Cryptocurrency Regulation Summary:
2022 Edition
The IMF’s Global Financial Stability Report, published in October 2021, noted that the market capitalization of crypto assets
has grown significantly amid large bouts of price volatility. Through early May, the market capitalization almost tripled in
2021 to an all-time high of US$2.5 trillion. This was followed by a 40% fall in the same month as concerns from institutional
holders about the environmental impact of crypto assets grew and global regulatory scrutiny of the crypto ecosystemescalated. Moreover, the market capitalization of stablecoins has quadrupled in 2021 to more than US$120 billion.
Issuance and trading activity has been tolerated in many countries around the world. While authorities such as central
banks and financial regulators do not want to stunt innovation, the large number of high profile cases alleging fraud andmoney laundering is worrisome. To this end, they are now tasked with creating a legal framework that is modern andaccommodative but also prudent. They are challenged to define token types and uses, figure out how they fit into existing
law, and develop a licensing structure.
Here is a snapshot of recent developments in key markets. Click on the dots to navigate to the desired regulation.

NASDAQ.COM/CRYPTO-SURVEILLANCE

1CRYPTOCURRENCY REGULATION SUMMARYGLOBAL ORGANIZATIONS
Organization: Financial Action Task Force (FATF)
FATF is an intergovernmental organization that develops
policies to combat money laundering; however, its policies are
not legally binding.
Recent developments: In July 2021, the Financial Action
Task Force (FATF), the global anti-money laundering (AML)
watchdog, completed a second 12-month review of theimplementation of its revised standards on virtual assets
and virtual asset service providers (VASPs). According to thereport, 58 out of 128 reporting jurisdictions advised that they
have now implemented the revised FATF Standards, with 52of these regulating VASPs and six of these prohibiting theoperation of VASPs. The other 70 jurisdictions have not yet
implemented the revised standards in their national law.

Organization: Financial Stability Board (FSB)
Recent developments: In October 2021, the FSB published
Regulation, Supervision and Oversight of “Global Stablecoin”
Arrangements: Progress Report on the implementation of the
FSB High-Level Recommendations. The report discusses key
market and regulatory developments since the publicationof the FSB high-level recommendations in October 2020.
It takes stock of the implementation of the FSB high-levelrecommendations across jurisdictions. It describes the statusof the review of the existing standard-setting body (SSB)
frameworks, standards, guidelines and principles in light of the
FSB high-level recommendations. In addition, it identifies areas
for consideration for potential further international work.

NORTH AMERICA
BERMUDA
Regulator: Bermuda Monetary Authority (BMA)
Policy: Bermuda aims to have best-in-class digital asset
regulation that can serve as a model for other jurisdictions.
Passed in May 2018, the ICO Act regulates offerings of digitalassets including digital coins and tokens that are issued as
ICOs. Bermuda is one of the only jurisdictions to address
crypto custody in depth. The Digital Asset Business Act 2018
prescribes requirements relating to safeguarding client assets.
Further, the Digital Asset Code of Practice 2018 prescribesthat a Digital Asset Business (DAB) must ensure that any
assets belonging to clients are kept segregated from the DAB’s
own assets. The Digital Asset Business Amendment Act 2019came into effect on October 8, 2019. It amends the existinglegislation, expanding the scope of the licensing regime toinclude digital assets derivatives, digital asset benchmark
administrators and digital asset trust service providers.
Recent developments: The BMA issued guidance on June 8,
2021 relating to the DAB sector in Bermuda. It includes FAQs
on the Digital Asset Business Act 2018 (DABA), guidance on
the head office requirements under DABA, and guidance on the
expected product due diligence to be conducted under DABA.
In July 2021, OTC trading platform 24 Exchange acquired a“Class T” digital asset business license from the BMA to roll out
cryptocurrency trading on its institutional-grade platform. The
exchange completed its first physical cryptocurrency trade in
September 2021.

CANADA
Regulator: Government of Canada
Policy: Canada implemented the world’s first national digitalcurrency law in June 2014, which focuses on anti-money
laundering and suspicious transaction reporting. The Canadiangovernment released an official draft of new regulations on
crypto exchanges and payment processors in June 2018. In
August 2018, the government postponed the release of its
final regulations for virtual currency and blockchain companies
until late 2019.
Recent developments: The government modified its guidelines
for cryptocurrency users and tax professionals in June 2021.
Guidance also came into effect for reporting large virtual
currency transactions to the Financial Transactions andReports Analysis Centre of Canada (FINTRAC).

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CRYPTOCURRENCY REGULATION SUMMARY

Regulator: Bank of Canada (BoC)
Policy: The BoC is monitoring developments in crypto-assets,
cryptocurrencies and the underlying technology, as well as
how they could affect core central bank functions.
Recent developments: In February 2019, the Bank of
Canada published a staff discussion paper, Crypto “Money”:
Perspective of a Couple of Canadian Central Bankers. Amongits conclusions and topics for further study, the paper notedthat it is unlikely that a cryptocurrency could form the basisof a stable or desirable monetary policy regime. However,the Bank of Canada is pursuing an active research agenda on
whether a central bank should issue its own digital currency.
In a February 2021 speech on Payments innovation beyond
the pandemic, BoC Deputy Governor Tim Lane reiterated theposition in the discussion paper, but was more open to thestablecoin concept.

