Section 7: Regulation developments overview by country



Japan is preparing to share its experience with cryptocurrency regulations at the next G20 meeting to be held in Osaka in June, 2019. Observing that no clear rules existed, Japanese authorities have decided to put theirs in a guidebook, to gather the know-how in a form available to all jurisdictions, to increase the level of regulation. This includes measures against cyber-attacks, rules to identify suspicious transactions, etc.


Limitations to margin trading have been implemented.


Accusations and inquiries related to money laundering have increased dramatically in Japan year-on-year (+1000%).

The CEO of Softbank admitted that he got caught up in the 2017 Bitcoin fever, and lost over 100M euros.



Civilian pressure is mounting for the government to ease regulation around cryptocurrencies, ICOs and other speculative activities related to DLTs. Based on announcements by officials, it appears to have been successful, as a revision of the regulations is being considered, notably the ban of ICOs. The Chairman of the National Assembly said that “it’s time to move on to the next phase of regulation which encourages growth and innovation, since South Korean investors are now fairly informed on the dangers that come with investing in cryptocurrencies and blockchain.”

KT Corporation, a South Korean telecommunications company, has been selected to develop a local cryptocurrency for the city of Gimpo. The municipality plans to issue 8M euros of crypto currency per year, to finance its budget. The currency will be used by Gimpo’s merchants. One goal is to “revitalize the local economy”. This is, of course, an interesting case of an official community using DLT to issue its own money.



North Korea is one of many US-sanctioned countries that have tried to bypass sanctions using crypto. Hacked cryptocurrencies are laundered, thereby circumventing the economic sanctions. Some observers firmly believe that North Korea has used at least some of the proceedings from its crypto-currencies thefts to fund the development of nuclear weapons.


Chinese authorities have announced that they are considering clamping down on Bitcoin mining. This is significant, and, surprisingly, this news has had little effect on BTC prices. In effect, mining has been added to the list of businesses that the National Development and Reform Commission want to restrict, or phase out.

Chinese citizens are banned from buying cryptocurrencies with yuan. As a result, the only way they have to invest is to find a counterparty, “physically”, or “over the counter”, which is cumbersome and less liquid, and they end-up paying a premium as high as 4-5%. This can be taken as a sign or an artifact of the higher demand for Bitcoin and other cryptos on the Chinese continent.

Guangdong Province has decided to use blockchain-based electronic tax invoices for e-commerce.

A blockchain notary office opened in Beijing.


Hong Kong’s Securities regulator has issued “detailed guidance” for security token offerings.


The country’s securities regulator has approved the release of a portal for Initial Coins Offerings. This site helps investors to screen ICOs, conduct due diligence, prove the smart contract code, and compare KYC processes.

The country also has given the green light to STOs. It is now legal for businesses to raise funds using distributed ledger token representation of financial titles.


Thailand has refined its definition of what constitutes a cryptocurrency: a “medium of exchanging goods” – different from digital tokens, which are “rights to take part in an investment”.


In February, legislation was passed that officially recognizes Bitcoin and other digital assets as trading commodities.

Further, Indonesia’s commodity futures regulator has established a legal framework for operating futures markets for crypto and digital assets.


The country has also passed laws that regulate the trading of cryptocurrency futures. The regulator insists on the need to conduct AML/CFT, and has added additional requirements (e.g. solvency).

Meanwhile, the use of cryptocurrencies, as a means of payment, is still prohibited in the country.


India is continuing to relax its position, having been especially unfavorable to cryptos, until now. In early March, the Supreme Court of India gave the Indian government four weeks to come up with cryptocurrency regulations before making its ruling on pending crypto cases. This follows a hearing by the court of petitions against the crypto banking ban by the central bank. Since then, the delay has been extended, and the eventual decision was postponed at the request of the government.

Meanwhile, the Reserve Bank of India announced a regulatory sandbox for blockchain applications, thereby implicitly approving technological initiatives by the financial sector – while also explicitly restating its rejection of Bitcoin.

Tata Consultancy Services Limited is actively working on several decentralized projects leveraging R3s DLT platform and Microsoft’s Azure tools.


Popular manifestation occurred supporting the opening, hoping to make India (especially Delhi, Bangalore and Hyderabad) a blockchain hub.


Pakistan has introduced licensing schemes for crypto firms. Authorities there have decided to introduce regulations for Electronic Money Institutions (EMIs), following recommendations from the Financial Action Task Force. In essence, it is about imposing some rules and regulation.



Iran has launched its gold-backed cryptocurrency, the Peyman, in an attempt to evade US sanctions. This is nothing new: Venezuela’s Petro was aiming for the same goal. However, Iran probably has a more articulate and robust approach than Venezuela: the initiative here is about pushing local banks to tokenize their (precious metal) assets. Of course, it all depends on the level of confidence that one has in the current and future Iranian governments to enforce the delivery of the assets to token holders, if the economic situation does not turn out to be favorable for the country.


