The Law Library of Congress, Global Legal Research Center 

(202) 707-6462 (phone) • (866) 550-0442 (fax) • law@loc.gov • http://www.law.gov

Regulation of Cryptocurrency in 

Selected Jurisdictions 

Argentina • Australia • Belarus • Brazil • Canada • China 

France • Gibraltar • Iran • Israel • Japan • Jersey 

Mexico • Switzerland 

June 2018
This report is provided for reference purposes only. 

It does not constitute legal advice and does not represent the official 

opinion of the United States Government. The information provided 

reflects research undertaken as of the date of writing. 

It has not been updated.
Contents 

Introduction ......................................................................................................................................1 

Argentina..........................................................................................................................................2 

Australia ...........................................................................................................................................5 

Belarus ...........................................................................................................................................17 

Brazil ..............................................................................................................................................21 

Canada............................................................................................................................................25 

China ..............................................................................................................................................30 

France .............................................................................................................................................34 

Gibraltar .........................................................................................................................................40 

Iran .................................................................................................................................................45 

Israel ...............................................................................................................................................49 

Japan ..............................................................................................................................................53 

Jersey..............................................................................................................................................59 

Mexico ...........................................................................................................................................63 

Switzerland ....................................................................................................................................66 
The Law Library of Congress 1

Introduction 

Hanibal Goitom 

Foreign Law Specialist 

This report summarizes the cryptocurrency policies and regulatory regimes in fourteen 

jurisdictions around the world. Among the key issues covered in the report are matters relating to 

the legality of cryptocurrency markets; the tax treatment of cryptocurrencies; and the applicability 

of anti-money laundering, anti-organized crime, and anti-terrorism-financing laws. 

In terms of the legal recognition of cryptocurrency markets, the jurisdictions included in this report 

may be categorized into two groups. In the first category are countries that permit cryptocurrency 

markets to operate, and within this group some countries (including Belarus, Gibraltar, Jersey, and 

Mexico) have been proactive in that they have enacted specific laws recognizing and regulating 

the cryptocurrency markets, while others (such as Brazil, Argentina, and France) allow the markets 

to exist but have yet to issue industry-specific laws. The second category of countries includes 

those that have taken steps to restrict the cryptocurrency markets, mainly by barring financial 

institutions within their borders from participating in them (China and Iran). 

Of the countries that permit cryptocurrency markets to operate, many impose taxes. However, the 

tax treatment of income generated from a cryptocurrency transaction may vary depending on how 

it is categorized. For instance, in Argentina a transaction of this nature would be taxed in a manner 

similar to revenue generated from the sale of securities and bonds, whereas in Switzerland 

cryptocurrency is categorized as a foreign currency for tax purposes. Some of the countries 

included in the report do not levy taxes on cryptocurrency transactions (Belarus and Jersey). 

Many of the countries that permit cryptocurrency markets to operate have enacted laws subjecting 

organizations that participate in these markets to rules designed to prevent money-laundering, 

terrorism financing, and organized crime. These include Australia, Belarus, Canada, Gibraltar, 

Japan, Jersey, and Switzerland. While a bill that would have the same effect is working its way 

through the Brazilian legislative process, countries like Argentina, France, and Mexico have yet 

to follow suit. 
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Argentina 

Graciela Rodriguez-Ferrand 

Senior Foreign Law Specialist

SUMMARY Bitcoins are not considered legal currency in Argentina because they are not issued by the 

Central Bank and therefore are not considered legal tender. Although bitcoins are not 

specifically regulated, they are increasingly being used. Bitcoin may be considered a good 

or a thing under the Civil Code, and transactions with bitcoins may be governed by the 

rules of the sale of goods under the Civil Code. In 2014, finance authorities warned entities 

and individuals who are required by law to report suspicious transactions involving money 

laundering or terrorism financing to be particularly alert with regard to operations carried 

out with virtual currency. In December 2017 an amendment to the Law on Income Tax 

provided that the profits derived from the sale of digital currency will be considered 

income from stock and bonds and taxed as such. 

I. Applicable Rules 

Under the National Constitution of Argentina1

 the only authority capable of issuing legal 

currency is the Central Bank.2 Bitcoins are not legal currency strictly speaking, because they are 

not issued by the government monetary authority and therefore are not legal tender.3

 They may 

be considered money but not legal currency, since they are not a mandatory means of cancelling 

debts or obligations.4

 Although bitcoins are not specifically regulated, they are increasingly 

being used in Argentina, a country that has strict control over foreign currencies.5

 According to 

some experts6 a bitcoin may be considered a good or a thing under the Civil Code,7 and 

 

1

 CONSTITUCIÓN DE LA NACIÓN ARGENTINA [NATIONAL CONSTITUTION OF ARGENTINA] art. 75, para. 6, BOLETÍN 

OFICIAL [BO], Aug. 22, 1994, http://servicios.infoleg.gob.ar/infolegInternet/anexos/0-4999/804/norma.htm, 

archived at https://perma.cc/XN2T-C5G7.

2

 Ley No. 24.144, Carta Orgánica del Banco Central de la República Argentina [Law No. 24,144, Charter of the 

Central Bank of the Republic of Argentina] art. 30, BO, Oct. 13, 1992, http://servicios.infoleg.gob.ar/infoleg 

Internet/anexos/0-4999/542/texact.htm, archived at https://perma.cc/2CVW-8VNX. 

3

 El Banco Central Argentino Considera Riesgoso Operar con Bitcoins [Central Bank of Argentina Considers Risky 

Operations with Bitcoins], INFOTECHNOLOGY (May 28, 2014), http://www.infotechnology.com/internet/El-BancoCentral-argentino-considera-riesgoso-operar-con-bitcoins-20140528-0003.html, archived at https://perma.cc/746AJBYG. 

4

 Mara Laudonia, El Vacío Legal del Bitcoin, ¿Es o No Es Dinero? [The Legal Vacuum of the Bitcoin, Is It or Is It 

Not Money?], TELAM (Feb. 28, 2018), http://www.telam.com.ar/notas/201702/180185-el-vacio-legal-del-bitcoin-eso-no-es-dinero.html, archived at https://perma.cc/P2WE-L8F9.

5

 José Crettaz, Bitcoin: Fiebre Argentina por la Máquina de Dinero Digital [Bitcoin: Argentine Fever for the Digital 

Money Machine], LA NACIÓN (June 30, 2013), http://www.lanacion.com.ar/1596773-bitcoin-pasion-argentina-porla-nueva-maquina-de-hacer-billetes-digitales, archived at https://perma.cc/PMU9-KWB5; Diego Geddes, Argentina 

es uno de los países que más usa el bitcoin [Argentina Is One of the Countries that Uses the Bitcoin], CLARÍN (Dec. 

31, 2013), http://www.clarin.com/sociedad/Argentina-paises-Bitcoin-moneda-virtual_0_1057694271.html, archived 

at https://perma.cc/N8SA-5H9L. 
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transactions with bitcoins may be governed by the rules of the sale of goods under the 

Civil Code.8

A formal recognition of electronic currency was issued by the Unidad de Información Financiera 

(UIF) (Financial Information Unit) of the Ministry of Finance through Resolution 300/2014, 

which warned entities and individuals required by law to report suspicious transactions involving 

money laundering or terrorism financing to be particularly alert with regard to operations carried 

out with virtual currency.9 The UIF Resolution differentiates “virtual currency” and “electronic 

currency,” stating that the latter involves the electronic transfer of legal tender while virtual 

currency transactions do not involve legal tender.10

In spite of the expectations for the G20 meeting of finance ministers and central bank governors 

of the G20 countries in Buenos Aires, Argentina on March 19–20, 2018, no specific guidelines 

or regulatory framework on cryptocurrencies were issued.11 The group only mentioned the issue, 

giving alerts as to its risks for the consumer and investors, but gave no indication as to the way it 

should be approached by the authorities, except for a call upon international standard-setting 

bodies to monitor cryptocurrencies and their risks while evaluating a multilateral response 

if appropriate.12

The government is planning to regulate transactions with bitcoins in the country this year.13 The 

plan is to amend the Law on Money Laundering to add stock markets, wallets, and brokers as 

entities required to report transactions with bitcoins to official entities.14

 6 See, e.g., Andres Chomczyk, Situación Legal del Bitcoin en Argentina, ELBITCOIN.ORG (Oct. 10, 2013), 

http://elbitcoin.org/situacion-legal-de-bitcoin-en-argentina, archived at https://perma.cc/43K8-ZYYK.

7

 CÓDIGO CIVIL [CIVIL CODE] art. 2311, http://servicios.infoleg.gob.ar/infolegInternet/anexos/105000-

109999/109481/texactley340_libroIII_tituloI.htm, archived at https://perma.cc/Y3Q7-JT25. 

8 Id. art. 1323. 

9

 Unidad de Información Financiera, Resolución 300/14 Prevención del Lavado de Activos y de la Financiación del 

Terrorismo, para. 9, BO, July 10, 2014, http://servicios.infoleg.gob.ar/infolegInternet/anexos/230000-

234999/231930/norma.htm, archived at https://perma.cc/G2L7-9S2Q.

10 Id. art. 2. 

11 Froilan Fernández, Sin Decisiones sobre los Criptoactivos Concluye Reunión del G20 [G-20 Meeting Concludes 

Without a Decision on Cryptocurrency], CRYPTONOTICIAS (Mar. 20, 2018), https://www.criptonoticias.com/ 

regulacion/sin-decisiones-criptoativos-concluye-reunion-g20/, archived at https://perma.cc/WH34-FQSE. 

12 Communiqué, Finance Ministers & Central Bank Governors, G20, Mar. 19–20, 2018, Buenos Aires, Argentina, 

https://back-g20.argentina.gob.ar/sites/default/files/media/communique_g20.pdf, archived at 

https://perma.cc/65UD-BB58.

13 Olivera Doll & Camila Russo, Argentina Supervisaría Operaciones en Bitcoins a Partir de 2018, BLOOMBERG 

LATAM NOTICIAS (Dec. 7, 2017) https://www.bloomberg.com/latam/blog/argentina-supervisaria-operaciones-enbitcoins-partir-de-2018/, archived at https://perma.cc/K6NS-GQYL. 

14 Id. 
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II. Taxation

The latest amendment to the Income Tax law provides that the profit derived from the sale of 

digital currency will be considered income and taxed as such.15 Income derived from the sale of 

digital currency is taxed at 15% when derived from either Argentine or foreign sources.16 The tax 

treatment of cryptocurrency corresponds with the treatment of profits on securities and bonds, 

which represent a liability in favor of the holder, which is not true in the case 

of cryptocurrencies.17 

15 Ley 27430 de Modificación del Impuesto a las Ganancias [Law 27430 Amending the Income Tax Law] art. 2, 

BO, Dec. 29, 2017, http://www.telam.com.ar/notas/201702/180185-el-vacio-legal-del-bitcoin-es-o-no-esdinero.html, archived at https://perma.cc/9PBP-BLUJ.

16 Id. art. 90, para. 2. 

17 BITCOIN ARGENTINA, SOBRE EL PROYECTO DE GRAVAR LAS MONEDAS DIGITALES COMO RENTA FINANCIERA DE

ACCIONES Y BONOS [ABOUT THE BILL THAT TAXES DIGITAL CURRENCY AS A FINANCIAL INCOME FROM STOCK AND 

BONDS] 2, last para. (Nov. 17, 2017), https://www.bitcoinargentina.org/wp-content/uploads/sites/6/2017/11/ 

proyecto-impuesto-a-las-ganancias-bitcoin.pdf, archived at https://perma.cc/B8TG-XQYP.
The Law Library of Congress 5

Australia 

Kelly Buchanan 

Chief, Foreign, Comparative, and 

International Law Division I 

SUMMARY Regulatory approaches to digital currencies have been considered in some detail in 

Australia in recent years. A Senate committee completed its inquiry into this issue in 2015, 

providing an overview of existing legislation and the views of relevant agencies, 

considering risks and opportunities arising from the advent of digital currencies, and 

recommending several changes as well as ongoing monitoring and research. At that time, 

the Australian Taxation Office had already produced several public rulings regarding 

different aspects of the tax treatment of digital currencies, holding that transactions 

involving such currencies should be treated akin to barter arrangements for the purposes of 

income tax. In line with the Senate committee’s recommendations, provisions in the goods 

and services tax legislation were subsequently amended to avoid a double taxation effect 

with regard to digital currency transactions. Guidance from the ATO also addresses the 

capital gains tax and fringe benefit tax consequences of utilizing digital currencies. 

The Senate committee also recommended that digital currency exchange businesses be 

brought under the anti-money laundering and counterterrorism financing (AML/CTF) 

legislation. Changes to this legislation were subsequently enacted in 2017, with the effect 

that such businesses will now need to register with the relevant regulatory body, 

implement an AML/CTF program, maintain certain records, and report 

suspicious transactions. 

Other areas covered by the committee’s report included financial regulation and consumer 

protection, and payments system regulation. The Australian Securities and Investments 

Commission has published guidance on its website regarding the risks of investing in 

digital currencies. This includes the fact that these investments are generally not regulated, 

as they are not considered to be financial products under the relevant legislation. 

Australia’s consumer protection agency reported that it received a large number of 

consumer complaints in 2017 involving cryptocurrency scams.

I. Parliamentary Inquiry into Digital Currencies

In August 2015, the Australian Parliament’s Senate Economic References Committee published 

a report titled Digital Currency – Game Changer or Bit Player,

1

 following the completion of an 

inquiry into “how to develop an effective regulatory system for digital currency, the potential 

impact of digital currency technology on the Australian economy, and how Australia can take 

1

 SENATE ECONOMIC REFERENCES COMMITTEE, DIGITAL CURRENCY – GAME CHANGE OR BIT PLAYER (Aug. 2015), 

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Digital_currency/~/media/Committ

ees/economics_ctte/Digital_currency/report.pdf, archived at https://perma.cc/9C8Z-L76P. 
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advantage of digital currency technology.”2 The inquiry involved receiving submissions and 

holding public hearings, and a delegation traveled to Canada and Singapore to discuss matters 

related to digital currency with relevant government officials. The Committee’s report noted that 

like Australia, Canada also treats digital currencies, such as Bitcoin, as commodities, and 

transactions using digital currencies as barter transactions. In this context, committee 

members were able to exchange views on the regulatory risks related to digital currencies 

particularly given the rapid rate of changing technology.3

A. Discussion and Recommendations

The Senate Committee’s report provided an explanation of digital currencies, including 

referencing a 2014 report by the Financial Action Task Force (FATF),4

 and described Australia’s 

regulatory framework as it existed at the time. It also discussed risks and opportunities associated 

with digital currencies and made several recommendations for addressing gaps or other issues in 

the regulatory framework. 