Regulator: Investment Industry Regulatory
Organization of Canada (IIROC) and the Canadian
Securities Administrators (CSA)
Policy: In December 2017, IIROC announced that it wasprescribing greater margin requirements for virtual currency
futures contracts that trade on commodity futures exchanges
compared to margin requirements on other contracts. Dealer
Members must mark to market and margin them daily at
the greatest of: (i) 50% of market value of the contracts(ii) the margin required by the futures exchange on which
the contracts are entered into (iii) the margin required by
the futures exchange’s clearing corporation (iv) the margin
required by the Dealer Member’s clearing broker.
Recent developments: In February 2021, the Ontario Securities
Commission approved the world’s first physically settled
bitcoin ETF. In March 2021, The CSA and IIROC published a
notice outlining securities law requirements that apply tocrypto asset trading platforms (CTPs) and how they may
be tailored by regulators for the CTPs business model. In
September 2021, the CSA and IIROC published guidance
to help crypto trading platforms understand and comply
with requirements under securities law and IIROC rules foradvertising, marketing and social media use.

NASDAQ.COM/CRYPTO-SURVEILLANCEMEXICO
Regulator: Bank of Mexico (Banxico)
Policy: With a permit, cryptocurrency exchanges and related
storage providers may provide fiat currency liquidity,
guaranteed by the central bank, to all customers. To obtain apermit, companies must provide a detailed business plan to
Banxico – including a description of operations, staff roles andactivities, commissions charged per trade and the procedure
for a KYC mandate. Banxico will not provide liquidity tocustomers on the same day of opening exchange accounts
to prevent money laundering and other illicit activities.
Additionally, all entities conducting business must prove
the legitimacy of all customers and corporations involved ineach trade. Mexico is the headquarters of Bitso, the largest
cryptocurrency exchange in Latin America. In May 2021, thecompany raised $250 million in its Series C funding round andreached a $2.2 billion valuation.
Recent developments: In a June 2021 joint statement,
the Central Bank of Mexico, the finance secretary and the
National Banking and Securities Commission specified thatcryptocurrencies are neither legal tender assets nor currencies
under the current legal framework. In addition, they warned
about the risks of using cryptocurrencies. Financial institutionsin Mexico are not authorized to deal with virtual assets.

U.S.
Regulator: The Securities and Exchange Commission(SEC)
Policy: The SEC uses the “Howey Test” to determine whether avirtual currency is a security. All initial coin offerings (ICOs) aretreated as securities, except ethereum and bitcoin.
Recent developments: At a Senate hearing in September 2021,
SEC Chairman Gensler assured lawmakers that the regulator
is working on a set of rules to oversee the cryptocurrency
markets while balancing the interests of American innovators.
Further, in October, 2021 Gensler told the House Committee
on Financial Services that the SEC has no plans to ban crypto.
Fed Chairman Jerome Powell made a similar remark to
the House Committee days earlier. Gensler reiterated thatcrypto exchanges need to register with the SEC but addedthat decentralized exchanges (DEXs) would also be subject
to regulations. He expanded on his stance on stablecoins,which he has previously called the “poker chips” at the crypto“casino.” He added that he viewed stablecoins as a systemicrisk to the economy. In October 2021, the SEC approved thefirst bitcoin futures ETFs in the U.S., based on CME bitcoin
futures contracts.

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CRYPTOCURRENCY REGULATION SUMMARY

Regulator: The Commodity Futures Trading
Commission (CFTC)EUROPE

Policy: The CFTC interprets the term “virtual currency” as any
digital representation of value (a “digital asset”) that functions
as a medium of exchange, as well as any other digital unit thatacts as a form of currency regardless of its format (tokens,
coins or digital units distributed through smart contacts). The
CFTC has limited regulatory oversight over virtual currency
spot markets. However, it has full authority to engage inanti-fraud and anti-manipulation enforcement actions oncommodities markets where virtual currencies are traded as acommodity in interstate commerce or traded for future rather
than immediate delivery. The CFTC favors close monitoring ofmarket developments, especially through its LabCFTC fintech
innovation hub while not hindering the introduction of new
products such as Bitcoin futures.

Regulator: European Commission

Recent developments: In August 2021, Commissioner Dawn
Stump released a statement regarding the CFTC’s regulatory
authority applicable to digital assets. “The CFTC does not
regulate commodities (regardless of whether or not they are
securities); rather, it regulates derivatives—and this is true
for digital assets just as for any other asset class,” she said.
In September 2021, the CFTC ordered Kraken to pay $1.25
million civil monetary penalty for illegally offering margined
retail commodity transactions in digital assets, including
Bitcoin, and failing to register as a futures commission
merchant (FCM). Kraken, founded in 2011, is one of the largest
digital asset exchanges in the U.S. The regulator also filed
charges against 14 entities for either failing to register as
futures commission merchants (FCMs) or else making false andmisleading claims of having CFTC registration and National
Futures Association (NFA) membership.

Recent developments: The ESMA Report on Trends, Risks
and Vulnerabilities, published in 2021, includes a section on
Cryptoasset prices at all-time highs. (page 54) It says: “YetCAs are highly volatile and bear high risks for investors, as
already highlighted by the three ESAs [European Supervisory
Authorities] in their 2018 warning. The legislative proposal
on CAs published by the European Commission in September
2020 is intended to address these risks.”