Emaar group, the owner of the Burj Khalifa is considering issuing its token, with the help of Lykke, as an ERC20. The shops at Burj Khalifa, the tallest building in the world, will accept the token.


The tiny oil and gas island claims that it will “become the first Arab nation to regulate Bitcoin comprehensively." Special features of this regulation include enhanced due diligence on customers, and responsibility to educate clients; in other words, if a customer-investor loses money and claims to lack an understanding, the financial institution could be held responsible.


The question of whether cryptocurrencies are acceptable, according to religious law, is a serious debate. Stellar was the first distributed ledger to obtain a Shariah compliance certification in the fields of money transfers and asset tokenization. BTC, ETH and LTC are the other three that comply.



President Vladimir Putin is personally putting pressure on the government to define and adopt regulations regarding crypto assets. He has even set a deadline for doing so: July 1st, 2019.

The Russian Ministry of Transport is involved in the Tradelens shipping project, managed by Maersk and IBM. It will be deployed in the Port of St. Petersburg.

Political opposition is receiving funding in cryptocurrency: Alexei Navalny recently raised 591 BTC in donations; it was noticed that a number of these payments arrived soon after Navalny published results of an anti-corruption investigation.

US investigators claim to have followed a trail of Bitcoin transactions directly connected to interference in the 2016 US presidential campaign, and leading to coins that the Russian Foreign Intelligence had mined. Much criticism has been leveled at this investigation from both sides of the affair, though. Difficult to see anything with clarity here.


The Central Bank of Ukraine completed a pilot to issue its fiat currency as a DLT token: the e-hryvnia.

Some activists managed to display “Bitcoin to the moon” on the tram in the city of Vinnytsia.


A report produced by ConsenSys for the EU Blockchain Observatory and Forum (EUBOF) suggests that “permissioned, purpose-built blockchain platforms aimed at specific use cases and user bases will constitute the first wave of blockchain technology adoption in Europe”. We agree with that, and maybe not only in Europe.

Additional aims of EUBOF include interoperability between blockchains, and the advice to regulators is that they should continue to favor the “wait and see” approach.


The Austrian Minister of Economy has declared that “no regulation is needed for blockchain”, advocating that Europe has a tendency to overregulate, and that this is greatly affecting the ability of European companies to make it to the “top ten”.


Germany has launched a consultation process to come up with a comprehensive blockchain strategy before June 2019.

The German derivatives exchange appears to be launching crypto futures, to be offered by Eurex, a subsidiary of Deutsche Börse. Deutsche Börse has a team of 24 that is focused on DLT, digital assets and a possible new market structure. They have partnered with Swisscom and Sygnum, a Swiss fintech, to work on the design and development of a “digital asset ecosystem.” Deutsche Börse and Commerzbank stated that they had “completed for the first time a successful use of DLT to execute a legally binding settlement of a repo transaction.” Tokenized fiat and tokenized securities were used in the PoC.

Bitbond has been working on the first German security token offering, the Bitbond Token (BB1). Interestingly, it is built on Stellar. It was approved by the BaFin (Bundesamt für Finanzdienstleistungsaufsicht)

Belgian police auctioned 315 Bitcoins, out of over 1000 BTC that it says has been collected from dark web drug dealers.



Continuing the point made in previous editions of this Quarterly, Luxembourg further passed a bill to recognize securities issued on DLTs.


The Finance Committee of France’s National Assembly (notably involving Eric Woerth) has recommended banning anonymous cryptocurrencies, as these “pose heightened risk of various financial crimes.” We expect similar positions being taken by officials in other jurisdictions, but not aggressively implemented, as there is reduced pressure to do so in the aftermath of the bear market.

France recently passed a bill that allows insurance providers to invest in cryptocurrencies and tokens without any limitation on the amount that can be allocated. This is part of the “loi Pacte” that notably also introduces the whitelisting principle for ICOs by the AMF (Autorité des Marchés Financiers).

Paris Blockchain Week was held in mid-April at Station F and other significant locations in the city. This event enabled French Tech to showcase some of its prominent start-ups and projects. The Minister of Finance, Bruno Le Maire, took the podium to express that blockchain was a very high priority for the French government, with an announcement of a 5-billion-euro investment in tech (including DLTs). The AMF also was present to promote its new legal framework.

Macron has spoken about using blockchain in agriculture, in particular, referring to traceability of food.


In February, BBVA froze thousands of bank accounts without warning, in applying an antimoney laundering provision. The vast majority of the accounts were owned by Chinese citizens. This move drew significant criticism, with cryptoenthusiasts, among others, claiming that with Bitcoin, no such unilateral decision by an institution is possible. Indeed, the legacy banking system seems to be increasingly opposed to the cryptocurrency philosophy.


