to buy and sell crypto tokens, though they are not considered legal tender. However, as of January 6th 2021, the Financial Conduct Authority (FCA) banned the sale of retail crypto derivatives and ETNs. The motive behind the ban comes from the risky nature of the industry, which puts consumers in danger from scams and market instability.
Note, UK residents can still participate in cryptocurrency exchanges as the ban is focused on retail trading products. The direct purchase of established cryptocurrencies is still permitted.
And, stablecoin issuance and payment services became a priority for the FCA in 2026, with further consultations planned around staking and lending digital assets.
Regulations In Europe
The European Union’s Markets in Crypto-Assets (MiCA) regulation has established a unified framework for digital assets across the bloc, requiring crypto-asset service providers (including exchanges, brokers and custodians) to obtain authorisation in an EU member state, meet capital and consumer-protection standards, and comply with existing anti-money-laundering rules.
Once authorised, firms can passport services across the EU, creating a single regulatory environment while strengthening transparency, disclosure and operational safeguards for investors.
Retail trading in higher-risk crypto derivatives remains tightly controlled. Where permitted, European Securities and Markets Authority (ESMA) measures limit leverage on crypto CFDs for retail clients and allow national regulators to restrict or prohibit certain products.
European Central Bank commentary has broadly supported MiCA’s goals of market stability and consumer protection while highlighting potential systemic risks from large stablecoins.
Spot crypto trading remains legal on licensed platforms across most of Europe, with national regulators overseeing implementation within the EU framework.
Regulations In Asia
Asia is the financial hub where most of the world’s crypto trading takes place. Japan has the most progressive regulation, recognising Bitcoin and other digital currencies as legal property. Crypto exchange regulations are also legal with the requirement to register with the FSA.
The surge of Bitcoin in 2017 prompted Malaysia’s Securities Commission to regulate the market by enforcing the Capital Markets and Services Order in 2019.
Crypto is not considered legal tender in India, while exchanges are effectively legal due to the lack of robust regulatory frameworks.
Hong Kong regulates crypto through a dual regime overseen by the Securities and Futures Commission (SFC). Tokens that amount to ‘securities’ (e.g., security tokens) fall under the Securities and Futures Ordinance (SFO), while centralised virtual asset trading platforms must be licensed under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) (in force from 1 June 2023) to operate in or actively market to the Hong Kong public. The regime also allows retail access via licensed platforms, subject to product admission criteria and investor-protection safeguards.
Regulations In The Netherlands, Switzerland & Estonia
In the Netherlands, cryptocurrencies aren’t accepted as digital money but are regarded as property. However, the country is striving to regulate them.
Cryptocurrencies as payment are legal in Swiss stores in certain contexts while retail trading is allowed.
Estonia also holds a similarly progressive stance, where crypto exchanges are legal with approved registration but are not yet considered legal tender. Estonia has planned future regulatory changes i.e. customer identification obligations, payments services and record keeping.
Other Global Views
Other countries take a more conservative view of crypto regulations. In China, crypto exchanges are illegal and cryptocurrencies are not considered legal tender. In recent years, the Chinese government drafted a law that bestowed legal status on the People’s Bank of China’s digital Yuan.
When it comes to cryptocurrencies in Dubai, the UAE does not recognise Bitcoin as a legal form of tender. However, exchanging digital currencies is allowed, with many UAE-based brokers offering crypto trading. Interestingly, Abu Dhabi’s ADGM was the first to introduce a regulatory framework for virtual assets.
In Canada, digital currencies are not considered legal tender but can be used as payment to buy goods online or in stores that accept them. Canada’s securities regulators, e.g. provincial, territorial, and CSA, sometimes characterise it as securities and Canadian laws have applied tax to crypto transactions since 2013. Exchanges in Canada are regulated as well.
Australia treats cryptocurrencies as legal, with guidance issued in 2014. Crypto exchanges are also legal, with the requirement to register with AUSTRAC. Retail crypto trading is permitted.
Vietnam introduced its first crypto licensing regime in 2025, and began accepting applications from crypto exchanges in January 2026. Cryptocurrencies under this framework are considered digital assets or virtual commodities.
What Will Happen In The Future?
Cryptocurrency regulations are constantly changing as their popularity grows. While some governments like Japan and Australia have taken a progressive stance on cryptocurrencies, some countries are still concerned with the characteristics of blockchain technology and restrict some forms of retail trading, such as in the UK.
The main concerns come from a security perspective, with data protection, money laundering, tax evasion and other financial crimes flagged as issues. Also a perceived problem is their volatile nature, with crypto regulations often attempting to shield individuals from the dangers.
Nonetheless, it looks like cryptocurrencies are here to stay with global regulations likely to try and bring order to a largely unregulated market. How crypto regulations grapple with the decentralised foundation of blockchain technology will be interesting to follow.
Bottom Line
Cryptocurrency regulations around the world vary, with retail traders facing different restrictions depending on their location. Many crypto regulations and policies are still a work in progress due to the myriad of considerations. As a result, it’s key that traders keep up to date with the latest rules and requirements in their country.