1. Risks and Opportunities

Chapter 3 of the Committee’s report discusses the opportunities and risks related to the advent of 

digital currencies. It particularly refers to findings of the European Securities and Markets 

Authority and the European Banking Authority, which each cited the lower transaction costs and 

the speed of transacting with digital currencies as being key attractions for users.5

 However, the 

Committee noted that, given Australia’s existing payment systems, which are “overwhelmingly 

digital in nature,” digital currencies “do not offer much more additional capability.”6

The distributed ledger technology used by digital currencies such as Bitcoin was noted as being 

“unique and genuinely new,” and worth considering in the context of improving Australia’s 

payment system in the future.7 There was also the potential for digital currencies to contribute to 

the international remittance market. However, the Reserve Bank of Australia (RBA) explained 

that existing improvement work in this area may lessen this potential, particularly in light of the 

price volatility of digital currencies.8

2 Digital Currency, PARLIAMENT OF AUSTRALIA, https://www.aph.gov.au/Parliamentary_Business/Committees/ 

Senate/Economics/Digital_currency (last visited Mar. 1, 2018), archived at https://perma.cc/T5XB-BNY2. 

3

 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 2. 

4 Id. at 3–5; FINANCIAL ACTION TASK FORCE, VIRTUAL CURRENCIES: KEY DEFINITIONS AND POTENTIAL AML/CFT

RISKS (June 2014), http://www.fatf-gafi.org/media/fatf/documents/reports/Virtual-currency-key-definitions-andpotential-aml-cft-risks.pdf, archived at https://perma.cc/MB2J-K36K. 

5

 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 15–16. 

6 Id. at 17. 

7 Id.

8 Id. at 18–19. 
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In terms of risks, the Committee noted that there were concerns regarding noncompliance with 

taxation; potential risks for financial stability or the Australian economy should there be a 

significant increase in the use of digital currencies; risks to consumers due to inherent price 

volatility; the pseudo-anonymity of digital currencies, which may make it difficult for law 

enforcement to determine the true owners, and mean that digital currencies can be used in 

criminal activities; risks arising from the potential for hacking; and the potential for scams.9

2. Tax Treatment of Digital Currencies 

At the time the Committee’s report was published, several public rulings of the Australian Tax 

Office (ATO) had been finalized in December 2014. These expressed the view that transacting 

with digital currency was akin to a barter arrangement. The rulings, discussed further in Part 

II(A) below, covered various potential tax implications of such transactions, including capital 

gains tax, goods and services tax (GST), income tax, and fringe benefits tax.10 

Chapter 4 of the Committee’s report considered in some detail the tax treatment of digital 

currencies, with the Committee concluding that “the most immediate concern for Australian 

digital currency businesses is the current GST treatment of digital currencies.”11 The Committee 

recommended that digital currency be treated as money for the purposes of GST, in order to 

avoid a double taxation effect.12 It also noted various concerns among submitters regarding other 

taxation issues, and recommended that there be further examination of the appropriate tax 

treatment of digital currencies, particularly in relation to income tax and fringe benefits tax.13

3. Financial Regulation and Consumer Protection 

With regard to financial regulation and consumer protection matters arising from digital 

currencies, the report states that the RBA “considers digital currencies are currently in limited 

use and do not yet raise any significant concerns with respect to competition, efficiency or risk to 

the financial system; and are not currently regulated by the RBA or subject to regulatory 

oversight.”14 However, the RBA indicated that it “would be assessing whether the current 

regulatory framework could accommodate alternative mediums of exchange such as 

digital currencies.”15

The report also set out the view of the Australian Securities and Investments Commission 

(ASIC) that digital currencies “do not fall within the legal definition of ‘financial product’ under 

the Corporations Act 2001 (Corporations Act) or the Australian Securities and Investments 

 

9 Id. at 20–25. 

10 Id. at 5–7. 

11 Id. at 31. 

12 Id. at 34. 

13 Id. at 35. 

14 Id. at 8. 

15 Id.
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Commission Act 2001 (ASIC Act).”16 The Committee noted the existing warning to consumers 

on ASIC’s MoneySmart website, discussed further in Part II(B) below, which states that virtual 

currencies are not regulated and have less safeguards, values can fluctuate wildly, a person’s 

money can be stolen, and that they are popular with criminals.17

The Committee noted that ASIC’s approach to digital currencies had been described in a 

November 2014 report by its oversight committee, the Parliamentary Joint Committee on 

Corporations and Financial Services.18 That report stated that ASIC was monitoring 

developments, considering how legislation it administers might apply, and consulting other 

Australian regulators (including financial regulators and law enforcement agencies).19 

The Committee expressed that, although ASIC does not consider digital currencies to be 

currency or money for the purposes of the ASIC Act or Corporations Act, “the general consumer 

protection provisions of the Competition and Consumer Act 2010 apply to digital currencies.”20

This Act is administered by the Australian Competition and Consumer Commission (ACCC), 

which the Committee noted does not include warnings about digital currencies on its own 

website dealing with consumer protection.21

Chapter 5 of the report then discussed whether digital currency should be treated as a financial 

product for the purposes of the Corporations Act and ASIC Act, as well as how digital currency 

payments fit within the current payments system regulations.22 ASIC advised the Committee that 

extending the definition of financial products to include digital currencies “would not be 

straightforward as the decentralised framework means that the normal obligations on product 

issuers cannot be imposed.”23 In addition, a number of industry participants, including overseas 

entities, may be required to obtain relevant Australian licenses as they would be providing 

financial products, which may cause difficulties to digital currency businesses and to ASIC.24

ASIC did note that some digital currency businesses offer facilities, such as non-cash payment 

facilities, that may already be considered financial products.25 

16 Id.; Corporations Act 2001 (Cth), pt 7.1 div 3, https://www.legislation.gov.au/Details/C2018C00064, archived at 

https://perma.cc/NSZ4-6FZK; Australia Securities and Investments Commission Act 2001 (Cth), s 12BAA, 

https://www.legislation.gov.au/Details/C2018C00077, archived at https://perma.cc/VBL6-NNV6. 

17 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 8–9. 

18 PARLIAMENTARY JOINT COMMITTEE ON CORPORATIONS AND FINANCIAL SERVICES, STATUTORY OVERSIGHT OF

THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, THE TAKEOVERS PANEL AND THE CORPORATIONS 

LEGISLATION 24–26 (Nov. 2014), https://www.aph.gov.au/~/media/Committees/Senate/committee/corporations_ 

ctte/asic%202014/rep0144/report.pdf?la=en, archived at https://perma.cc/JQE5-F3YG. 

19 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 9–10. 

20 Id. at 10. 

21 Id.

22 Id. at 37. 

23 Id. at 41. 

24 Id.

25 Id. at 43. 
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The Committee simply recommended that further research be conducted before any changes 

are made.26

4. Payments System Regulation

At the time of publication of the Committee’s report, the government’s Financial System Inquiry 

(FSI) had been completed and the Treasury was conducting a consultation process on the 

resulting recommendations.27 The FSI report, released in December 2014, had found that digital 

currencies were not being widely used in Australia but that their use could expand in the future.28 

Therefore, “it will be important that payments system regulation is able to accommodate 

them.”29 The FSI report recommended that the legislation be reviewed to ensure that “alternative 

mediums of exchange can be regulated . . . if a public interest case arises.”30 

The Committee noted the findings of the FSI report, including with regard to the possibility of 

graduated regulation of payment facilities “to enable market entry and ensure regulation is 

targeted where it is most needed,”31 and making the existing ePayments Code mandatory.32 The 

Committee’s report also set out different views regarding industry self-regulation, a “wait-andsee” approach to regulation by relevant agencies, and the need for further information.33 

The Committee subsequently recommended that the government establish a Digital Economy 

Taskforce to gather further information so that regulators can monitor the situation and 

determine whether it may be appropriate to regulate certain digital currency businesses.34

5. Anti-Money Laundering and Counterterrorism Financing Legislation

With respect to law enforcement approaches to digital currencies, the Committee’s report stated 

that digital currencies were not currently covered by the Anti-Money Laundering and CounterTerrorism Financing Act 2006 (Cth) (AML/CTF Act), although that Act does recognize “ecurrency,” which is defined as being backed, either directly or indirectly, by precious metal, 

bullion, or “a thing of a kind prescribed by the AML/CTF Rules.”35 The report stated that no 

26 Id. at 42. 

27 See AUSTRALIAN GOVERNMENT, IMPROVING AUSTRALIA’S FINANCIAL SYSTEM: GOVERNMENT RESPONSE TO THE 

FINANCIAL SYSTEM INQUIRY (2015), https://static.treasury.gov.au/uploads/sites/1/2017/06/Government_response_ 

to_FSI_2015.pdf, archived at https://perma.cc/CF5Q-WV53. 

28 FINANCIAL SYSTEM INQUIRY FINAL REPORT 166 (Nov. 2010), http://fsi.gov.au/files/2014/12/FSI_Final_Report_ 

Consolidated20141210.pdf, archived at https://perma.cc/52SC-VCKQ. 

29 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 10. 

30 Id. at 10–11. 

31 Id. at 45. 

32 Id. at 46. 

33 Id. at 46–51. 

34 Id. at 51. 

35 Id. at 11–12; AML/CTF Act s 5. 
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rules had been issued that would bring digital currencies under the definition of e-currency in the 

AML/CTF Act.36 However, it goes on to indicate that the existing AML/CTF regime does enable 

limited oversight of convertible digital currencies, since the transactions “will generally intersect 

with banking or remittance services which are regulated under the AML/CTF regime.”37

At the time of the Committee’s report, the government was undertaking a review of the 

AML/CTF Act and, as part of that review, the Attorney-General’s Department stated that “[a] 

number of options to address the money laundering and terrorism financing issues created by the 

emergence of digital currency systems are being considered.”38 In addition, a different 

parliamentary committee was also in the process of conducting an inquiry into financial-related 

crime and had received evidence relating to Bitcoin in that context.39

Chapter 6 of the Committee’s report examined whether digital currencies should be brought 

within the AML/CTF regime. A spokesman for the Attorney-General’s Department noted that 

“one of the difficulties with digital currencies is peer-to-peer transfers as it means transactions 

using digital currencies can be made directly to people anywhere in the world,” which creates 

challenges when working out how to regulate digital currencies.40 An additional challenge was 

finding a balance between trying to mitigate risks through regulation while allowing positive 

aspects of the industry to develop.41 The Committee was also advised that a change to the 

AML/CTF Act would be needed, not just the regulations.42

The Committee strongly supported applying the AML/CTF regime to digital currency 

exchanges, “noting that similar steps have been taken in Canada, the UK and Singapore.”43 It 

recommended that the statutory review being conducted by the Attorney-General’s Department 

consider this matter.44

 

 

36 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 12. 

37 Id.

38 Id. at 13. 

39 Id. See also PARLIAMENTARY JOINT COMMITTEE ON LAW ENFORCEMENT, INQUIRY INTO FINANCIAL RELATED 

CRIME ch. 6 (Sept. 2015), https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Law_Enforcement/ 

Financial_related_crime/~/media/Committees/le_ctte/Financial_related_crime/report.pdf, archived at 

https://perma.cc/S672-MZFE. 

40 SENATE ECONOMIC REFERENCES COMMITTEE, supra note 1, at 58. 

41 Id. 

42 Id. at 60. 

43 Id at 61. 

44 Id. at 62. 
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B. Government’s Response 

The government responded to the Committee’s recommendations in May 2016.45 Prior to this, in 

a March 2016 statement on financial technology, Backing Australian FinTech, the government 

had committed to reforming the GST treatment of digital currencies in order to address the 

double-taxation issue.46 The government also noted the recommendation regarding further 

examination of the tax treatment of digital currencies, stating that the ATO was continuing to 

monitor developments.47

With regard to establishing a task force to gather further information related to digital currencies 

in order to assist regulators, the government stated that its already established FinTech Advisory 

Group would be the appropriate mechanism for such work. The government also indicated its 

support for an existing industry association to continue work on improving industry standards, 

including via the development of a self-regulatory model.48

The government agreed with the Committee’s recommendation regarding extending the 

AML/CTF framework to cover digital currency exchanges, and noted existing work in that area, 

as well as developments in other countries.49

The current rules in these different regulatory areas, which include recent developments related 

to the Committee’s recommendations, are set out in Part II, below. 

II. Current Regulatory Framework 

A. Taxation 

As noted above, the ATO finalized various rulings relating to the application of tax laws to 

Bitcoin and other cryptocurrencies in December 2014.50 It has subsequently published a general 

guidance document on the tax treatment of virtual currencies.51 

 

45 Australian Government Response to the Senate Economic References Committee Report: Digital Currency – 

Game Changer or Bit Player (May 2016), https://www.aph.gov.au/DocumentStore.ashx?id=4f9bcf03-5867-449c85ad-b8dd01d7459c, archived at https://perma.cc/U6WP-VYKU. 

46 AUSTRALIAN GOVERNMENT, BACKING AUSTRALIAN FINTECH 22 & 27 (Mar. 2016), http://fintech.treasury.gov. 

au/files/2016/03/Fintech-March-2016-v3.pdf, archived at https://perma.cc/2MJ3-6MC6. 

47 Australian Government Response to the Senate Economic References Committee Report: Digital Currency – 

Game Changer or Bit Player, supra note 45, at 2. 