Recent developments: In June 2021, EU policymakers
proposed that companies that transfer bitcoin or othercrypto assets must collect details of senders and recipientsto help authorities crack down on dirty money. Known as thetravel rule, this would make crypto transactions traceable.
As of July 2021, the EU was negotiating the Regulation onMarkets in Crypto Assets (MiCA). The regulation applies tocryptocurrencies that do not qualify as financial instruments,
including utility and payment tokens, and the main focus is on
stablecoins.

Regulator: European Securities and Markets Authority(ESMA)BELGIUM
Regulator: Financial Services and Markets Authority(FSMA)
Policy: Cryptocurrencies do not have legal tender status in
Belgium. The FSMA has issued fraud warnings pertaining tocryptocurrencies.
Recent developments: According to an FSMA press release
dated 10/4/21, the number of fraudulent online platforms thatoffer trading in certain products, including cryptocurrencies,
continues to grow. FSMA tracks unlawful offers of financial
products and services. 88 reports or questions about
cryptocurrencies were received from consumers in the firsthalf of 2021, up 54% from the first half of 2020. The increase
can be explained by the significant number of questions about
the reliability of service providers offering virtual currencies
and more generally about the topic of virtual currencies. FSMA
said a characteristic of these platforms is that they attract
consumers via fake advertisements using photos of celebrities
on social media.

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FRANCEGERMANY

Regulator: Banque de France

Regulator: The Deutsche Bundesbank

Policy: France is generally “crypto friendly,” and thegovernment is working to establish a legal framework for
virtual currencies. Currently, there are no specific regulations
governing virtual currencies. However, the Banque de France
does not consider virtual currencies equivalent to domestic
or foreign fiat currencies, and it uses the term “crypto-asset”
exclusively to delineate this difference. It maintains thatcrypto-assets are too volatile to be used as “units of account;”
they are not as efficient as fiat currencies; and they have no
intrinsic value, so they cannot be used as reserve in value.
Crypto-assets cannot be considered a means of payment orelectronic money under French law.

Policy: Germany’s central bank is open to innovation, including
in crypto-assets. However, it also has taken the stance that
global regulators should ensure that security standards as well
as monetary and financial stability are not negatively affected,
and payment transactions are not compromised.

Recent developments: In June 2021, the Banque de France
hosted a webinar: What will shape the future of crypto assets?
The two themes were crypto-assets: risks and regulation, andcrypto-assets: what will become a standard? Also in June
2021, the central bank successfully conducted an experimentwith SEBA Bank using a central bank digital currency in thesettlement of listed securities and trigger their delivery in
T2S. This was part of a 10-month initiative, launched in 2020.
Finally, François Villeroy de Galhau, the Governor of theFrench Central Bank, Banque de France, called upon Europe
to introduce a regulatory framework for cryptocurrencies.
He said that Europe must be prepared to act quickly when it
comes to digital currencies or payments. He added that failure
to give this matter the attention it deserves might see Europe
lose its grip on monetary sovereignty.

Regulator: Autorité des Marchés Financiers (AMF)
Policy: France intends to urge the EU to adopt its regulatory
framework for cryptocurrency.
Recent developments: In July 2021, the AMF publishedproposals as part of the European Commission’s consultation
on supervisory convergence – some could apply to the crypto
markets. It listed four major action points in its suggestion for
creating a level playing field for all market participants andminimizing regulatory arbitrage. One action point is centralized
supervision within ESMA for new unregulated activities and “ofcertain categories of entities and activities on account of theircross-border nature, or their significant or systemic impact.”
In October 2021, the AMF and the Autorité de Contrôle
Prudentiel et de Résolution (ACPR) blacklisted 16 brokers thatwere scamming people by inviting them to invest in fiat andcryptocurrencies without authorization to carry out business intheir jurisdiction. Four of them offer crypto-assets derivatives.

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Recent developments: The Bundesbank has evaluatedpotential advantages and shortcomings of central bankdigital currencies (CBDCs), as well as stablecoins. At a BIS
innovation summit in March 2021, Jens Weidmann, presidentof Deutsche Bundesbank, commented: “CBDC would becomea very close substitute for bank deposits and in times ofstress, the attractiveness of CBDCs versus a bank deposit will
even increase. This could mean that the danger of a bank run
increases. It also means that we will have stronger relianceon refinancing through the central bank. It means that thefootprint of the central bank increases, our balance sheet
increases in size and also the risks of our balance sheet might
become larger.” He added that before the implementation ofany eurozone CBDC, the “legal basis will be sound.”Regulator: Federal Financial Supervisory Authority(BaFin)Policy: Virtual currencies are not considered legal tender,
currencies, foreign notes, coins or e-money. Generally, virtual
currency brokers, multilateral trading facilities, exchanges –and miners in some cases – must be authorized by BaFin, andfailure to do so is a criminal offense.
Recent developments: In April 2021, BaFin warned that
Binance, one of the world's largest cryptocurrency exchanges,
risked being fined for offering its securities-tracking digitaltokens without publishing an investor prospectus. In June
2021, BaFin issued the first crypto custody business license
for Coinbase’s Germany arm. The regulator said due to the lackof precedent, it would be forming an interdisciplinary, crossdivisional and cross-departmental team to handle any issues
related to crypto custody.

