Amongst the 25 countries we studied, cryptocurrency is legal in 13, partially banned in 9, and generally banned in 3. In ten G20 countries, representing over 50% of the world’s GDP, cryptocurrencies are fully legal. Regulation is under consideration in all G20 countries.

Tax policy and licensing requirements are the leading edge in regulatory development. In many of the countries analyzed, tax policy and licensing requirements were implemented first, followed by other rules and requirements. In others, taxation remains the only type of crypto-asset regulation.

Among the countries reviewed, there is a generally weak relationship between cryptocurrency adoption rates and regulatory restrictiveness. Six of the top ten countries in cryptocurrency adoption have partial or general bans in place.

Crypto-asset regulations are changing rapidly. Of the countries reviewed, 88% are in the process of making substantial changes to their regulatory framework, often through new, bespoke legislation addressing cryptocurrency markets.

Experimentation is widespread. Countries use regulatory sandboxes to test and co-operate with the private sector. Japan created an association of cryptocurrency exchanges and issuers in an attempt to encourage self-regulation. Canada, Italy, Mexico, and Saudi Arabia have developed regulatory sandboxes.

Countries with general bans—China, Saudi Arabia, and Pakistan—have high levels of adoption across centralized, peer-to-peer, and decentralized platforms. This may be explained by enforcement lag, enforcement capacity, or political will.

Stablecoins, which are usually backed by a fiat currency, constitute the next frontier of crypto regulation. In the EU, US, UK, and Thailand stablecoin regulation is under consideration. In Mexico, financial institutions cannot issue stablecoins.

Consumer protection rules are lagging behind. Only 44% of the countries reviewed have rules in place to protect consumers. Such rules include advertising regulations, cybersecurity requirements for service providers, investor accreditation, and others. These rules can successfully prevent fraud.

Of the 25 countries analyzed, over 90% have active central bank digital currency (CBDC) projects in addition to cryptocurrency regulations. This indicates that countries adapt and update cryptocurrency regulations simultaneously as they explore CBDCs.

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