48 Id. at 3. 

49 Id.

50 ATO, Income Tax: Is Bitcoin a ‘Foreign Currency’ for the Purposes of Division 775 of the Income Tax 

Assessment Act 1997 (ITAA 1997)? (TD 2014/25), https://www.ato.gov.au/law/view/document?src=hs&pit=999 

91231235958&arc=false&start=1&pageSize=10&total=7&num=3&docid=TXD/TD201425/NAT/ATO/00001&dc=

false&tm=and-basic-TD 2014/25 (last visited Mar. 1, 2018), archived at https://perma.cc/DS47-Y2JW; ATO, 

Income Tax: Is Bitcoin a ‘CGT Asset’ for the Purposes of Subsection 108-5(1) of the Income Tax Assessment Act 

1997? (TD 2014/26), https://www.ato.gov.au/law/view/document?src=hs&pit=99991231235958&arc= 

false&start=1&pageSize=10&total=7&num=2&docid=TXD/TD201426/NAT/ATO/00001&dc=false&tm=phrasebasic-TD 2014/26 (last visited Mar. 1, 2018), archived at https://perma.cc/B9QN-N4FM; ATO, Income Tax: Is 
Regulation of Cryptocurrencies: Australia 

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According to the rulings and guidance, transacting with cryptocurrencies is “akin to a barter 

arrangement, with similar tax consequences.”52 This is because, in the view of the ATO, such 

currencies are “neither money nor a foreign currency.”53 Individuals who engage in 

cryptocurrency transactions are advised to keep records of the date of transactions, the amount in 

Australian dollars (“which can be taken from a reputable online exchange”), what the transaction 

was for, and who the other party was (“even if it’s just their bitcoin address”).54 

In addition, cryptocurrencies may be considered assets for capital gains tax purposes, with the 

guidance stating: “Where you use bitcoin to purchase goods or services for personal use or 

consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a 

personal use asset) provided the cost of the bitcoin is $10,000 or less.”55

With regard to business transactions, the ATO guidance states that the Australian dollar value of 

bitcoins (being the fair market value) received for goods and services must be recorded as part of 

ordinary income, in the same way as receiving non-cash consideration under a barter 

transaction.56 A business that purchases items using bitcoin is “entitled to a deduction based on 

the arm’s length value of the item acquired.”57 GST is also payable and is calculated on the 

market value of the goods or services, which is “ordinarily equal to the fair market value of the 

bitcoin at the time of the transaction.”58 

When a business disposes of bitcoin, there may be capital gains tax consequences. Furthermore, 

if a business gives bitcoin to an employee this may be considered either a fringe benefit (if there 

is a valid salary sacrifice arrangement in order to receive the bitcoin) or normal salary 

and wages.59 

Bitcoin Trading Stock for the Purposes of Subsection 70-10(1) of the Income Tax Assessment Act 1997 (ITAA 

1997)? (TD 2014/27), https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia---

specifically-bitcoin/ (last visited Mar. 1, 2018), archived at https://perma.cc/BS2E-UZKW; ATO, Fringe Benefits 

Tax: Is the Provision of Bitcoin by an Employer to an Employee in Respect of their Employment a Property Fringe 

Benefit for the Purposes of Subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986? (TD 2014/28), 

https://www.ato.gov.au/law/view/document?src=mm&pit=99991231235958&arc=false&start=1&pageSize=10&tot

al=7&num=0&docid=TXD/TD201428/NAT/ATO/00001&dc=true&tm=and-basic-TD 2014/25 (last visited Mar. 1, 

2018), archived at https://perma.cc/Y5FS-VYL3. 

51 Tax Treatment of Crypto-Currencies in Australia – Specifically Bitcoin, AUSTRALIAN TAXATION OFFICE (ATO), 

https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia---specifically-bitcoin/ (last 

updated Dec. 21, 2017), archived at https://perma.cc/UFZ7-QSUG. 

52 Id.

53 Id.

54 Id.

55 Id.

56 Id.

57 Id.

58 Id.

59 Id.
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If an entity is in the business of mining bitcoin, or buying and selling bitcoin as an exchange 

service, any income derived must be included in its assessable income, and any expenses 

incurred may be deducted.60

The ATO has also published separate guidance on the application of GST with respect to 

transactions involving digital currency.61 A previous ruling regarding GST was withdrawn in 

December 2017 following the passage of amendments to A New Tax System (Goods and Service 

Tax) Act 1999 and associated regulations, which apply to transactions after July 1, 2017.62 Under 

the amendments, sales and purchases of digital currency are not subject to GST. If a person is 

carrying on a business in relation to digital currency, or accepting digital currency as a payment 

as part of a business, then there are GST consequences.63 The changes were aimed at removing 

“double taxation” of digital currencies under the GST system, as recommended by the 

Senate Committee.64

According to news reports from January 2018, the ATO is consulting with tax experts “to help it 

identify and track cryptocurrency transactions and ensure all taxes are being paid.”65

B. Financial Regulation and Consumer Protection

As noted above, ASIC does not consider cryptocurrencies to be financial products under the 

ASIC Act or Corporations Act. ASIC’s MoneySmart website provides information on virtual 

currencies, including how they work and different types, and sets out various risks associated 

with buying, trading, or investing in such currencies.66 This includes statements that “[t]he 

exchange platforms on which you buy and sell digital currencies are not regulated, so if the 

platform fails or is hacked, you will not be protected and will have no legal recourse”; [a] 

cryptocurrency is not guaranteed by any bank or government” and “[i]nvesting in virtual 

currencies is considered highly speculative, as values can fluctuate significantly over short 

60 Id.

61 GST and Digital Currency, ATO, https://www.ato.gov.au/business/gst/in-detail/your-industry/financial-servicesand-insurance/gst-and-digital-currency/ (last updated Dec. 8, 2017), archived at https://perma.cc/L2MT-WHHC. 

62 Goods and Services Tax Ruling: GSTR 2014/W, ATO, https://www.ato.gov.au/law/view/document?DocID= 

\GST/GSTR20143/NAT/ATO/00001 (last visited Mar. 1, 2018), archived at https://perma.cc/6YAU-SYF3; 

Treasury Laws Amendment (2017 Measures No. 6) Act 2017 (Cth), https://www.legislation.gov.au/Details/ 

C2017A00118, archived at https://perma.cc/6TB9-V9QU. 

63 GST and Digital Currency, supra note 61. 

64 GST – Removing the Double Taxation of Digital Currency, ATO, https://www.ato.gov.au/General/Newlegislation/In-detail/Indirect-taxes/GST/GST---removing-the-double-taxation-of-digital-currency/ (last updated Dec. 

18, 2017), archived at https://perma.cc/L7KG-NWK2. 

65 Duncan Hughes, ATO Creates Specialist Task Force to Tackle Cryptocurrency Tax Evasion, FINANCIAL REVIEW

(Jan. 10, 2018), http://www.afr.com/news/policy/tax/ato-creates-specialist-task-force-to-tackle-cryptocurrency-taxevasion-20180109-h0fyaz, archived at https://perma.cc/VNY2-R6G3. 

66 Cryptocurrencies, ASIC’S MONEYSMART, https://www.moneysmart.gov.au/investing/investment-warnings/ 

virtual-currencies (last updated Mar. 19, 2018), archived at https://perma.cc/VG4U-7AUD. 
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periods of time”; and “[i]f hackers steal your digital currency you have little hope of getting 

it back.”67

A separate page provides information about initial coin offerings (ICO), which ASIC calls a 

“high-risk speculative investment.”68 It advises investors to check whether an ICO issuer is a 

company registered in Australia and whether it is a licensed financial services provider, noting 

that “[i]f the company is not registered and does not have a licence in Australia you will have 

little protection if things go wrong. But even if the company is registered in Australia, or has a 

licence, there are risks associated with investing in ICOs.”69

In February 2018, ABC News reported that more than 1,200 Australians had made complaints to 

the ACCC about cryptocurrency scams in 2017, with losses totaling more than AU$1.2 million.70

The ASIC commissioner was quoted as saying that “[i]t’s been quite well documented that some 

of these products are scams, so please don’t invest unless you’re prepared to lose some or all of 

your money.”71

C. Anti-Money Laundering and Counterterrorism Financing Legislation

The government introduced a bill in Parliament in August 2017 in order bring digital currency 

exchange providers under the AML/CTF regulatory regime, as recommended by the Senate 

committee referred to above.72 The bill was enacted in December 2017 and the relevant 

provisions came into force on April 3, 2018.73 

The bill was developed following the release of a public discussion document and completion of 

a consultation process by the Attorney-General’s Department, as part of its statutory review of 

the AML/CTF Act.74 Information regarding the bill in the Australian Parliamentary Library’s 

Bills Digest publication also states that 

67 Id.

68 Initial Coin Offerings (ICOs), ASIC’S MONEYSMART, https://www.moneysmart.gov.au/investing/investmentwarnings/initial-coin-offerings-icos (last updated Mar. 19, 2018), archived at https://perma.cc/3VUN-FM45. 

69 Id.

70 Liz Hobday, More Than 1,200 People Complain to ACCC about Bitcoin Scams, ABC News (Feb. 19, 2018), 

http://www.abc.net.au/news/2018-02-19/more-than-1200-people-complain-to-accc-about-bitcoin-scams/9462240, 

archived at https://perma.cc/K3Q7-Y7V3. 

71 Id.

72 Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017, PARLIAMENT OF AUSTRALIA, 

https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5952 (last 

visited Mar. 26, 2018), archived at https://perma.cc/3LS8-TZ5L; Anti-Money Laundering and Counter-Terrorism 

Financing Amendment Act 2017 (Cth) sch 1 pt 2, https://www.legislation.gov.au/Details/C2017A00130, archived at 

https://perma.cc/892P-DQ5W. 

73 Digital Currency Exchange Providers, AUSTRAC, http://www.austrac.gov.au/digital-currency-exchangeproviders (last updated Mar. 13, 2018), archived at https://perma.cc/X4DK-SJ8X. 

74 ATTORNEY-GENERAL’S DEPARTMENT, REGULATING DIGITAL CURRENCIES UNDER AUSTRALIA’S AML/CTF

REGIME: CONSULTATION PAPER (Dec. 2017), https://www.ag.gov.au/Consultations/Documents/AMLCTF/Regulating-digital-currencies-under-Australias-aml-ctf-regime.docx, archived at https://perma.cc/7U62-AW86. 
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AML/CTF regulation of digital currency businesses was also recommended by the Senate 

Economics References Committee in August 2015 and the Productivity Commission in 

September 2015 in the context of broader reviews related to digital currency and business 

set up, transfer and closure respectively. Regulating digital currency exchange providers 

is consistent with FATF’s guidance on a risk-based approach to digital currencies.75

Under the legislation, digital currency exchanges will be required to enroll in a register 

maintained by AUSTRAC (the Australian Transaction Reports and Analysis Centre) and 

implement an AML/CTF program “to mitigate the risks of money laundering as well as identify 

and verify the identity of their customers.”76 They will also be required to report suspicious 

transactions and maintain certain records. 

The legislation contains the following definition of “digital currency,” replacing the definition of 

“e-currency”: 

digital currency means: 

(a) a digital representation of value that:

(i) functions as a medium of exchange, a store of economic value, or a unit of

account; and

(ii) is not issued by or under the authority of a government body; and

(iii) is interchangeable with money (including through the crediting of an account)

and may be used as consideration for the supply of goods or services; and

(iv) is generally available to members of the public without any restriction on its use

as consideration; or

(b) a means of exchange or digital process or crediting declared to be digital currency by

the AML/CTF Rules;

but does not include any right or thing that, under the AML/CTF Rules, is taken not to be 

digital currency for the purposes of this Act.77

Although the definition of “money” in the AML/CTF included e-currency, it was not amended to 

include digital currency; digital currency is treated separately and there were “several 

75 Cat Barker, Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017, Bills Digest No. 

47, 2017-18 (Oct. 25, 2017), Parliament of Australia, https://www.aph.gov.au/Parliamentary_Business/ 

Bills_Legislation/bd/bd1718a/18bd047, archived at https://perma.cc/ECT9-GT6M. See also PRODUCTIVITY

COMMISSION, BUSINESS SET-UP, TRANSFER AND CLOSURE 240–44, recommendation 9.3 (Inquiry Report No. 75, 

Sept. 30, 2015), https://www.pc.gov.au/inquiries/completed/business/report/business.pdf, archived at

https://perma.cc/CQF9-WVPZ. 

76 Rohan Pearce, Government Cracks Down on Bitcoin Money Laundering, COMPUTERWORLD (Aug. 17, 2017), 

https://www.computerworld.com.au/article/626134/government-cracks-down-bitcoin-money-laundering/, archived 

at https://perma.cc/GE5C-HHEK. 

77 Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (Cth) sch 1 pt 2 cl 3 (inserting a 

new definition into section 5). 
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consequential amendments to amend existing references to money to instead refer to money or 

digital currency.”78

AUSTRAC is currently developing changes to the AML/CTF Rules to implement amendments 

to the AML/CTF Act.79 A new chapter will cover registration on the Digital Currency Register, 

the renewal of registration, suspension of registration, cancellation of registration, review of 

reviewable decisions, updating and correcting of information, the correction of entries on the 

register, and the publication of information. Amendments have also been drafted for two other 

chapters with regard to suspicious-matter reporting and “regarding threshold transaction 

reporting of digital currency exchange transactions (to include additional reporting identifiers 

specifically relevant to digital currency exchange providers).”80

78 Barker, supra note 75. 

79 Draft AML/CTF Rules, AUSTRAC, http://www.austrac.gov.au/draft-aml-ctf-rules (last modified Feb. 2, 2018), 

archived at https://perma.cc/7BDB-85FU. 

80 AUSTRAC, Explanatory Note for Consultation – Draft Amendments Resulting from the Anti-Money Laundering 

and Counter-Terrorism Financing Amendment Act 2017, http://www.austrac.gov.au/sites/default/files/draft-rulesdigital-currency-exchange-providers.pdf (last visited Mar. 28, 2018), archived at https://perma.cc/ZE2E-ZPAS. 
The Law Library of Congress 17

Belarus 

Nerses Isajanyan 

Foreign Law Consultant

SUMMARY Belarusian legislation allows natural and legal persons to mine, buy, sell, and exchange 

cryptocurrencies and tokens. The Presidential Decree on the development of the digital 

economy, which took effect on March 28, 2018, regulates taxation, foreign exchange 

control, and other aspects of transactions with cryptocurrencies. Only legal entities operating 

in the special economic zone designated as the High Technologies Park are allowed to 

provide cryptocurrency-related services as operators of cryptocurrency exchanges and 

crypto-platforms. 

I. Decree on the Development of the Digital Economy

The Presidential Decree on the development of the digital economy1 is a comprehensive document 

regulating the issuance and use of cryptocurrencies and tokens. It was signed by the President of 

Belarus on December 21, 2018, and took effect on March 28, 2018. Most of its provisions are 

retroactive.2 The Decree creates the legal framework for buying, selling, exchanging, creating, and 

mining cryptocurrencies and tokens. According to an official commentary published on the 

presidential website, Belarus thus became the world’s first jurisdiction with a comprehensive 

regulation of businesses based on blockchain technology and the first country in the world to 

legalize smart contracts at the national level.3

Many of the regulations in the Decree extend only to legal entities operating on the territory of the 

High Technologies Park, a special economic zone. As a legal experiment, the Decree allowed 

residents of the Park to use “smart contracts” and elements of English contract law, such as 

convertible loans, options, clauses of indemnity, and nonsolicitation and noncompetition 

agreements, to create a “venture ecosystem.”4 Residents of the Park also enjoy a simplified 

procedure for recruiting and employing foreign workers.5 

1

 Decree of the President of the Republic of Belarus No. 8 of Dec. 21, 2017, NATIONAL LEGAL INTERNET PORTAL OF 

THE REPUBLIC OF BELARUS, Dec. 27, 2017, No. 1/17415, http://pravo.by/document/?guid=12551&p0=Pd17 

00008&p1=1&p5=0 (in Russian), archived at https://perma.cc/7PJ7-YEKA, available in English at http://law.by/ 

document/?guid=3871&p0=Pd1700008e, archived at https://perma.cc/V7UZ-TYM8. 