IRELAND
Regulator: Central Bank of Ireland
Policy: The central bank has not issued specific guidance
about cryptocurrencies, but it has issued consumer warnings
about them. It is concerned about retail funds’ ability to cover
the risks associated with the asset class. It has noted that it’sdifficult for depositaries to provide safekeeping where direct
investments are involved. In addition, it sees conflicts with
Europe’s sustainable finance agenda given cryptocurrencies’
disproportionate draws on non-renewable energy resources.

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Recent developments: In July 2021, Central Bank Governor
Gabriel Makhlouf warned that the risks to financial stability
and consumer protection posed by cryptocurrencies are
increasing as more individuals become involved in tradingthem. He also endorsed the technical architecture behind
cryptocurrencies such as bitcoin and ethereum and said thearrival of a digital euro was a matter of “how and when” rather
than “if”. In September 2021, Binance registered three firms in
Ireland.

ITALY
Regulator: Ministry of Economy and Finance
Policy: Cryptocurrency exchanges and investors, must be
registered by the Institution of Agents and Mediators byproviding documentation data and the websites of businesses.
Recent developments: Consultations on registration ofblockchain and cryptocurrency companies was completed in
February 2018. Cryptocurrency issuers must mention thatthe coin is not issued by the central bank or any other publicauthority. Entities opting for cryptocurrencies must collectinformation from parties and submit a full report to theauthorities.

Regulator: The Commissione Nazionale per la Societa
e la Borsa (Consob)
Policy: Consob is the authority responsible for supervisingmarkets and listed companies as well as investor protectionin Italy. It defines crypto-assets as “digital registrations which
incorporate rights connected to investments in entrepreneurial
projects”. Regarding crypto-asset platforms, it is seeking toestablish a regulatory framework for the conduct of offerings
upon the issue of crypto-assets from the perspective ofinvestor protection. This will take into account initiatives on
the EU level.
Recent developments: In June 2021, Consob Chairman
Paolo Savona voiced concerns regarding cryptocurrency. He
noted that there are some 4,000-5,000 cryptocurrencies incirculation without any form of real regulation. The watchdog’s
yearly report said: “Without proper oversight there could bea worsening in market transparency, the basis of legality andrational choice for (market) operators… If it takes too long at a
European level to come up with a solution, (Italy) will have totake its own measures.” In July 2021, Italy blocked consumers
from investing in cryptocurrencies through Binance on all of
its platforms.

NASDAQ.COM/CRYPTO-SURVEILLANCELUXEMBOURG
Regulator: Commission de Surveillance du Secteur
Financier (CSSF)
Policy: Luxembourg does not have specific cryptocurrency
regulation. However, CSSF was a pioneer in the EU with its
official “Bitcoin Communiqué 2014.” This stated that even if
there is no specific legal framework, the existing traditional
financial regulation may apply. Additionally, bitcoin may
qualify as “scriptural money” if broadly adopted as a means of
payment by its user network. CSSF licensed the first-ever EUlicensed crypto firm, Bitstamp, and opted to issue it a payment
institution license. It issued bitFlyer the same license in 2018,
and an EU-compliant electronic money institution Directive
license to Snapswap. CSSF has a rigorous vetting process andwill only license companies that have proven their potential
and commitment to strong KYC policies and anti-money
laundering/countering financing of terrorism (AML/CFT) checks.
Recent developments: In July 2021, Karen O’Sullivan, head ofinnovation, payments, market infrastructures and governanceat the CSSF, called for a more developed and harmonizedregulatory framework for the crypto and digital asset market.
She also referenced the need for a flexible approach thatwill “give certainty to the market and the players but won’t
impede further innovation in the sector”. Also in July 2021,
Azimut, with its Luxembourg-based product platform Azimut
Investments SA, obtained authorization from the CSSF tomanage investment strategies based on virtual assets such as
bitcoin, ethereum, and other sub-asset classes such as DeFi
tokens.

NETHERLANDS
Regulator: De Nederlandsche Bank (DNB)
Policy: Cryptocurrencies are not recognized as legal tender, butthey are not banned in the Netherlands.
Recent developments: In February 2021, the DNB responded
to a letter from the Dutch Association of Bitcoin Companies,
which raised questions regarding the supervision of crypto
service providers and compliance with sanctions legislation.
In May 2021, the DNB canceled some KYC verification
procedures that it imposed on crypto service providers infall 2020 after a local exchange, Bitonic, took the matter tocourt. In August 2021, the DNB said Binance was providing its
services in the Netherlands without the required registration.

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SPAIN
Regulator: Comisión Nacional de Valores (National
Securities Commission) and the Banco de España(Bank of Spain)
Policy: In a joint statement released in February 2018,
Comisión Nacional de Valores and the Banco de España notedthat virtual currencies are not issued, registered, authorized orverified by any regulatory agency in Spain. Virtual currencies
purchased or held in Spain are not backed by any of theguarantees or safeguards provided by regulations applicable tobanking or investment products. In other words, they are notlegal tender.
Recent developments: In February 2021, the CNMV and Bankof Spain issued a statement on cryptocurrency investment
risks, warning of their potential lack of liquidity and otherliabilities they may pose to small-scale investors. The approvalof Royal Decree-Law 5/2021 in March 2021 grants the
CNMV administrative powers to oversee the advertising of
crypto-assets. Despite these assets not being covered by the
Spanish Securities Market Act, the new Decree-Law makesa modification via Article 240 bis. In April 2021, the CNMV
invited a public consultation to gather opinions related to theregulation of advertising around cryptocurrency investing.
In August 2021, the CNMV warned that Huobi, Bybit, Dsdaq
Market, Markets Cube and Expertise Trader; crypto token
issuer N2 Group; trading platforms Markets EU, Profit Assist
and Financial Resident and other exchange firms are operatingin the country without proper registration.