In a permanent attempt to be in front of the crowd in the field of DLTs, the latest step taken by Maltese authorities has been to impose a mandatory requirement that all diplomas be issued on a blockchain.


At the Crypto Valley Summit held in Zug on March 27th, the spirit and atmosphere among the 400+ participants were resolutely optimistic and geared towards victory. Even if the origin of participants was less international than the year before, businesses and initiatives are insisting on “buidl” and it was obvious that the CEOs and founders present at the summit are indeed developing, and are optimistic for the future. 

Opinions vary on whether the winter is over and spring is back. To conclude this major event, the President of the Swiss Federal Council, Ueli Maurer, expressed in person to the DLT professionals gathered that he believes Switzerland is an ideal location for blockchain businesses, and that the Federal Council is working to make their life easier. He concluded by saying that the doors of his administration at the highest level are always open for them. An unexpected presence, a strong statement and an impressive engagement!

Opening a bank account as a crypto-related business, let alone as an ICO issuer, is still very complicated in the country. Some banks are trying to address the need, which is strong in Switzerland. The aim is to dissuade businesses from going to Liechtenstein. What is at stake here is not only the loss of traditional banking services to cryptorelated actors, but also the provision of crypto asset custodial and management services for businesses and the general public. Seba is a young company that is working to provide this service, while Julius Baer Group, the big and reputable financial institution, is taking a step in the same direction (by collaborating with Seba).

The Swiss stock exchange (SIX) has announced it has chosen Corda as the platform for its new DLTpowered digital exchange. This announcement casts light on the way the stock exchange operator intends to address privacy of data when its business is shifted to DLT. It is claimed that the new SIX systems will soon support trading of stocks, bonds and ETFs.


A blockchain-based ETF has been launched on the London stock exchange. Disappointingly, there is no use of the technology there, as it is just an investment vehicle that invests in blockchaininvolved companies to enable investors to have exposure to the technology.

Some observers expect Brexit to have some impact on the market price of cryptocurrencies, as some individuals may want to have some of their wealth outside of the pound sterling.


Gibraltar’s crypto exchange is strengthening, with the listing of new fiat-to-crypto trading pairs. In particular, it has listed five stablecoins (DAI, Gemini$, TrustToken, USDC and Paxos).



Canadian financial regulatory authorities are working on putting in place rules for cryptocurrency exchanges. So far, data is being gathered from fintech in the country. It follows the QuadrigaCX saga (discussed in a previous chapter).

The trial performed by the Bank of Canada with its Singaporean counterpart is viewed as an easier and faster way to perform trans-border payments. However, the use for larger amount of wealth remains to be seen.


Quebec Energy Board decided to not increase the price of the power it is selling to the mining industry, and instead to almost double the amount of energy available to this activity. The attempt to cut down an activity seen by many as unnecessarily resource intensive have aborted.


The SEC has made a definitive statement that it does not consider Ethereum, in its current form, as a security. This brings to an end a lengthy debate and 
sets the jurisprudence on the favorable side.

Texas state is talking about outlawing cryptocurrencies that allow anonymous transactions. According to the proposed bill, any transaction where one party cannot be identified would be illegal.

Coinbase, Polychain Capital and Digital Currency Group have created the first blockchain “lobby” in Washington. 

Blockchain lobbies are focused on calling for the recognition of the power and potential of blockchain-related technology. The Chamber of Digital Commerce is one of them; they are concerned that the US could fall behind instead of stepping forward as a visionary leader.

The state of Wyoming’s 13 DLT laws is having quite an impact in the US. The state has been described as the most forward-looking in the country, and its crypto regulations are likely to be imitated. Its focus is on innovation. The legal significance is that Wyoming’s digital asset custodians won’t be regarded in the same way as traditional securities custodians. Investors own their digital assets under a custody bailment, for example, so they are simply handing over control – and not ownership – of their digital assets by using a custodian service.

When comparing the Crypto-Valley with SiliconValley in a panel, a blockchain-involved SanFrancisco-based speaker stated that the undeniable advantages of California are very deep pockets and an incredible acceptance of risk. But what he witnesses happening is regulatory uncertainty in the USA that is deterring American entrepreneurs from creating or growing their companies in their home country.


The phenomenon of recent decades, when the intellectual property was owned in the US and the production delocalized to China (think of Apple), is challenged. Today, intellectual property, to a large extent, is flying to Singapore, Zürich or Toronto. This is partly because of taxes, partly because of the dominance of big Palo Alto companies that phagocyte the available resources, and partly because of the legal uncertainty, in an environment where the ultimate decisions of financial authorities - as to how they will frame the operating landscape - is necessary immediately.