2 Id. § 3.4. 

3

 Press Release, President of the Republic of Belarus, Commentary to Decree No. 8 of December 21, 2017 (Dec. 27, 

2017), http://president.gov.by/ru/news_ru/view/kommentarij-k-dekretu-8-ot-21-dekabrja-2017-g-17715/ (in 

Russian), archived at https://perma.cc/A7B7-WJBS. 

4

 Decree No. 8, § 5. 

5 Cryptocurrency Silicone Valley in Belarus, HAPPY COIN CLUB (Apr. 22, 2018), https://happycoin.club/ 

kriptovalyutnaya-silikonovaya-dolina-v-belarusi/ (in Russian), archived at https://perma.cc/997B-85CB (click “See 

the screenshot view”). 
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II. Authorized Transactions

The Decree defines “cryptocurrency” as bitcoin or other digital signs (tokens) that is used in 

international circulation as a universal means of exchange.6 A “digital sign” (token) is defined as 

an entry in the transaction block registry (blockchain) or other distributed information system, 

which certifies that the owner of the digital sign (token) is entitled to civil law protections and/or 

is a cryptocurrency.7

 

Natural persons are expressly allowed to own tokens; mine them; store them in virtual wallets; 

exchange tokens for other tokens; acquire them or dispose of them in exchange for Belarusian 

rubles, foreign currency, or electronic money; and donate or bequeath them.8 At the same time, 

individuals are not allowed to buy goods or services with cryptocurrency.9 The Decree clarifies 

that tokens are not subject to declaration and that the mining, acquisition, or disposal of tokens is 

not considered entrepreneurial activity as long as the natural person acts alone and does not engage 

other individuals as employees or contractors.10 

Legal entities are allowed, through a resident of the Park, to create and place their own tokens in 

Belarus or abroad, to store tokens in virtual wallets, and to acquire or dispose of them through 

crypto-platform operators, cryptocurrency exchange operators, or other residents of the Park.11 

III. Crypto-Platform Operators and Cryptocurrency Exchange Operators

The Decree introduced two new types of companies operating in the field of cryptocurrency, 

“crypto-platform operators” and “cryptocurrency exchange operators.” All companies working in 

this field must be residents of the High Technology Park. A “crypto-platform operator” is a 

provider of information systems to businesses and individuals, who are not necessarily Belarusian 

residents, with the purpose of facilitating such transactions as the exchange, sale, or purchase of 

tokens between natural or legal persons.12 Crypto-platform operators are allowed to place tokens 

and buy, sell, or exchange them in their own interests or the interests of their clients. Cryptoplatform operators cannot exchange tokens for property other than Belarusian rubles, foreign 

currency, electronic money, or other tokens.13 

6

 Decree No. 8, Annex 1. 

7 Id.

8 Id. § 2.2. 

9

 Tatyana Melnichuk, Crypto-Freedom in Belarusian. Will Lukashenko Create a Digital Power?, BBC (Mar. 29, 

2018), https://www.bbc.com/russian/features-43578798 (in Russian), archived at https://perma.cc/X5NR-QCCH. 

10 Decree No. 8, § 2.2. 

11 Id. § 2.1. 

12 Id. Annex 1. 

13 Id. § 2.2. 
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A “cryptocurrency exchange operator” on its own behalf and in its own interests exchanges, sells, 

or purchases tokens using software and hardware systems operating in self-service mode.14 

IV. Licensing Requirements

The Decree specifically excludes operations with tokens from the application of licensing and 

other requirements of banking and securities legislation.15 Licensing requirements pertaining to 

cryptography and information protection also generally do not apply to the mining, storage, 

acquisition, and alienation of tokens. The minimum capital requirements are 1 million Belarusian 

rubles (approximately US$505,000) for crypto-platform operators and 200,000 rubles 

(approximately US$101,000) for cryptocurrency exchange operators.16 The Decree has not 

established rules for the operation of ICO operators and crypto-exchanges; these areas will be left 

to self-regulation. 

V. Foreign Exchange Controls

Regulations on foreign exchange are generally not applicable to transactions with tokens.17 The 

use of foreign currency in transactions between residents of Belarus is authorized if such 

transactions are conducted through crypto-platform operators or on foreign trading platforms.18

Payments between cryptocurrency exchange operators and residents of Belarus must be made in 

Belarusian rubles.19

VI. Taxes and Financial Reporting

The Presidential Decree exempts from income tax the income of the residents of the Park as well 

as the income of natural persons generated from the mining, creation, acquisition, or alienation of 

tokens.20 The Decree also exempts the sale of tokens from value-added tax (VAT).21 These tax 

benefits will be effective until January 1, 2023.22 Moreover, the Decree clarifies that investments 

attracted as a result of the creation and placement of tokens are not considered taxable income.23

Businesses operating in the Park only have to pay 1% of their turnover to the government. This 

arrangement is guaranteed by the government to last until 2049. 

14 Id. Annex 1. 

15 Id. § 3.3. 

16 Mining Is Allowed, Bitcoin Mining Has Been Legalized in Belarus, RG.RU (Dec. 27, 2017), https://rg.ru/2017/ 

12/27/v-belarusi-legalizovali-dobychu-bitkoina.html (in Russian), archived at https://perma.cc/9DLQ-EMGX. 

17 Decree No. 8, § 3.2. 

18 Id.

19 Id. Annex 1. 

20 Id. § 3.1. 

21 Id.

22 Id.

23 Id.
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For purposes of financial reporting, acquired or “mined” tokens are considered assets. The 

placement of tokens created by legal entities results in increased liabilities. These accounting rules 

were further detailed by a decree of the Ministry of Finance.24

VII. Anti-Money Laundering

On February 15, 2018, the National Bank of Belarus amended the anti-money laundering 

regulations to extend their application to crypto-platform operators and operators of 

cryptocurrency exchanges.25 Crypto-platform operators and operators of cryptocurrency 

exchanges will be treated as high-risk clients similar to operators of lottery games and casinos.26 

On March 27, 2018, the Council of Ministers issued a press release stating that the use of 

cryptocurrencies and other tokens must comply with the Financial Action Task Force (FATF) 

recommendations for combating the laundering of criminal proceeds and the financing of 

terrorism. The business plans submitted by applicants for registration with the Park must contain 

comprehensive measures to address the issues of compliance with Belarus’s international 

obligations, compliance with FATF recommendations (including procedures for identifying 

customers), sufficient guarantees of financial stability, technological safety, and protection 

from cyberattacks.27 

24 Resolution of the Ministry of Finance of the Republic of Belarus No. 16 of Mar. 6, 2018, NATIONAL LEGAL 

INTERNET PORTAL OF THE REPUBLIC OF BELARUS, Mar. 24, 2018, No. 8/32944, http://www.pravo.by/document/? 

guid=12551&p0=W21832944&p1=1&p5=0 (in Russian), archived at https://perma.cc/3EL9-CBR7; see also David 

McNickel, Belarus Leads the Way with New Crypto Accountancy Laws, BRAVE NEW COIN (Mar. 28, 2018), 

https://bravenewcoin.com/news/belarus-new-crypto-accountancy-laws-kick-in/, archived at https://perma.cc/3VGF9SMC. 

25 Resolution of the Board of the National Bank of the Republic of Belarus No. 62 of Feb. 15, 2018, NATIONAL

LEGAL INTERNET PORTAL OF THE REPUBLIC OF BELARUS, Mar. 20, 2018, No. 8/32923, http://pravo.by/upload/ 

docs/op/B21832923_1521493200.pdf (in Russian), archived at https://perma.cc/D3CK-DQL6. 

26 Premiere of Digits, Belarus Is the First in the World to Comprehensively Legalize Cryptocurrencies, RG.RU (Mar. 

26, 2018), https://rg.ru/2018/03/26/belarus-pervoj-v-mire-kompleksno-vvedet-kriptovaliuty-v-zakon.html (in 

Russian), archived at https://perma.cc/X258-2T5A. 

27 Press Release, Council of Ministers of the Republic of Belarus (Mar. 27, 2018), http://www.government.by/ 

ru/content/7914 (in Russian), archived at https://perma.cc/S899-4B9N; see also Iana Largo, The Decree “On the 

Development of the Digital Economy” Came into Force in Belarus, Legalizing the Cryptocurrency, CRYPTO.PRO

(Mar. 28, 2018), https://news.crypto.pro/v-belarusi-v-stupil-v-silu-dekret-o-razvitii-cifrovoj-jekonomikilegalizujushhij-kriptovaljutu/, archived at https://perma.cc/7ERA-9JB2. 
The Law Library of Congress 21

Brazil 

Eduardo Soares 

Senior Foreign Law Specialist

SUMMARY Cryptocurrencies have yet to be regulated in Brazil. The Brazilian Central Bank has issued 

statements regarding the risks posed by this type of currency and its lack of guarantee by the 

monetary authorities, and has advised that companies that trade in virtual currencies are not 

regulated, supervised, or licensed to operate by the Bank. Recently, the Brazilian Securities 

and Exchange Commission issued a statement saying, among other things, that 

cryptocurrencies could not be classified as financial assets and could not be acquired by 

investment funds. A bill of law currently under analysis in the Brazilian Chamber of 

Deputies seeks to include virtual currencies and air mileage programs under the supervision 

of the Brazilian Central Bank.

I. Brazilian Central Bank

A. Policy Statement No. 25,306 of February 19, 2014

On February 19, 2014, the Brazilian Central Bank (Banco Central do Brasil, BACEN) issued 

Policy Statement No. 25,306 on the risks related to the acquisition of the so-called “virtual 

currencies” or “encrypted currencies” and transactions carried out with these currencies.1 The 

purpose of the statement was, inter alia, to clarify that virtual currencies should not be confused 

with electronic money (moeda eletrônica) as defined in Law No. 12,865 of October 9, 2013, and 

its regulations.2

“Electronic money” is defined in article 6(VI) of Law No. 12,865 as a resource stored in a device 

or electronic system that allows the final user to make payment transactions in the national 

currency (Brazilian Real).3 In contrast, the statement explained that virtual currencies are 

denominated in a different unit of account from the currencies issued by sovereign governments 

and are not stored in a device or electronic system in national currency.4 

According to the statement, the usage of virtual currencies and whether the regulation applicable 

to financial and payments systems applies to them have been the theme of international debate and 

public announcements by monetary authorities and other public institutions, with few concrete 

conclusions thus far; virtual currencies are not issued or guaranteed by a monetary authority; these 

virtual assets are not regulated or supervised by the monetary authorities of any country; there is 

1

 Banco Central do Brasil, Policy Statement No. 25,306 of February 19, 2014, http://www.bcb.gov.br/pom/spb/ing/ 

IComunicado25306.pdf, archived at https://perma.cc/NC7T-TVSR. 

2 Id. 

3

 Lei No. 12.865, de 9 de Outubro de 2013, https://www.planalto.gov.br/ccivil_03/_ato2011-2014/2013/lei/ 

l12865.htm, archived at https://perma.cc/5ZNY-3KVD. 

4

 Policy Statement No. 25,306, supra note 1. 
Regulation of Cryptocurrencies: Brazil 

The Law Library of Congress 22

no government mechanism that guarantees the value in official currency of those instruments 

known as virtual currencies; and BACEN is monitoring the evolution of the usage of these 

instruments, as well as the related discussions in international forums—especially regarding their 

nature, ownership, and functioning—in order to possibly adopt measures within its sphere of legal 

competency, if necessary.5

B. Communiqué 31,379 of November 16, 2017 

In another statement associated with the growing interest of individuals and companies in virtual 

currencies, on November 16, 2017, BACEN warned of the risks derived from storing and 

negotiating virtual currencies and reiterated that these currencies are neither issued nor guaranteed 

by any monetary authority.6 

The statement further detailed that companies that negotiate or store virtual currencies on behalf 

of their owners, be they persons or companies, are neither regulated, licensed to operate, nor 

supervised by BACEN; there is no specific provision governing virtual currencies in the legal and 

regulatory frameworks associated with the National Financial System; and BACEN, in particular, 

neither regulates nor supervises transactions involving virtual currencies.7

The statement again reminded persons that virtual currencies are not to be confused with e-money, 

which is defined in accordance with Law No. 12,865 of October 9, 2013, and controlled by 

BACEN regulations approved under the guidelines of the National Monetary Council.8

In addition, the statement noted that carrying out international wire transfers referenced in foreign 

currencies through the use of virtual currencies and related instruments does not exempt companies 

from the obligation to comply with foreign exchange rules—especially the rule establishing that 

this type of transaction may only be performed by institutions authorized by BACEN to operate in 

the foreign exchange market.9

II. Brazilian Securities and Exchange Commission 

On January 12, 2018, the Brazilian Securities and Exchange Commission (Comissão de Valores 

Mobiliários, CVM) issued Statement No. 1, which was addressed to officers responsible for the 

administration and management of investment funds regulated by CVM Instruction No. 555 of 

December 17, 2014, that are investing in cryptocurrencies.10 

 

5 Id.

6

 Banco Central do Brasil, Communiqué 31,379 of November 16, 2017, http://www.bcb.gov.br/ingles/norms/ 

Virtual-currencies-Communique-31379-English.pdf, archived at https://perma.cc/N7KB-P5J9. 