SWEDEN
Regulator: Sveriges Riksbank
Policy: Sweden’s central bank issued a report of its E-krona
Project in September 2017, which examines the possibility ofa central bank digital currency (CBDC) to complement physicalcash, which is declining in usage. As of 2021, the E-krona isbeing tested. However, the central bank has issued warnings
about the risks associated with cryptocurrencies.
Recent developments: In May 2021, Stefan Ingves, governorof the Sveriges Riksbank, commented that regulation of bitcoin
and other cryptocurrencies is looking more likely as they
become more mainstream. Moreover, regulation will develop
at different speeds in different markets. In September 2021,
Ingves warned that trading in bitcoin is “like trading stamps,”and “private money usually collapses sooner or later.”

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Regulator: Financial Supervisory Authority (FSA)
Policy: The FSA has issued warnings about cryptocurrencies
and stated that they present a high risk of investors losing
their money.
Recent developments: In February 2021, the regulator
published a report, Financial instruments with crypto-assets
as underlying asset. It also cautioned investment firms against
selling bitcoin ETFs to average consumers. In October 2021,
the FSA said it will investigate how firms that trade cryptocurrencies implement regulations aimed at preventing money
laundering and the financing of terrorism.

SWITZERLAND
Regulator: Swiss National Bank (SNB)
Policy: Switzerland is recognized as a cryptocurrency andblockchain-friendly country due to the activity in “Crypto
Valley,” located in Zug.
Recent developments: As of June 2021, the Swiss central
bank is participating in Project Jura, an initiative to evaluate
the potential benefits and challenges of a CBDC in settlingcross-border payments and digital financial instruments. It iscollaborating with Banque de France, the BIS Innovation Huband a coalition of partners led by Accenture that includes
Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS.
However, it sees no need for a digital franc.

Regulator: Swiss Financial Market Supervisory
Authority (FINMA)
Policy: FINMA recognizes the innovative potential ofblockchain technology and supports the federal government’s
Blockchain/ICO Working Group. In February 2018, FINMA
published guidelines on how it intends to apply financial
market legislation in handling enquires from ICO organizers.
Circumstances must be considered on a case-by-case basis.
Currently, there is no ICO-specific regulation or relevant caselaw consistent with legal doctrine. In assessing ICOs, FINMA
will focus on the economic function and purpose of the tokens(payment tokens, utility tokens and asset tokens). Dependingon the function, the tokens must comply with anti-money
laundering regulations, securities law requirements and civil
law requirements under the Swiss Code of Obligations.
Recent developments: In September 2021, FINMA approved
the first crypto fund according to Swiss law. The fund, whichis restricted to qualified investors, invests primarily in cryptoassets.

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U.K.
Regulator: Financial Conduct Authority (FCA)
Policy: The FCA has jurisdiction over AML and counterterrorism regulations. As such, it is the major regulator of thecryptocurrency market in the U.K., at least on an organizational
level. It has asked crypto firms to register with it before they
can operate in the region. In the first six months of 2021,
it only registered six firms, but it is assessing dozens more.
Crypto platforms that registered in December 2020 are eligible
to receive the Temporary Registrations Regimes (TRR). Withthe TRR, they can continue offering their services while the
FCA assesses their registration. However, many platforms
have withdrawn their applications due to the U.K.’s tight AML
regulations. The FCA has issued several warnings to consumers
about the risks of cryptocurrency trading.
Recent developments: Effective in January 2021, the U.K.
banned the sale of derivatives and ETNs “that reference
certain types of crypto assets to retail consumers.” In June
2021, the FCA banned Binance from operating in the U.K. In
September 2021, the FCA called for powers to govern the
online promotion – including on social media platforms – ofcrypto assets to combat a flood of "problematic content," which
it said has no value.

ASIA-PACIFIC
AUSTRALIA
Regulator: Australian Transactions and Analysis
Centre (AUSTRAC)
Position: Virtual currencies and exchanges have been legal inAustralia since 2017. Digital currency exchange providers must
be enrolled on AUSTRAC’s Digital Currency Exchange (DCE)
Register. Similar to a bank, the exchange must also identify andverify the identities of their customers, and report suspicious
matters, international transactions, and transactions involving
physical currency that exceeds AU$10,000 to AUSTRAC.
Recent developments: As of May 2021, AUSTRAC hasregistered 456 cryptocurrency exchanges. In August 2021,
heads of Australia’s largest cryptocurrency exchanges appealed
to the Senate Committee on Australia as a Technology and
Financial Centre to recommend legislation to protect investors
and require minimum operating standards for exchanges.
Further, the lack of regulation locally has made banks skeptical
about dealing with cryptocurrency businesses, so many ofthese businesses are being “unbanked.” They point to concerns
about anti-money laundering and counter terrorism financing
laws.