Mexico’s central bank has announced weird regulations for crypto exchanges; one of the core measures is to forbid regulated financial companies from offering any cryptocurrencies. On the other hand, Mexican crypto exchanges are now required by law to register and be regulated as a financial institution. This, in effect, makes it legally impossible to operate a crypto exchange in the country.



The political situation in this country is now in a bigger turmoil than it was before, with a new Juan Guaido, a new president claiming power while Maduro is still in office.

For Venezuela’s citizens, Bitcoin or cryptocurrencies are a safer store of value than the Bolivar, which has a daily inflation rate of 3-5%.

Maduro’s government is putting in place a remittance service, where Bitcoin and Litecoin can be used to send value. Importantly, the recipient must be a resident of Venezuela. This is one more step that the Venezuelan government has taken to integrate cryptocurrencies. Even if the Bolivar is not very appealing compared with cryptos, the mere existence of the service is interesting, as it may remain in place when the bolivar has stabilized.


A Brazilian investment bank, BTG Pactual, is considering raising 60 million reals via a security token offering (bundling exposure to some Brazilian real estate). The plan is also to provide a secondary market for the security, which will provide liquidity for investors. The interesting aspect is that private interest is turning to the public, and offering to manage the assets directly on behalf of investors, thus shunning the stock exchange altogether. Note: the STO is in partnership with Gemini, using the Gemini dollar to receive investment capital and settle transactions.

There are reports that particularly high volumes of Bitcoin have been traded in Brazil, in line with what has been happening in other emerging economies. This has occurred simultaneously with negative news on the Brazilian economy.


The country has deployed a mechanism with Paraguay to use Bitcoin to settle exports of chemicals between the two nations.

Argentina faces serious difficulties, monetarily speaking, being in a somewhat intermediate situation, compared to Venezuela and Iran; here Bitcoin is the actual solution adopted by the population, gaining momentum. The influx of 
unbanked Venezuelans has fueled the trend.

The Argentinian crypto ecosystem continues to gain momentum and enthusiasm, with a number of startups launching, whereas this country was not at all on the radar until recently.

Binance announced it is considering creating a fiatto-crypto exchange in Argentina.



The country’s central bank is exploring a blockchainbased version of the dinar, following the recent appointment of a new Director General, Marouane El Abassi. The goal is to fight corruption and moneylaundering, i.e. the grey economy in the country.


Official initiatives on land ownership registries are getting traction in Kenya.

The electricity regulator in Kenya is examining ways to apply DLT to frame the electricity market properly.


Bitcoin ATMs are being installed, in a move by local actors to enable the population to access cryptocurrencies. No regulation currently exists in the country, so this could become a challenge for regulators in the country.


A Blockchain Africa Conference was held in Cape Town. The event highlighted the growing interest in crypto and DLT on the continent. Commentators were almost unanimous that, just as Africa moved directly to mobile phones without the landline phase, the continent is poised to provide banking services to the masses without traditional banks, thanks to blockchain. There was also general agreement that a lot of work has to be done by governments to pave the way, and make it easy for populations to embrace the opportunities that the technology offers.


A regulatory sandbox has been established in the country.





Australia’s regulators have announced a National Blockchain Roadmap, and government funding has been increased to continue exploring the administrative use of the technology.


The 29-atoll republic has formally decided to issue a national cryptocurrency, the Sovereign (SOV). Until now, the country has been using the USD as the official currency, a consequence of its administration by the US until 1986. Even though this is a small country, with only 50,000 inhabitants, the initiative is a first-of-a-kind. This is the first time in history that a nation has adopted a currency with a fixed supply, determined in advance. The SOV is currently being designed by an Israeli startup. One of the reasons the country is opting for a cryptocurrency is the high cost of remittances in the current legacy system. Importantly, the SOV will live alongside the USD. The IMF has hypocritically voiced criticism, warning that the cost of KYC is going to be far higher than the expected benefits of issuing the coin.


To conclude this section, we would like to outline a range of criteria that we are going to use in the next Quaterly reviews to evaluate front-running countries in the adoption of crypto assets:


  • Allowed possession of cryptocurrencies.

  • Allowed fiat to be traded for cryptocurrencies.

  • Allowed mining of cryptocurrencies (or various restrictions).

  • Allowed utility tokens to be offered to the public (ICO).

  • Allowed tokenized securities to be offered to the public (STO).

  • Ratified laws to regulate financial institutions, to clarify how to handle crypto assets.

  • Introduced licensing framework for cryptoexchanges.

  • Introduced extraterritoriality of crypto laws for services offered to its citizens.

  • Enforced other countries’ crypto laws.

  • Defined tax rate on crypto asset gains.

  • Imposed anti-money laundering, and counterterrorism financing regulations on financial institutions.

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