7 Id.

8 Id.

9 Id.

10 Comissão de Valores Mobiliários, Ofício Circular No. 1/2018/CVM/SIN, http://www.cvm.gov.br/export/ 

sites/cvm/legislacao/oficios-circulares/sin/anexos/oc-sin-0118.pdf, archived at https://perma.cc/486G-8TS4. 
Regulation of Cryptocurrencies: Brazil 

The Law Library of Congress 23

The Statement noted that both in Brazil and in other jurisdictions the legal and economic nature of 

these investment modalities has been discussed, without having, especially in the domestic market 

and within its internal regulation, reached a conclusion on such a conceptualization.11 Therefore, 

based on this uncertainty, the interpretation of the CVM’s technical area is that cryptocurrencies 

cannot be classified as financial assets for the purposes of the provisions of article 2(V) of CVM 

Instruction 555/14, and for this reason its direct acquisition by regulated investment funds is 

not allowed.12

The Statement further explained that other inquiries have also reached the CVM regarding the 

possibility that investment funds may be set up in Brazil for the specific purpose of investing in 

other investment funds incorporated in jurisdictions where they are admitted and regulated that in 

turn have as their strategy the investment in cryptocurrencies, or investing in derivatives allowed 

to be traded in regulated environments in other jurisdictions.13 In this regard, the CVM emphasized 

that the existing discussions about the investment in cryptocurrencies, both directly by funds or in 

other way, are still in an initial stage and coexist with current Bill of Law No. 2,303/2015 

(discussed below), which may prevent, restrict, or even criminalize the trading of such 

investment modalities.14

The CVM concluded that, based on its understanding of the technical area, it is undeniable that 

there are still many other inherent risks associated with such investments (such as cybersecurity 

and privacy risks), and with the future legality of their acquisition or trade, and that considering 

all these variables it was not possible for the CVM to reach a conclusion regarding the possibility 

of the constitution and structuring of indirect investments in cryptocurrencies. Therefore, in view 

of these circumstances, the CVM advised managers of investment funds to await further and more 

conclusive guidance from the CVM on the subject in order to structure indirect investments in 

cryptocurrencies as described, or even in other alternative forms that seek this nature 

of investment.15

III. Bill of Law No. 2,303 of 2015 

A Bill of Law that would amend Law No. 12,865 of October 9, 2013, which provides for payment 

arrangements and payment institutions that are part of the Brazilian Payment System, and Law No. 

9,613 of March 3, 1998, which provides for crimes of money laundering or concealment of assets 

and the prevention of the use of the financial system for the illicit activities foreseen in Law No. 

9,613, is currently under analysis in the Brazilian Chamber of Deputies.16 

 

11 Id.

12 Id. Article 2(V) of CVM Instruction 555/2014 lists the financial assets applicable to investment funds registered 

with CVM. Instrução CVM No. 555, de 17 de Dezembro de 2014, http://www.cvm.gov.br/legislacao/instrucoes/ 

inst555.html, archived at https://perma.cc/6LV3-X532. 

13 Id. 

14 Id. 

15 Id. 

16 Câmara dos Deputados, Projeto de Lei No. 2.303, de 2015, http://www.camara.gov.br/proposicoesWeb/ 

fichadetramitacao?idProposicao=1555470, archived at https://perma.cc/97Y2-NJDV. 
Regulation of Cryptocurrencies: Brazil 

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The Bill would provide for the inclusion of virtual currencies and air mileage programs in the 

definition of “payment arrangements” under the supervision of the BACEN, and would require 

individuals and companies engaged in investment businesses to closely monitor deals involving 

virtual currencies and air mileage programs for crimes of money laundering or concealment 

of assets.17

Law No. 12,865 currently defines “payment arrangement” as a set of rules and procedures that 

regulate the rendering of a particular service to the public that is accepted by more than one 

recipient, through direct access by end users, payers, and recipients.18 

 

17 Id. 

18 Lei No. 12.865 de 9 de Outubro de 2013, art. 6(I). https://www.planalto.gov.br/ccivil_03/_ato2011-2014/2013/ 

lei/l12865.htm, archived at https://perma.cc/5ZNY-3KVD. 
The Law Library of Congress 25

Canada 

Tariq Ahmad 

Foreign Legal Specialist

SUMMARY Canada allows the use of digital currencies, including cryptocurrencies. However, 

cryptocurrencies are not considered legal tender in Canada. Canada’s tax laws and rules, 

including the Income Tax Act, also apply to cryptocurrency transactions. The Canada 

Revenue Agency has characterized cryptocurrency as a commodity and stated that the use 

of cryptocurrency to pay for goods or services should be treated as a barter transaction. 

On June 19, 2014, the Governor General of Canada gave his royal assent to Bill C-31, which 

includes amendments to Canada’s Proceeds of Crime (Money Laundering) and Terrorist 

Financing Act. The new law treats virtual currencies as “money service businesses” for 

purposes of anti-money laundering provisions. The law is not yet in force, pending issuance 

of subsidiary regulations. 

I. Legality of Cryptocurrencies

Canada allows the use of cryptocurrencies.1 According to the Government of Canada webpage on 

digital currencies, “[y]ou can use digital currencies to buy goods and services on the Internet and 

in stores that accept digital currencies. You may also buy and sell digital currency on open 

exchanges, called digital currency or cryptocurrency exchanges.”2 However, cryptocurrencies are 

not considered legal tender in Canada.3 According to the Financial Consumer Agency of Canada, 

“[o]nly the Canadian dollar is considered official currency in Canada.” The Currency Act4 defines 

“legal tender” as “bank notes issued by the Bank of Canada under the Bank of Canada Act” and 

“coins issued under the Royal Canadian Mint Act.”5

II. Taxation

Canada’s tax laws and rules also apply to digital currency transactions.6 The Canada Revenue 

Agency (CRA) “has characterized cryptocurrency as a commodity and not a government-issued 

1 Digital Currency, FINANCIAL CONSUMER AGENCY OF CANADA, https://www.canada.ca/en/financial-consumeragency/services/payment/digital-currency.html, archived at https://perma.cc/G3PY-H8NR. 

2 Id. 

3 Id. 

4

 Currency Act, R.S.C., 1985, c. C-52, http://laws-lois.justice.gc.ca/eng/acts/c-52/page-1.html, archived at

https://perma.cc/4A4E-3XBH. 

5 Digital Currency, supra note 1; Currency Act § 8. 

6 Id. 
Regulation of Cryptocurrencies: Canada 

The Law Library of Congress 26

currency. Accordingly, the use of cryptocurrency to pay for goods or services is treated as a 

barter transaction.”7

A. Payments in Cryptocurrencies

Digital currencies are subject to the Income Tax Act (ITA).8 According to the Financial Consumer 

Agency of Canada “[g]oods purchased using digital currency must be included in the seller’s 

income for tax purposes.”9 On the issue of taxation, the Canada Revenue Agency adds that, 

[w]here digital currency is used to pay for goods or services, the rules for barter transactions

apply. A barter transaction occurs when any two persons agree to exchange goods or

services and carry out that exchange without using legal currency. For example, paying for

movies with digital currency is a barter transaction. The value of the movies purchased

using digital currency must be included in the seller’s income for tax purposes. The amount

to be included would be the value of the movies in Canadian dollars.10

The Canada Revenue Agency has also said that “GST/HST [Goods and Services Tax/ harmonized 

sales tax] also applies on the fair market value of any goods or services you buy using 

digital currency.”11

B. Trade in Cryptocurrencies

As noted, digital currency is characterized as a commodity under Canadian law. Thus, according 

to the Financial Consumer Agency “[w]hen you file your taxes you must report any gains or losses 

from selling or buying digital currencies.”12 Any resulting gains or losses “could be taxable income 

or capital for the taxpayer.”13 The CRA has published a bulletin14 to “provide information that can 

help in determining whether transactions are income or capital in nature.”15 According to lawyers 

from the law firm Gowling WLG, 

[i]n general terms, where a taxpayer does not engage in the business of trading in

cryptocurrency (i.e., the taxpayer acquires such property for a long-term growth), any gain

7

 Mariam Al-Shikarchy et al., Gowling WLG, Canadian Taxation of Cryptocurrency . . . So Far, LEXOLOGY (Nov. 

14, 2017), https://www.lexology.com/library/detail.aspx?g=6283077e-9d32-4531-81a5-56355fa54f47. 

8 Id. 

9 Digital Currency, supra note 1. 

10 What You Should Know about Digital Currency, CANADA REVENUE AGENCY, https://www.canada.ca/en/revenueagency/news/newsroom/fact-sheets/fact-sheets-2015/what-you-should-know-about-digital-currency.html (last 

updated Mar. 17, 2015), archived at https://perma.cc/CYV2-236S. 

11 Digital Currency, supra note 1. 

12 Id. 

13 What You Should Know about Digital Currency, supra note 10. 

14 CRA, Interpretation Bulletin IT-479R, Transactions in Securities, https://www.canada.ca/en/revenueagency/services/forms-publications/publications/it479r/archived-transactions-securities.html, archived at 

https://perma.cc/NDV9-4BGA. 

15 What you Should Know about Digital Currency, supra note 10. 
Regulation of Cryptocurrencies: Canada 

The Law Library of Congress 27

or loss generated from the disposition of cryptocurrency should be treated as on account of 

capital. However, where a taxpayer engages in the business of trading or investing in 

cryptocurrency, gains or losses therefrom should be treated as being on account of income. 

The cost to the taxpayer of property received in exchange for cryptocurrency (for example, 

another type of cryptocurrency) should be equal to the value of the cryptocurrency given 

up as consideration.16

The law firm also notes that “it is possible that a trader in cryptocurrency would also be required 

to collect GST/HST (and QST [Quebec Sales Tax]) on their supplies, but the CRA has not 

expressed a clear view on this point.”17

C. Mining Cryptocurrencies

Mining of cryptocurrencies can be undertaken for profit (as a business) or as a personal hobby 

(which is nontaxable).18 According to Gowling WLG, 

[i]f the taxpayer mines in a commercial manner, the income from that business must be

included in the taxpayer’s income for the year. Such income will be determined with

reference to the value of the taxpayer’s inventory at the end of the year, established

pursuant to the rules in section 10 of the ITA and Part XVIII of the Regulations regarding

valuing inventory.19

III. Anti-Money Laundering Regime

On June 19, 2014, the Governor General of Canada gave his royal assent to Bill C-31 (An Act to 

Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014, and Other 

Measures),20 which includes amendments to Canada’s Proceeds of Crime (Money Laundering) 

and Terrorist Financing Act. The law treats virtual currencies, including Bitcoin, as “money 

service businesses” for purposes of anti-money laundering laws.21 As a result of the law, 

companies dealing in virtual currencies are required to register with the Financial Transactions and 

Reports Analysis Centre of Canada (Fintrac), put into effect compliance programs, “keep and 

retain prescribed records,” report suspicious or terrorist-related property transactions, and 

16 Al-Shikarchy et al., supra note 7. 

17 Id. 

18 Cryptocurrencies and Tax: Five Things Every Canadian Needs to Know, WILDEBOER DELLELCE (Dec. 12, 2017), 

http://www.wildlaw.ca/resource-centre/legal-updates/2017/cryptocurrencies-and-tax-five-things-every-canadianneeds-to-know/, archived at https://perma.cc/F7RC-R2D3. 

19 Al-Shikarchy et al., supra note 7. 

20 Bill C-31, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014, and 

Other Measures, Second Session, Forty-first Parliament, 62-63 Elizabeth II, 2013-2014, Statutes of Canada 2014 

Ch. 20, http://www.parl.ca/DocumentViewer/en/41-2/bill/C-31/royal-assent, archived at https://perma.cc/2N7QE68C. 

21 Id.; see also Tariq Ahmad, Canada: Canada Passes Law Regulating Virtual Currencies as “Money Service 

Businesses” GLOBAL LEGAL MONITOR (July 9, 2014), http://www.loc.gov/law/foreign-news/article/canada-canadapasses-law-regulating-virtual-currencies-as-money-service-businesses/, archived at https://perma.cc/BQA6-K7MV. 
Regulation of Cryptocurrencies: Canada 

The Law Library of Congress 28

determine if any of their customers are “politically exposed persons.”22 The law will also apply to 

virtual currency exchanges operating outside of Canada “who direct services at persons or entities 

in Canada.”23 The new amendments also bar banks from opening and maintaining accounts or 

having a “correspondent banking relationship” with companies dealing in virtual currencies, 

“unless that person or entity is registered with the Centre.”24

The law is regarded as the “world’s first national law on digital currencies, and certainly the 

world’s first treatment in law of digital currency financial transactions under national anti-money 

laundering law.”25 Though the law has received royal assent it is not yet in force, pending issuance 

of subsidiary regulations. Recent news reports indicate that the government may be about to issue 

those regulations.26

IV. Securities Law 

On August 24, 2017, the Canadian Securities Administrators (CSA) published CSA Staff Notice 

46-307 Cryptocurrency Offerings,27 “which outlines how securities law requirements may apply 

to initial coin offerings (ICOs), initial token offerings (ITOs), cryptocurrency investment funds 

and the cryptocurrency exchanges trading these products.”28 On February 1, 2018, the Globe and 

Mail reported that the Ontario Securities Commission had approved the country’s first blockchain 

fund—Blockchain Technologies ETF.29 

V. Bank of Canada’s Blockchain Project 

The Bank of Canada, Payments Canada, and R3, a distributed database technology company, are 

involved in a research initiative called Project Jasper “to understand how distributed ledger 

technology (DLT) could transform the wholesale payments system.”30 Phases 1 and 2 of the project 

 

22 Christine Duhaime, Canada Implements World’s First National National Digital Currency Law; Regulates New 

Financial Technology Transactions, DUHAIME LAW (June 22, 2014), http://www.duhaimelaw.com/2014/06/22/ 

canada-implements-worlds-first-national-bitcoin-law/, archived at https://perma.cc/4TLH-LTN5. 

23 Bill C-31, § 255(2). 

24 Id. § 258. 

25 Duhaime, supra note 22. 

26 Corin Faife, Canada Is Gearing Up to Regulate Cryptocurrency, MOTHERBOARD (Mar. 20, 2018), 

https://motherboard.vice.com/en_us/article/d358zk/canada-is-gearing-up-to-regulate-cryptocurrency-parliamenthearing, archived at https://perma.cc/K7AH-LDMZ. 

27 CSA Staff Notice 46-307 Cryptocurrency Offerings (Aug. 24, 2017), http://www.osc.gov.on.ca/en/ 

SecuritiesLaw_csa_20170824_cryptocurrency-offerings.htm, archived at https://perma.cc/7XF6-3T3E. 

28 Press Release, CSA, Canadian Securities Regulators Outline Securities Law Requirements that May Apply to 

Cryptocurrency Offerings (Aug. 24, 2017), https://www.securities-administrators.ca/aboutcsa.aspx?id=1606, 

archived at https://perma.cc/4KL4-YSEV. 

29 Clare O’Hara, OSC Approves Canada’s First Blockchain ETF, THE GLOBE AND MAIL (Feb. 1, 2018), 

https://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/osc-approves-canadas-first-blockchainetf/article37828183/, archived at https://perma.cc/V6TD-KZ5C. 