Regulator: Australian Securities and Investments
Commission (ASIC)
Position: ASIC is responsible for overseeing ICOs. In 2017,
it issued guidelines indicating that the structure of tokens(security or utility) will determine their legal treatment undergeneral consumer law and the Corporations Act.
Recent developments: In June 2021, ASIC released
Consultation Paper 343: Crypto-assets as underlying assets
for ETPs and other investment products, which calls for
submissions on ASIC’s proposed approach to regulatingexchange traded products that invest in, or provide exposure
to, crypto-assets. CP343 is limited to proposing good practices
for ETPs and other investment products providing exposure
to crypto-assets under the current regulatory framework. ASX
and the NSX have taken a very cautious approach to entities
that have any involvement with crypto-assets. As of July
2021, DigitalX is the only ASX-listed company with cryptorelated assets, and the ASX and NSX have yet to approve thelisting of any crypto-related ETPs. Most crypto assets that are
currently available to Australian retail investors fall outsideof ASIC's regulatory perimeter, so companies offering theseproducts do not need to hold an AFS license or a market
license. As such, in October 2021, the Senate Committee
on Australia as a Technology and Financial Centre hasrecommended creating a new category of market license thatenables DCEs to demonstrate a high level of commitment to

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consumer protection and operational integrity. The Committee
recommended for the Treasury Department to conduct a token
mapping exercise to classify the various types of crypto asset
tokens and other digital assets being developed in the market.
It also recommended for government to establish and formallyrecognize Decentralized Autonomous Organization company
structures, which has been used more often in the digitalassets space.

CHINA
Regulator: People’s Bank of China (PBoC)
Policy: In July 2019, China’s Hangzhou Internet Court foundbitcoin is a commodity because it carries value, it is scarce,
and it can be used to transfer value. However, bitcoin is notlegal tender. Moreover, the state-owned Bank of China posted
an infographic on its web site explaining the history of bitcoin
and how cryptocurrencies work. As of June 2020, the Shanghai
No.1 Intermediate People’s Court ruled that bitcoin is an asset
protected by law, and the Shenzhen Futian District People’s
Court ruled that ethereum is legal property with economic
value. In addition, China passed the Civil Code in May 2020,
which protects cryptocurrency inheritance.
Recent developments: In May 2021, China banned financial
institutions and payment companies from providing services
related to cryptocurrency transactions. It had issued similarbans in 2013 and 2017. In September 2021, regulators
issued a blanket ban on all crypto transactions and mining.
Ten agencies, including the central bank, financial, securities
and foreign exchange regulators, vowed to work together toroot out "illegal" cryptocurrency activity, the first time the
Beijing-based regulators have joined forces to explicitly ban all
cryptocurrency-related activity.

HONG KONG“regulated activity” in Hong Kong. In September 2021, Deputy
Chief Executive Liang Fengyi said the SFC is obligated to
expand the scope of cryptocurrency supervision in Hong Kong,especially as it pertains to unlicensed trading. Since crypto
assets are not recognized as securities or payment methods,
they fall outside the jurisdiction of the SFC. As a result, many
investors who have participated in the asset class havesuffered significant losses.

Regulator: Hong Kong Monetary Authority (HKMA)
Position: The HKMA has said that it does not regulate
cryptocurrencies such as bitcoin, which is regards as a
virtual “commodity” and not as legal tender, or as a means of
payment or money. Hong Kong’s banking laws and regulations
therefore do not apply to entities accepting or dealing incryptocurrencies.
Recent developments: In October 2021, the HKMA issued awhite paper exploring the prospect of issuing a retail CBDC in
Hong Kong, covering both technical and policy considerations,and aims to come up with an initial view by the middle of2022.

Regulator: Hong Kong Financial Services and Treasury
Bureau (FSTB)
Policy: The FSTB has been consulting the market on changes
to crypto exchange licensing rules. It intends to propose
legislative changes to turn its proposals into law in the 202122 session of the city's legislative assembly.
Recent developments: In May 2021, The FSTB said in its
consultation conclusions all virtual asset (crypto currency)
exchanges should be licensed if they wished to operatein Hong Kong. It also said "confining the services of a VA
exchange to professional investors… is appropriate at least for
the initial stage of the licensing regime." According to Hong
Kong law, an individual must have a portfolio of HK$8 million($1.03 million) to count as a professional investor.

Regulator: Securities and Futures Commission (SFC)
Position: The SFC’s regulatory remit is overseeing securitiesonly. Funds with virtual assets exceeding 10% of aggregate
assets must be licensed by the SFC. In November 2020, theSFC issued a position paper setting out a new regulatory
framework for virtual asset trading platforms. Platforms which
operate in Hong Kong and offer trading of at least one security
token may apply to be licensed by the SFC. The SFC’s new
regulatory framework is aligned with the recommendationsof international standard setting bodies. Dozens ofcryptocurrency exchanges operate in Hong Kong, including
some of the world's largest. The city currently has an "opt in"approach under which exchanges can apply to be licensed by
the SFC, but it is not a requirement.
Recent developments: In July 2021, the SFC said no entity
in the Binance Group is licensed or registered to conduct

NASDAQ.COM/CRYPTO-SURVEILLANCE

INDIA
Regulator: Reserve Bank of India (RBI)
Position: The central bank has repeatedly warned thegeneral public against investing in cryptocurrencies, citing
concerns over consumer protection, market integrity andmoney laundering. But it has been welcoming toward
blockchain technology, and has been researching CBDCs for
its applicability to the Indian economy. It has not articulated
which classes of cryptocurrencies it considers to be
problematic. In April 2017 there were reports that the RBI was
experimenting with its own digital currency, and in April 2018
an interdepartmental group was reportedly analyzing thefeasibility of a rupee-backed CBDC. The RBI banned paying for
cryptocurrencies using systems and portals of Indian banks in
April 2018.