30 Fintech Experiments and Projects, BANK OF CANADA, https://www.bankofcanada.ca/research/digital-currenciesand-fintech/fintech-experiments-and-projects/ (last visited Apr. 30, 2018), archived at https://perma.cc/9F77-QHFN. 
Regulation of Cryptocurrencies: Canada 

The Law Library of Congress 29

are “focused on exploring the clearing and settlement of high-value interbank payments using 

DLT” and have been completed. Phase 1 of Project Jasper used the Ethereum platform as the basis 

for the DLT, while Phase 2 used the “custom-designed R3 Corda platform.”31 

In June 2017, the Bank of Canada published a report on its preliminary findings from Phase 1 of 

Project Jasper and partly found that “[f]or critical financial market infrastructures, such as 

wholesale payment systems, current versions of DLT may not provide an overall net benefit 

relative to current centralized systems.”32 On September 29, 2017, the Bank of Canada, Payments 

Canada, and R3 released a white paper that describes the project’s findings to date.33 On October 

17, 2017, Payments Canada, the Bank of Canada, and TMX Group announced “a new 

collaboration to experiment with an integrated securities and payment settlement platform based 

on distributed ledger technology (DLT) as part of the third phase of the Project Jasper 

research initiative.”34 

 

31 Andrea Schneider, Project Jasper Update: White Paper Release and Phase 3 Announcement, CYBERLEX (Oct. 31, 

2017), https://www.canadiancybersecuritylaw.com/2017/10/project-jasper-update-white-paper-release-and-phase-3-

announcement/, archived at https://perma.cc/948N-6Z8S. 

32 James Chapman et al., Bank of Canada, Project Jasper: Are Distributed Wholesale Payment Systems Feasible 

Yet? 1 (Financial System Review, June 2017), https://www.bankofcanada.ca/wp-content/uploads/2017/05/fsr-june2017-chapman.pdf, archived at https://perma.cc/UZU6-CL6L. 

33 Payments Canada, Bank of Canada 1 & R3, Project Jasper: A Canadian Experiment with Distributed Ledger 

Technology for Domestic Interbank Payments Settlement (Sept. 29, 2017), https://www.payments.ca/sites/ 

default/files/29-Sep-17/jasper_report_eng.pdf, archived at https://perma.cc/PH5V-UJLK. 

34 Payments Canada, Bank of Canada and TMX Group Announce Integrated Securities and Payment Platform as 

Next Phase of Project Jasper, TMX GROUP (Oct. 17, 2017), https://www.tmx.com/newsroom/press-releases? 

id=615&year=2017, archived at https://perma.cc/2B5Q-C65R. 
The Law Library of Congress 30

China 

Laney Zhang 

Foreign Law Specialist

SUMMARY China does not recognize cryptocurrencies as legal tender and the banking system is not 

accepting cryptocurrencies or providing relevant services. The government has taken a series 

of regulatory measures to crack down on activities related to cryptocurrencies for purposes 

of investor protection and financial risk prevention. Those measures include announcing that 

initial coin offerings are illegal, restricting the primary business of cryptocurrency trading 

platforms, and discouraging Bitcoin mining. In the meantime, China’s central bank is 

reportedly considering issuing its own digital currency. 

I. Introduction 

China has not passed any legislation regulating cryptocurrencies. Regulators are not recognizing 

cryptocurrencies1 as legal tender or a tool for retail payments, and the Chinese banking system is 

not accepting any existing cryptocurrencies or providing relevant services.2 In a 2013 circular, the 

government defined Bitcoin as a virtual commodity, but while warning citizens about the risks of 

virtual commodities allowed them to freely participate in the online trading of such commodities.3 

In recent years, especially since September 2017, however, the government has taken a series of 

regulatory measures to crack down on activities related to cryptocurrencies, mainly due to the 

concern over financial risks associated with such currencies. 

II. Regulatory Measures on Cryptocurrencies 

A. Ban on Initial Coin Offering 

The practice of raising funds through initial coin offerings (ICOs) is completely banned in China. 

On September 4, 2017, seven Chinese central government regulators—the People’s Bank of China 

(PBOC), the Cyberspace Administration of China (CAC), the Ministry of Industry and Information 

Technology (MIIT), the State Administration for Industry and Commerce (SAIC), the China 

Banking Regulatory Commission (CBRC), the China Securities Regulatory Commission (CSRC), 

and the China Insurance Regulatory Commission (CIRC)—jointly issued the Announcement on 

 

1

 The term 虚拟货币 (“virtual currencies”) is used in Chinese. 

2 Zhou Xiaochuan: Future Regulation on Virtual Currency Will Be Dynamic, Imprudent Products Shall Be Stopped 

for Now, XINHUANET (Mar. 1, 2018), http://www.xinhuanet.com/finance/2018-03/10/c_129826604.htm (in 

Chinese), archived at https://perma.cc/2CW7-8F2T.

3

 People’s Bank of China, Ministry of Industry and Information Technology, China Banking Regulatory 

Commission, China Securities Regulatory Commission, and China Insurance Regulatory Commission Notice on 

Precautions Against the Risks of Bitcoins (Dec. 3, 2013), http://www.miit.gov.cn/n1146295/n1652858/n1652930/ 

n3757016/c3762245/content.html (in Chinese), archived at https://perma.cc/S4DN-DXHD (all translations 

by author). 
Regulation of Cryptocurrencies: China 

The Law Library of Congress 31

Preventing Financial Risks from Initial Coin Offerings (ICO Rules) for purposes of investor 

protection and financial risk prevention.4 

Under the ICO Rules, ICOs that raise cryptocurrencies such as Bitcoin and Ethereum through the 

irregular sale and circulation of tokens are essentially engaging in public financing without official 

authorization, which is illegal. The ICO Rules warn that financial crimes may be involved in ICOs, 

such as the illegal issuance of tokens or securities, illegal fundraising, financial fraud, or pyramid 

selling.5 Cryptocurrencies involved in ICOs are not issued by the country’s monetary authority 

and therefore are not mandatorily-accepted legal tender. They do not have equal legal status with 

fiat currencies and “cannot and should not be circulated and used in the market as currencies.”6

B. Restrictions on Cryptocurrency Trading Platforms 

The ICO Rules also impose restrictions on the primary business of cryptocurrency trading 

platforms. According to the ICO Rules, the platforms are prohibited from converting legal tender 

into cryptocurrencies, or vice versa. They are also prohibited from purchasing or selling 

cryptocurrencies, setting prices for cryptocurrencies, or providing other related agent services. 

Government authorities may shut down the websites and mobile applications of platforms that fail 

to comply, remove the applications from application stores, or even suspend the platform’s 

business licenses.7

Following the issuance of the ICO Rules on September 4, 2017, senior executives of 

cryptocurrency trading platforms in China were reportedly summoned for “chats” by regulators. 

On September 15, 2017, for example, the Beijing Internet Finance Risk Working Group 

summoned senior executives of cryptocurrency trading platforms in Beijing. The platforms were 

reportedly ordered to immediately cease new client registration and announce the deadline by 

which time the platforms would cease all cryptocurrency trading.8

 As a result, the cryptocurrency 

trading platforms essentially shut down their trading business in China. 9 More recently, in 

February 2018, the South China Morning Post reported that China was planning to block websites 

 

4

 PBOC, CAC, MIIT, SAIC, CBRC, CSRC, and CIRC, Announcement on Preventing Financial Risks from Initial 

Coin Offerings (Sept. 4, 2017), http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/index.html (in 

Chinese), archived at https://perma.cc/N88N-5CV5. See Greg Pilarowski & Lu Yue, China Bans Initial Coin 

Offerings and Cryptocurrency Trading Platforms, CHINA REGULATION WATCH (Sept. 21, 2017), 

http://www.pillarlegalpc.com/en/news/2017/09/21/china-bans-initial-coin-offerings-and-cryptocurrency-tradingplatforms/, archived at https://perma.cc/VQ2W-T4HY. 

5

 Announcement on Preventing Financial Risks from Initial Coin Offerings, supra note 4. 

6 Id.

7 Id.

8

 Wu Yujian, Bitcoin Exchanges Ordered to Formulate Non-Risk Clearance Plan and Shut Down by End of 

September (Updated), CAIXIN (Sept. 15, 2017), http://finance.caixin.com/2017-09-15/101145796.html (in Chinese), 

archived at https://perma.cc/NQ4S-MDBL. 

9

 Xie Xu, China to Stamp Out Cryptocurrency Trading Completely with Ban on Foreign Platforms, SOUTH CHINA 

MORNING POST (Feb. 7, 2018), http://www.scmp.com/business/banking-finance/article/2132009/china-stamp-outcryptocurrency-trading-completely-ban, archived at https://perma.cc/42H4-F2AW. 
Regulation of Cryptocurrencies: China 

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related to cryptocurrency trading and ICOs, including foreign platforms, in a bid to completely 

stamp out cryptocurrency trading.10

C. Requirements for Financial Institutions 

The ICO Rules prohibited financial institutions and non-bank payment institutions from directly 

or indirectly providing services for ICOs and cryptocurrencies, including opening bank accounts 

or providing registration, trading, clearing, or liquidation services. They were also prohibited from 

providing insurance services relating to ICOs or cryptocurrencies.11 

In fact, a ban on bank and payment institution dealings in Bitcoin has been in place since 2013. 

According to the Notice on Precautions Against the Risks of Bitcoins jointly issued by the PBOC, 

MIIT, CBRC, CSRC, and CIRC on December 3, 2013, banks and payment institutions in China 

must not deal in Bitcoins; use Bitcoin pricing for products or services; buy or sell Bitcoins; or 

provide direct or indirect Bitcoin-related services, including registering, trading, settling, clearing, 

or other services. They are also prohibited from accepting Bitcoins or using Bitcoins as a clearing 

tool, or trading Bitcoins with Chinese yuan or foreign currencies.12

D. Discouraging Bitcoin Mining 

In January 2018, China’s Leading Group of Internet Financial Risks Remediation reportedly 

requested that local governments remove existing, preferential policies for Bitcoin mining 

companies in terms of electricity prices, taxes, or land use, and guide the orderly exit of such 

companies from the Bitcoin mining business. The localities must submit regular reports on Bitcoin 

mining operations in their jurisdictions.13 Since then regulations on Bitcoin mining have been 

strengthened, at least in some Chinese provinces. Many Bitcoin mines in China have 

stopped operating.14

III. Central Bank Digital Currency 

Despite cracking down on privately-issued cryptocurrencies, China’s central bank, the PBOC, is 

reportedly considering issuance of its own digital currency. According to a March 2018 interview 

with Zhou Xiaochuan, the then governor of the PBOC, the PBOC has been conducting a study of 

 

10 Id.

11 Id.

12 PBOC, MIIT, CBRC, CSRC, and CIRC Notice on Precautions Against the Risks of Bitcoins, supra note 3. 

13 Wu Yujian et al., China Clamps Down on Preferential Treatment for Bitcoin Mines, CAIXIN (Jan. 4, 2018), 

https://www.caixinglobal.com/2018-01-04/china-clamps-down-on-preferential-treatment-for-bitcoin-mines101193622.html, archived at https://perma.cc/8564-FEXC. 

14 Song Di, Bitcoin Regulatory “Tight Inside and Loose Outside,” Many “Mining Sites” Have Stopped Operating, 

ECONOMIC OBSERVER NET (Jan. 13, 2018), http://www.eeo.com.cn/2018/0113/320754.shtml (in Chinese), archived 

at https://perma.cc/49S8-JQVK. 
Regulation of Cryptocurrencies: China 

The Law Library of Congress 33

digital currency for over three years and has set up an Institute of Digital Money within 

the PBOC.15 

In October 2017, the PBOC reportedly completed trial runs on the algorithms needed for a digital 

currency supply, “taking it a step closer to addressing the technological challenges associated with 

digital currencies.”16 The digital currency would be a digital form of the sovereign currency that 

is backed by the central bank. “Unlike Bitcoin or other digital money issued by the private sector, 

the digital fiat currency has the same legal status as the Chinese yuan, the only fiat currency issued 

by the People’s Bank of China.”17 

 

15 Zhou Xiaochuan: Future Regulation on Virtual Currency Will Be Dynamic, Imprudent Products Shall Be Stopped 

for Now, supra note 2. 

16 Wang Yanfei, PBOC Inches Closer to Digital Currency, CHINA DAILY (Oct. 14, 2017), http://www.chinadaily. 

com.cn/business/2017-10/14/content_33235955.htm, archived at https://perma.cc/T4R8-R4PU. 

17 Id.
The Law Library of Congress 34 

France 

Nicolas Boring 

Foreign Law Specialist

SUMMARY Cryptocurrencies remain largely unregulated in France. So far, only two ordinances 

containing provisions on blockchain technology have been issued, but their applicability 

remains very narrow. However, the government has set up several fact-finding missions 

and is actively working to establish a regulatory framework. French regulatory authorities 

are generally wary of cryptocurrencies, due to their high volatility and unregulated nature, 

but appear enthusiastic about the underlying blockchain technology. Additionally, French 

authorities have issued some limited guidance with regard to the tax treatment of 

cryptocurrencies, instructing that any profits from their sale is taxable, and that their value 

is to be taken into account when calculating the wealth tax. 

I. Introduction 

Cryptocurrencies remain largely unregulated in France, with two ordinances on blockchain 

technology being the only legislative action taken so far. However, the French government is 

actively studying the cryptocurrency phenomenon and moving towards establishing a regulatory 

regime. Statements from various quarters of the French government show that while many are 

wary of cryptocurrencies, there appears to be a real enthusiasm for the underlying 

blockchain technology. 

II. Provisions Regarding Blockchain Technology 

A 2016 ordinance included two provisions that allowed the use of blockchain technology for a 

specific type of zero-coupon bond called a “mini-bond” (minibon).1 The main impact of this 

ordinance was to provide the first definition of “blockchain” in French law, but otherwise these 

provisions only had a very narrow application. Another ordinance, from December 2017, went 

further and will make it possible to use blockchain technology for a broader range of financial 

instruments.2

 This ordinance will come into force when the application decree is published, or 

on July 1, 2018, at the latest.3

 

1

 Ordonnance n° 2016-520 du 28 avril 2016 relative aux bons de caisse [Ordinance No. 2016-520 of 28 April 2016 

Regarding Zero Coupon Bonds] art. 2, https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT00 

0032465520&categorieLien=id, archived at https://perma.cc/K3UP-AJ9D. 