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Recent developments: In May 2021, the RBI issued aclarification, informing banks that they cannot warn customers
against trading in cryptocurrencies based on the April 2018ban. The move was perceived as a vote of confidence to crypto
by RBI amid reports of India planning a complete ban on
crypto trading. That said, the RBI has suggested that banks andcrypto platforms need to make sure that these transactions are
not used for fraudulent activities and tax evasion. It has asked
the banks to carry out the necessary customer due diligenceprocess in line with regulations governing standards for KYC,
AML and CFT.

Regulator: Securities and Exchange Board of India(SEBI)
Policy: The crypto industry in India is currently unregulated,
so all crypto-related activities are considered “unregulated
activities.”
Recent developments: In May 2021, cryptocurrency exchanges
communicated to the government that SEBI is more suited
to regulate the space than the RBI. In October 2021, SEBI
warned: “Investment advisers are, hereby, advised to refrainfrom undertaking such unregulated activities. Any dealing
in unregulated activities by investment advisers may entail
action as deemed appropriate under the SEBI Act, 1992 andregulations framed thereunder.”JAPAN

SINGAPORE
Regulator: Monetary Authority of Singapore (MAS)
Policy: MAS does not see a strong case for banning virtual
currency trading. It distinguishes between utility tokens,
payment tokens and security tokens, and does not regulate thetechnology itself but its purpose. In the regulator’s view, utility
tokens do not require as much control as the other types. For
businesses trading in cryptocurrencies, offering custody toretail users and a number of other activities, applying proper
KYC (Know-Your-Customer), AML (Anti-Money Laundering), and
CFT (combatting the Financing of Terrorism) checks are a legal
requirement. All cryptocurrency service providers must obtaina license from MAS.
Recent developments: As of May 2021, MAS was working
on a new payment services bill to provide a clear regulatory
framework for cryptocurrency exchanges. The bill will
update MAS’ definition of e-money to now include e-wallets.
Previously, the term “e-money” was confined to stored value
and pre-paid services. Under the proposed bill, e-money will
require issuers to protect the value stored in major e-wallets
for both consumers and merchants. In August 2021, Australianexchange Independent Reserve secured an “in principle”
approval from MAS that will allow it to offer digital payment
token services. The company is the first exchange to be
granted formal permission to operate in Singapore out of
about 170 applicants, including global exchanges Binance andGemini.

Regulator: Financial Services Agency (FSA)
Position: Japan is the first country to have a legal systemregulating crypto asset trading. The Payment Services Act
was enacted in May 2016 and came into effect in April 2017.
Crypto assets such as bitcoin are recognized as legal tender.
The FSA strengthened regulations on cryptocurrency exchange
operators in 2019 following a massive theft in 2018. Crypto
asset exchange businesses operating in Japan must comply
with AML/CFT and consumer protection laws.
Recent developments: In May 2021, the FSA issued a warning
to crypto derivatives exchange Bybit, stating that the firm is
not registered to operate crypto services in Japan. In June
2021, the FSA also issued a warning to Binance for offering
crypto exchange services without registration. In July 2021,
the FSA set up a section to oversee digital and decentralized
finance. The agency plans to propose measures by next
summer that ensure the stability of cryptocurrencies in a waythat does not hamper their development.

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SOUTH AMERICABRAZIL
Regulator: Comissão de Valores Mobiliários (CVM)
Policy: Cryptocurrency exchanges exist in Brazil, andgovernment support for crypto-related businesses has
increased. Bitcoin and cryptocurrencies are not officiallyrecognized as securities. However, there are situations where
they can be characterized as such depending on the economic
context of their issue and the rights granted to investors – forexample, in a collective investment contract.
Recent developments: In March 2021, the CVM approved two
crypto ETFs – one 100% bitcoin and the other compose of fivecryptocurrencies, in addition to bitcoin – listed on the B3 stock
exchange. In July 2021, the CVM approved an ether ETF listedon the B3 stock exchange. The ETF uses the same ether index
as that used by CME Group and institutional custodial services
provided by Gemini.

Regulator: Banco Central Do Brasil
Policy: In August 2019, Brazil’s central bank decided toclassify crypto assets under IMF guidelines. That means traded
crypto assets will be considered as non-financial products
and accounted as goods on the central bank’s balance sheet.
Classifying them as goods could make them eligible to be used
as a payment mechanism, and they could be reflected in the
country’s trade balance.
Recent developments: In June 2021, the central bankreleased general guidelines for a Brazilian CBCD. In August
2021, central bank head Roberto Campos Neto recognized
the demand for greater crypto regulation as Brazil evolves
in the market. He mentioned several ongoing discussions
with Brazil’s Securities and Exchange Commission on how towelcome cryptocurrencies into the regulatory landscape.

Regulator: The Brazilian Securities and Exchange
Commission
Policy: Brazil’s securities regulator is interested in furthering
the adoption of blockchain technology in Brazil. Its regulatory
sandbox acts as a testing environment for fintech and othercompanies to issue tokens or cryptocurrencies with a regulated
environment.
Recent developments: In March 2021 the securities regulator
approved QR Asset Management’s Bitcoin ETF for listing on
B3 alongside another crypto-based ETF by Hashdex. In June
2021, B3 launched another QR Asset Management bitcoin ETF.