2

 Ordonnance n° 2017-1674 du 8 décembre 2017 relative à l’utilisation d’un dispositif d’enregistrement électronique 

partagé pour la représentation et la transmission de titres financiers [Ordinance No. 2017-1674 of 8 December 2017 

Regarding the Use of a Shared Electronic Registration Method for the Representation and Conveyance of Financial 

Instruments], https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000036171908&categorie 

Lien=id, archived at https://perma.cc/ESA7-89E6. 

3 Id. art. 8. 
Regulation of Cryptocurrencies: France 

The Law Library of Congress 35 

III. Positions of Financial Regulatory Authorities 

A. Warnings about the Inherent Risks of Cryptocurrencies 

The French Financial Market Authority (Autorité des marchés financiers, AMF) and Prudential 

Supervisory Authority (Autorité de contrôle prudentiel et de resolution, ACPR) recently issued a 

joint notice to investors, warning about the current unregulated nature of cryptocurrencies.4 This 

document notes that Bitcoin and other cryptocurrencies are not considered financial instruments 

under French law, and therefore do not fall under the regulatory framework of actual currencies 

or under the AMF’s supervision.5 The AMF and ACPR warn that cryptocurrencies are 

unregulated and particularly volatile investments.6 This document is reminiscent of a slightly 

longer report that the French Central Bank (Banque de France) published in December 2013.7 

This report explained that Bitcoin cannot be considered a real currency or means of payment 

under current French laws,8

 and criticized it as a vehicle for speculation as well as an instrument 

for money laundering and other illegal activities.9 The 2013 report also suggested that the 

conversion between Bitcoin and real currencies should be considered a payment service, which 

therefore could only be performed by payment service providers authorized and supervised by 

the ACPR.10 The ACPR acknowledged this position in a 2014 document in which it stated that 

entities that habitually engage in the activity of purchasing or selling cryptocurrencies in 

exchange for actual legal tender must be licensed as payment services providers by the ACPR.11

However, the AMF and ACPR’s 2017 joint notice recognizes that “the purchase/sale of and 

investments in Bitcoin currently operate outside of any regulated market.”12

Robert Ophèle, the President of the AMF, reiterated his skepticism of the economic value of 

cryptocurrencies in a January 2018 interview.13 In this interview, he described as “catastrophic” 

 

4 Achats de Bitcoin: l’AMF et l’ACPR mettent en garde les épargnants [Bitcoin Purchases: The AMF and ACPR 

Warn Savers], AMF & ACPR (Dec. 4, 2017), https://acpr.banque-france.fr/sites/default/files/medias/documents/ 

20171204-cp-bitcoin.pdf, archived at https://perma.cc/CM6Q-EGUH. 

5 Id. 

6 Id. 

7

 Banque de France, Les dangers liés au développement des monnaies virtuelles: l’exemple du bitcoin [The Dangers 

of the Development of Virtual Currencies: The Bitcoin Example], FOCUS No. 10, Dec. 5, 2013, https://publications. 

banque-france.fr/sites/default/files/medias/documents/focus-10_2013-12-05_fr.pdf, archived at 

https://perma.cc/K93L-HLAC. 

8 Id. at 1. 

9 Id. at 2–3. 

10 Id. at 6. 

11 ACPR, Position de l’ACPR relative aux opérations sur Bitcoins en France [Position of the ACPR Regarding 

Bitcoin Operations in France] (Jan. 29, 2014), https://acpr.banque-france.fr/sites/default/files/20140101_acpr_ 

position_bitcoin.pdf, archived at https://perma.cc/M6YT-EG6J. 

12 Achats de Bitcoin, supra note 4. 

13 Devises virtuelles: Leur banalisation serait une catastrophe, avertit l’AMF [Cryptocurrencies: Their 

Trivialization Would be a Disaster, AMF Warns], CAPITAL (Jan. 12, 2018), https://www.capital.fr/entreprisesmarches/lamf-juge-quil-serait-desastreux-que-les-monnaies-virtuelles-soient-banalisees-1264945, archived at 

https://perma.cc/4EQJ-M72T. 
Regulation of Cryptocurrencies: France 

The Law Library of Congress 36 

the prospect of cryptocurrencies, in their current form, spreading to become an everyday 

instrument of the economic circuit: “due to the nontraceability of operations [and] their quasiirrational valuation, those are not really appropriate foundations for investment.”14

B. Warnings about the Risks of Acquiring Cryptoassets from Unregistered Sources 

In March 2018, the AMF warned investors about the risks of purchasing cryptoassets from 

unregistered sources and published a list of websites of companies selling cryptoassets without 

having obtained prior authorization from the AMF.15 The AMF has also considered the status of 

cryptocurrency derivatives, and has concluded that “cash-settled cryptocurrency contracts may 

qualify as a derivative” and that, as a result, “online platforms which offer cryptocurrency 

derivatives fall within the scope of MiFID 2 [the European Union Markets in Financial 

Instruments Directive 2] and must therefore comply with the authorization, conduct of business 

rules, and the European Market Infrastructure Regulation (E.M.I.R.) trade reporting obligation to 

a trade repository.”16 Furthermore, such products are subject to the provisions of French law that 

ban the advertisement of certain financial contracts.17

C. Enthusiasm for Blockchain Technology 

While its main purpose was to warn investors about the volatility and unregulated nature of 

cryptocurrencies, the AMF and ACPR’s 2017 joint notice also included a brief passage 

recognizing the potential benefits of blockchain technologies for the corporate world.18 This 

view was repeated by the President of the AMF in his above-mentioned January 2018 

interview.19 While he sees the development of cryptocurrencies as potentially “catastrophic,” he 

also highlighted the “extremely positive contribution of the underlying technology, i.e. 

blockchain, which could bring deep changes to the financial sector because it has the ability to 

reduce costs and intermediaries.”20

 

 

14 Id. 

15 News Release, AMF, The Autorité des marchés financiers (AMF) Is Publishing a List on Its Website of 

Unauthorized Companies Proposing Atypical Investments without Being Authorised to Do So (Mar. 15, 2018), 

http://www.amf-france.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2018?docId=work 

space://SpacesStore/3f85fe88-fc1f-45b8-a55e-0bc5aeb298ce, archived at https://perma.cc/P38R-L8MQ. 

16 New Release, AMF, The AMF Considers that the Offer of Cryptocurrency Derivatives Requires Authorization 

and that It Is Prohibited to Advertise such Offer via Electronic Means (Feb. 22, 2018), http://www.amffrance.org/en_US/Actualites/Communiques-de-presse/AMF/annee-2018?docId=workspace://SpacesStore/a225bf1dde35-4f58-89e3-f03cb7e9e551, archived at https://perma.cc/6323-NYAP. 

17 Id. 

18 Achats de Bitcoin, supra note 4. 

19 Devises virtuelles: Leur banalisation serait une catastrophe, avertit l’AMF, supra note 13. 

20 Id. 
Regulation of Cryptocurrencies: France 

The Law Library of Congress 37 

IV. Legislative and Executive Branches Considering Regulatory Options 

A. Parliamentary Fact-Finding Missions 

In parallel to the independent regulatory institutions mentioned above, the French legislative and 

executive branches are actively investigating how best to regulate cryptocurrencies. To that 

purpose, the National Assembly (Assemblée nationale, one of the two houses of the French 

Parliament) recently initiated a fact-finding mission on cryptocurrencies,21 and a separate factfinding mission on “blockchains and other technologies for the certification of ledgers.”22 The 

mission on cryptocurrencies held its first (and so far, only) hearings on March 12, 2018,23 while 

the mission on blockchains has not yet held any hearings. So far, neither mission has published 

any findings or opinions. Additionally, the Senate (the other house of the French Parliament) 

organized two hearings on February 7, 2018: one on blockchain technology, and one on the rise 

of cryptocurrencies.24 Many of the speakers stressed the importance of establishing a new legal 

framework for cryptocurrencies, as the existing legislation is deemed inadequate. All appeared 

to agree on the necessity to minimize the illegal uses of cryptocurrencies (such as money 

laundering) and to provide some protection and transparency for investors, while at the same 

time avoiding stifling innovation.25

B. Ministry of the Economy Fact-Finding Mission 

The Minister of the Economy has recently tasked Jean-Pierre Landau, a former deputy governor 

of the Banque de France, with researching how to best regulate cryptocurrencies to “better 

control their development and to prevent their use for tax evasion, money laundering, or the 

financing of criminal or terrorist activities.”26 Landau has the reputation of being a 

cryptocurrency skeptic after he wrote an op-ed in 2014 that criticized Bitcoin for being 

 

21 Mission d’information sur les monnaies virtuelles [Information Mission on Cryptocurrencies], Assemblée 

nationale [National Assembly], http://www2.assemblee-nationale.fr/15/commissions-permanentes/commission-desfinances/missions-d-information/monnaies-virtuelles (last visited Mar. 19, 2018), archived at

https://perma.cc/JNU5-4MRG. 

22 Assemblée nationale [National Assembly], Mission d’information commune sur les usages des bloc-chaînes 

(blockchains) et autres technologies de certification de registres [Joint Information Mission on the Uses of 

Blockchains and Other Technologies for the Certification of Ledgers], http://www2.assemblee-nationale.fr/15/ 

commissions-permanentes/commission-des-finances/missions-d-information/chaines-de-blocs/(block)/47252 (last 

visited Mar. 19, 2018), archived at https://perma.cc/3TKA-Y7L7. 

23 Monnaies virtuelles: Auditions diverses [Cryptocurrencies: Miscellaneous Hearings], ASSEMBLEE NATIONALE 

[NATIONAL ASSEMBLY] (Mar. 12, 2018), http://videos.assemblee-nationale.fr/video.5668992_5aa68794a2acf

(video). 

24 Comptes Rendus de la Commission des Finances [Minutes of the Finance Commission], SENAT [SENATE] (Feb. 7, 

2018), http://www.senat.fr/compte-rendu-commissions/20180205/fin.html#toc1, archived at https://perma.cc/J9LVN8ZD. 

25 Id. 

26 Un ancien de la Banque de France chargé d’une mission sur le bitcoin [Former Banque de France Official 

Tasked with a Mission on Bitcoin], AFP / LE POINT (Jan. 15, 2018), http://www.lepoint.fr/economie/un-ancien-dela-banque-de-france-charge-d-une-mission-sur-le-bitcoin-15-01-2018-2186834_28.php, archived at 

https://perma.cc/R6CD-GCV9. 
Regulation of Cryptocurrencies: France 

The Law Library of Congress 38 

“unsuitable as a means of exchange” and primarily attractive for purposes of speculation, money 

laundering, and tax evasion.27

C. Action Plan to be Unveiled Soon 

On March 19, 2018, the Minister of the Economy and Finance published an op-ed in which he 

expressed the view that “France has every interest in becoming the first big financial center to 

offer an ad hoc legislative framework that would allow companies that launch an ICO to 

demonstrate their seriousness to potential investors.”28 He announced an upcoming “Action Plan 

for Growth and Transformation of Companies,” to be unveiled by the government “in a few 

weeks,” that will allow the AMF to grant a certification of trustworthiness to companies that 

issue tokens, provided that they fulfill certain criteria to ensure the protection of investors.29

It is also worth noting that France and Germany have jointly requested that cryptocurrencies be 

discussed by the G-20, so that coordinated initiatives may be taken at the international level.30

V. Taxation 

According to guidelines from the Direction générale des Finances publiques (DGFP, General 

Directorate for Public Finance), capital gains from the sale of cryptocurrency are subject to 

taxation.31 These gains will be taxed differently depending on whether the taxpayer’s acquisition 

and sale of cryptocurrency is an occasional activity (in which case it will be taxed as “noncommercial profit”) or a habitual activity (in which case it will be taxed as “industrial and 

 

27 David Meyer, France’s Newly-Appointed ‘Monsieur Bitcoin’ Is a Notable Cryptocurrency Skeptic, FORTUNE (Jan. 

16, 2018), http://fortune.com/2018/01/16/bitcoin-cryptocurrency-france-regulation-jean-pierre-landau/, archived at 

https://perma.cc/5H4H-ZNGV. 

28 Bruno Le Maire, Minister of the Economy and Finance,, Op-ed, Cryptoactifs, Blockchain & ICO: Comment la 

France veut rester à la pointe [Cryptoassets, Blockchain & ICO: How France Wants to Stay at the Forefront], 

NUMERAMA (Mar. 19, 2018), https://www.numerama.com/politique/336943-tribune-cryptoactifs-blockchain-icocomment-la-france-veut-rester-a-la-pointe-par-bruno-le-maire.html, archived at https://perma.cc/43EJ-6NQB. 

29 Id.

30 Berlin et Paris veulent mobiliser le G20 sur les cryptomonnaies [Berlin and Paris Want to Mobilize the G20 on 

Cryptocurrencies], REUTERS (Feb. 9, 2018), https://fr.reuters.com/article/technologyNews/idFRKBN1FT19LOFRIN, archived at https://perma.cc/RF3M-ZVZM. 

31 Extrait du Bulletin Officiel des Finances Publiques – Impôts [Excerpt from Official Bulletin of Public Finances – 

Taxes], Direction générale des Finances publiques [General Directorate for Public Finance], BNC – Champ 

d'application – Activités et revenus imposables – Exploitations lucratives et sources de profits – Professions ou 

activités dont la classification fiscale des revenus a donné lieu à des solutions administratives ou jurisprudentielles 

[BNC – Applicability – Taxable Income and Activities – For-Profit Activities and Sources of Profits – Professions 

or Activities for Which the Income Tax Classification was Subject to Administrative or Jurisprudential Solutions] ¶ 

1080 (Feb. 3, 2016), http://bofip.impots.gouv.fr/bofip/ext/pdf/createPdfWithAnnexePermalien/BOI-BNC-CHAMP10-10-20-40-20140711.pdf?doc=2824-PGP&identifiant=BOI-BNC-CHAMP-10-10-20-40-20140711, archived at 

https://perma.cc/L5RG-7SE9; Direction générale des Finances publiques, BNC – BIC – ENR – PAT – Régime fiscal 

applicable aux bitcoins [BNC – BIC – ENR – PAT – Tax Treatment Applicable to Bitcoins] (July 11, 2014), 

http://bofip.impots.gouv.fr/bofip/ext/pdf/createPdfWithAnnexe/BNC_-_BIC_-_ENR_-_PAT_-_R%C3%A9gime_ 

fiscal_applicable_aux_bitcoins..pdf?id=9515-PGP, archived at https://perma.cc/QWZ6-W7VF. 
Regulation of Cryptocurrencies: France 

The Law Library of Congress 39 

commercial profit”).32 Additionally, cryptocurrencies are taken into account when calculating 

the basis for the French wealth tax, and the free transfer of cryptocurrencies from one person to 

another may be subject to the gift tax.33 Beyond these guidelines, however, tax experts have 

commented that there still are a number of ambiguities that will need to be clarified by 

the government.34

 

32 Id.

33 Direction générale des Finances publiques, BNC – BIC – ENR – PAT – Régime fiscal applicable aux bitcoins 

[BNC – BIC – ENR – PAT – Tax Treatment Applicable to Bitcoins], supra note 31. 