NASDAQ.COM/CRYPTO-SURVEILLANCE

CHILE
Regulator: Ministry of Finance of Chile
Policy: Cryptocurrencies are currently unregulated in Chile.
Moreover, the country’s Supreme Court has ruled thatcryptocurrencies do not have “physical manifestation and no
intrinsic value.”
Recent developments: In September 2021, central bankpresident Mario Marcel said a strategy for the potential rollout of its own digital currency will be decided in early 2022.
He has formed a high-level working group to study a mediumterm strategy for minting a "digital peso" in a bid to meet theneeds of an "increasingly challenging payments industry." Theworking group would critically evaluate risks to Chile's banking
system and the efficiency of its monetary policy.

COLOMBIA
Regulators: Government of Colombia, Banco dela República and Superintendencia Financiera de
Colombia (SFC)
Policy: Cryptocurrencies on a government level have been
limited to a regulatory sandbox that exchanges are runningwith banks.
Recent developments: As of February 2021, the SFC has
authorized alliances between Colombian banks and digitalcurrency exchanges. So far, Colombia’s financial department
has approved nine partnerships between exchanges andnational banks in order to make cryptocurrency operations
more accessible to citizens. Colombia has the second-highest
number of cryptocurrency ATMs in Latin America. As of
October 2021, there are 50 of these ATMs.

EL SALVADOR
Regulators: Banco Central de Reserva
Policy: In June 2021, President Nayib Bukele declare that
bitcoin would become legal tender in El Salvador. A few days
later, the Bitcoin Law was passed, effective in September
2021. Businesses would be required to accept bitcoin for all
payments. In August 2021, the central bank released two
documents detailing how banks should deal with bitcoin.
Financial entities must apply to the central bank to offer digitalwallets, the guidelines stated. Applications must detail the typeof product being offered, and include target market details,
risk assessments, charges to customers, education provisions
for customers, and complaint procedures. KYC verification
will be required for all customers. Two-way Bitcoin-to-dollar
convertibility must be provided and the bank is allowed tocharge a fee.

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Recent developments: In June 2021, Bukele announced an
official bitcoin wallet, Chivo, which would work like PayPal:
people would have a balance in dollars and a balance inbitcoins, held at Chivo. New users would get a signup bonusof $30 in bitcoin. 200 Chivo ATMs were deployed, and 50
staffed Chivo kiosks were constructed around the country. The
Chivo app would be available internationally for remittances—dollars go into Chivo, the government subsidizes transmission
costs and keeps the actual dollars, and the recipient gets
virtual “dollars” that are numbers displayed in the Chivo app.
However, Chivo was not put together until the end of August,
two weeks before the launch. In addition, people protested
against the forced acceptance, lack of transparency from thegovernment and the dysfunctional Chivo payment system.

MIDDLE EASTABU DHABI
Regulator: The Financial Services Regulatory
Authority (FSRA)
Policy: Abu Dhabi Global Market (ADGM) claims to be thefirst jurisdiction to introduce a comprehensive regulatory
framework for the regulation of spot virtual asset activities
undertaken by multilateral trading facilities, brokers,
custodians, asset managers and other intermediaries. The
FSRA’s regulatory framework addresses the full range ofassociated risks, including those relating to market abuse andfinancial crime, consumer protection, technology governance,
custody and exchange operations. To foster institutional
involvement within virtual asset markets, the FSRA focuseson proper governance, oversight and transparency within thisspace.
Recent developments: In February 2020, the FSRA enacted
some amendments to its rules and regulations. It changed
the terminology of “crypto asset” to “virtual asset” to bealigned with the terminology used by the FATF. It also
moved the applicable rules and regulations from a bespoke
category of “Operating a Crypto Asset Business” to therespective underlying Regulated Activities (e.g. Providing
Custody, Operating a Multilateral Trading Facility, Dealing in
Investments).

DUBAI
Regulator: Dubai Financial Services Authority (DFSA)
Policy: In January 2021, the DFSA announced plans to
introduce a regulatory framework for diverse assets as partof its 2021-2022 business plan. The crypto framework willfurther expand the DFSA’s regulation of digital asset issuers
and associated trading platforms. The framework will include
a number of digital asset types like tokenized securities andcryptocurrencies such as bitcoin. The rules will represent
a comprehensive regulatory framework, drawing on bestpractices from global jurisdictions. The framework will
specifically include AML measures.
Recent developments: In June 2021, 3iQ’s Bitcoin ETF, was thefirst cryptocurrency fund to go public in the Middle East.

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AFRICANIGERIA
Regulator: Central Bank of Nigeria (CBN)
Policy: In March 2021, the CBN clarified a statement it issued
in February that seemed to order financial institutions to shut
down all accounts associated with cryptocurrency trading.
The bank said it reiterated an already imposed 2017 ban on
institutions facilitating cryptocurrency transactions. The CBN
did not place restrictions from use of cryptocurrencies and it is
not discouraging people from trading in them.
Recent developments: In October 2021, the CBN’s CBDC, theeNaira, went live.

These materials are for informational purposes only and are not for the purpose of providing legal advice. Whilst these materials are intended to be accurate
and current, they are is not guaranteed to be accurate or complete. © Copyright 2022. All rights reserved. 3033-Q21

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