34 Face à l’envolée des devises virtuelles, le fisc est à l’affût [Faced with the Soaring of Cryptocurrencies, the Tax 

Authorities Are on the Lookout], CAPITAL (Jan. 15, 2018), https://www.capital.fr/entreprises-marches/face-a-laflambee-des-cryptomonnaies-ladministration-fiscale-a-laffut-1265534, archived at https://perma.cc/Q4N4-35W5. 
The Law Library of Congress 40

Gibraltar 

Clare Feikert-Ahalt 

Senior Foreign Law Specialist

SUMMARY Gibraltar has actively legislated to regulate the operation of cryptocurrencies within its 

jurisdiction. It currently requires the registration of firms that use distributed ledger 

technology to store or transmit value belonging to others. The registration process 

involves the Gibraltar Financial Services Commission reviewing the application and, if 

satisfied that certain criteria are met, a license may be granted, enabling the holder to 

operate a business using distributed ledger technology. Gibraltar is also considering 

introducing regulations that will regulate initial coin offerings. 

I. Introduction 

The Gibraltar Financial Services Commission (GFSC) is the regulator of the financial services 

market in Gibraltar and is responsible for regulating providers of such services that conduct 

business in Gibraltar and overseas. The GFSC must undertake this responsibility “in an effective 

and efficient manner in order to promote good business, protect the public from financial loss 

and enhance Gibraltar’s reputation as a quality financial centre.”1

Gibraltar has been considering regulating cryptocurrency for a number of years. In 2014, the 

Cryptocurrency Working Group, a private initiative, was established to consider cryptocurrencies 

and, in January 2016, the government of Gibraltar and the working group joined together and 

issued a discussion paper that considered various types of regulations for this area.2 

The government recently introduced regulations governing the provision of distributed ledger 

technology (DLT)3 and is currently in the process of introducing draft legislation to regulate 

initial coin offerings (ICOs).4

 

1

 Press Release, GFSC, Distributed Ledger Technology (DLT) Regulatory Framework (Jan. 2, 2018), 

http://www.gfsc.gi/news/distributed-ledger-technology-dlt-regulatory-framework-270, archived at

https://perma.cc/7DPW-ANKK. 

2

 Press Release, HM Government of Gibraltar, Government Confirms Introduction of Government Confirms 

Introduction of Confirms Introduction of Distributed Ledger Technology (DLT) Regulatory Framework in January 

2018, No. 610/2017 (Oct. 12, 2017), http://www.fsc.gi/uploads/GoGPR12102017.pdf, archived at

https://perma.cc/LV7Y-2B59. 

3

 “Distributed ledger technology” is defined in the Financial Services (Investment and Fiduciary Services) Act 1989, 

Act No. 49-1989, sched. 3 ¶ 10(2), http://www.gibraltarlaws.gov.gi/articles/1989-47o.pdf, archived at

https://perma.cc/MUK3-5Q3T, as “a database system in which – (a) information is recorded and consensually 

shared and synchronised across a network of multiple nodes; and (b) all copies of the database are regarded as 

equally authentic; and ‘Value’ includes assets, holdings and other forms of ownership, rights or interests, with or 

without related information, such as agreements or transactions for the transfer of value or its payment, clearing 

or settlement.” 

4 Statement on Initial Coin Offerings, GFSC (Sept. 22, 2017), http://www.gfsc.gi/news/statement-on-initial-coinofferings-250, archived at https://perma.cc/CN3Z-A9AS. 
Regulation of Cryptocurrencies: Gibraltar 

The Law Library of Congress 41

II. Regulation of Distributed Ledger Technology 

In May 2017, the government published a consultation paper discussing proposals for a 

regulatory framework covering DLT.5

 In September 2017, the GFSC issued a statement that a 

new regulatory framework for DLT would be introduced and, on October 12, 2017, the 

government of Gibraltar introduced the Financial Services (Distributed Ledger Technology 

Providers) Regulations 20176

 under the Financial Services (Investment and Fiduciary Services) 

Act.7

 These regulations entered into force on January 1, 2018.8 The government of Gibraltar 

claims that the GFSC is the first regulator to introduce a framework regulating DLT.9 The aim 

of the legislation is to protect consumers, protect the reputation of Gibraltar as a well-regulated 

and safe environment for firms that use DLT, and enable Gibraltar to prosper from the use and 

growth of new financial technology.10

The regulatory framework covers firms that operate in or from Gibraltar and provide DLT 

services, defined in the Financial Services (Investment and Fiduciary Services) Act as 

“[c]arrying on by way of business, in or from Gibraltar, the use of distributed ledger technology 

for storing or transmitting value belonging to others.”11 The regulations require firms that meet 

these criteria to apply for a license from the GFSC to become a DLT provider.12 

In order to obtain a DLT provider’s license, a person must submit an initial application 

assessment request with a £2,000 fee13 (approximately US$2,750) to the GFSC,14 which 

must then 

(a) assess the nature and complexity of the requester’s proposed business model and of 

the products and services which the requester proposes to offer; and 

(b) provide the requester with an initial assessment notice informing the requester of– 

 

5

 HM Government of Gibraltar et al., Proposals for a DLT Regulatory Framework 18 (Published for public 

consultation, May 2017), http://www.gibraltarfinance.gi/downloads/20170508-dlt-consultation-publishedversion.pdf?dc_%3D1494312876, archived at https://perma.cc/K36X-47YD. 

6

 Financial Services (Distributed Ledger Technology Providers) Regulations 2017, Legal Notice No. 204/2017, 

GIBRALTAR GAZETTE No. 4401 (Oct. 12, 2017), http://www.gfsc.gi/uploads/DLT regulations 121017 (2).pdf, 

archived at https://perma.cc/QG2W-8TQ6. 

7

 Financial Services (Investment and Fiduciary Services) Act 1989, §§ 5, 7, 53, 56. 

8

 Financial Services (Distributed Ledger Technology Providers) Regulations 2017, reg 1(2). See also Press Release, 

GFSC, supra note 1. 

9

 Press Release, GFSC, supra note 1. 

10 Id. 

11 Financial Services (Investment and Fiduciary Services) Act, sched. 3, ¶ 10. 

12 Distributed Ledger Technology Regulatory Framework (DLT Framework), GFSC, http://www.gfsc.gi/dlt (last 

visited Apr. 30, 2018), archived at https://perma.cc/L753-37RN. 

13 Financial Services Commission (Fees) Regulations 2016, LN 2016/071, sched. 2, http://www.gibraltar 

laws.gov.gi/articles/2016s071.pdf, archived at https://perma.cc/7KHF-LXNJ. 

14 GFSC, DLT APPLICATION PROCESS AND FEE STRUCTURE (Oct. 4, 2017), http://www.fsc.gi/uploads/DLT 

Application Process and Fee Structure Public.pdf, archived at https://perma.cc/96VL-T4TJ. 
Regulation of Cryptocurrencies: Gibraltar 

The Law Library of Congress 42

(i) any steps which the requester must take before applying for a DLT 

Provider's licence; 

(ii) the documents and other information which must accompany any 

application; and 

(iii) the prescribed fee which is payable.15

Upon receiving an application assessment notice from the GFSC, the person may then apply for 

a DLT Provider’s license conforming with the requirements of the notice and including an 

additional fee that ranges from £8,000 (approximately US$11,000) to £28,000 (approximately 

US$39,000), depending upon the complexity of the application, which is determined during the 

initial application assessment.16 The GFSC may issue the license if it is satisfied that the 

applicant will comply with nine regulatory principles,17 which are contained in schedule 2 of the 

regulations and provide as follows: 

1. A DLT Provider must conduct its business with honesty and integrity. 

2. A DLT Provider must pay due regard to the interests and needs of each and all its 

customers and must communicate with them in a way that is fair, clear and 

not misleading. 

3. A DLT Provider must maintain adequate financial and non-financial resources. 

4. A DLT Provider must manage and control its business effectively, and conduct its 

business with due skill, care and diligence; including having proper regard to risks 

to its business and customers. 

5. A DLT Provider must have effective arrangements in place for the protection of 

customer assets and money when it is responsible for them. 

6. A DLT Provider must have effective corporate governance arrangements. 

7. A DLT Provider must ensure that all of its systems and security access protocols are 

maintained to appropriate high standards. 

8. A DLT Provider must have systems in place to prevent, detect and disclose financial 

crime risks such as money laundering and terrorist financing. 

9. A DLT Provider must be resilient and have contingency arrangements for the 

orderly and solvent wind down of its business.18

In a paper discussing the introduction of these regulations, the government noted that, 

[i]n determining whether a principle is met, the GFSC will have regard to similarities in 

such matters as risk profile, use case, business model and product. The principles will be 

applied proportionately and on a risk-based approach.19 

 

15 Financial Services (Distributed Ledger Technology Providers) Regulations 2017, reg 4(2). 

16 Financial Services Commission (Fees) Regulations 2016, sched. 2. 

17 Financial Services (Distributed Ledger Technology Providers) Regulations 2017, regs 4(3) & 5(1). 

18 Id. 
Regulation of Cryptocurrencies: Gibraltar 

The Law Library of Congress 43

DLT license holders are further required to pay an annual fee, charged at a flat rate of £10,000 

(approximately US$14,000), although an additional fee of up to £20,000 (approximately 

US$28,000) may be charged “depending upon the complexity of regulating the DLT Provider.”20 

Companies that are currently licensed under the existing financial legislation in Gibraltar and use 

DLT to improve their procedures and processes do not need a separate license unless the 

activities that DLT is used for are not within the scope of the current license. Banks that wish to 

provide virtual currency services and warrants need to obtain a new DLT license for 

these activities.21 

DLT providers are required to comply with the anti-money laundering and combatting terrorist 

financing requirements of Gibraltar, as well as those of any jurisdiction in which they 

also operate.22

Providing DLT services without a license under the regulations is an offense, punishable with a 

fine of up to £10,000.23

III. Proposals to Regulate Initial Coin Offerings 

The government of Gibraltar has expressed concern over the use of tokenized digital assets 

(tokens) and cryptocurrency given by companies to raise capital and bypass the traditional, 

regulated, capital-raising process required by financial institutions or venture capitalists.24 It is 

currently working to develop legislation to regulate the use of tokens, “essentially those created 

and traded using [DLT]”25 that will align with the DLT regulations,26 and expects a bill to be 

before Parliament by the second quarter of 2018.27 

It has stated that “one of the key aspects of the token regulations is that we will be introducing 

the concept of regulating authorized sponsors who will be responsible for assuring compliance 

 19 HM Government of Gibraltar et al., supra note 5. Further guidance on the principles is available at Distributed 

Ledger Technology Regulatory Framework (DLT Framework), GFSC, http://www.fsc.gi/dlt?print (last visited Apr. 

30, 2018), archived at https://perma.cc/6T44-CNT3. 

20 Financial Services Commission (Fees) Regulations 2016, LN 2016/071, sched. 1, http://www.gibraltarlaws. 

gov.gi/articles/2016s071.pdf, archived at https://perma.cc/7KHF-LXNJ. 

21 Distributed Ledger Technology Regulatory Framework (DLT Framework), supra note 19. 

22 Id.

23 Financial Services (Penalty Fees) Regulations 1993, LN 1993/147, sched., http://www.gibraltarlaws.gov.gi/ 

articles/1993s147.pdf, archived at https://perma.cc/A58V-PQ2C. 

24 Statement on Initial Coin Offerings, GFSC (Sept. 22, 2017), http://www.fsc.gi/news/statement-on-initial-coinofferings-250, archived at https://perma.cc/HD3M-N6UB. 

25 Press Release, HM Government of Gibraltar and Ministry of Commerce, HM Government of Gibraltar and the 

Gibraltar Financial Services Commission Announce Plans for Token Legislation (Feb. 12, 2018), 

http://www.gfsc.gi/news/hm-government-of-gibraltar-and-the-gibraltar-financial-services-commission-announceplans-for-token-legislation-272, archived at https://perma.cc/9FVC-L4Z8. 

26 Distributed Ledger Technology Regulatory Framework (DLT Framework), supra note 19. 

27 Press Release, HM Government of Gibraltar and Ministry of Commerce, supra note 25. 
Regulation of Cryptocurrencies: Gibraltar 

The Law Library of Congress 44

with disclosure and financial crime rules.”28 The regulations will cover the sale, promotion, and 

distribution of coins in Gibraltar, secondary market activities that involve tokens that are carried 

out in or from Gibraltar, the provision of investment advice connected to tokens, and measures to 

detect and prevent financial crimes.29 The laws will also include disclosure rules that must 

provide clear, concise, and balanced information to anyone who purchases the tokens.30

 

28 Id. 

29 Id. 

30 Huw Jones, Gibraltar Moves Ahead with World’s First Initial Coin Offering Rules, REUTERS (Feb. 8, 2018), 

https://www.reuters.com/article/us-gibraltar-markets-cryptocurrencies/gibraltar-moves-ahead-with-worlds-firstinitial-coin-offering-rules-idUSKBN1FT1YN, archived at https://perma.cc/LV7Y-2B59.
The Law Library of Congress 45

Iran 

Barry Lerner 

Legal Research Analyst

SUMMARY Iran’s Central Bank announced in late April 2018 that it was prohibiting all Iranian financial 

institutions, including banks, credit institutions, and currency exchanges, from handling 

cryptocurrencies. The Central Bank’s decision was in line with the Iran’s recent efforts to 

address deficiencies in its policies on anti-money laundering and combating the financing 

of terrorism—efforts undertaken to comply with the action plan of the Financial Action Task 

Force on Money-Laundering (FATF). The Bank’s decision was preceded by debate between 

those in the country who were concerned about the risks inherent in the use of 

cryptocurrencies and those who believe their use is the wave of the future and essential to 

the country’s financial stability in light of US financial sanctions.

I. Current Government Policy Toward Cryptocurrencies 

The Central Bank of Iran (CBI) officially announced on April 22, 2018, that it has prohibited the 

handling of cryptocurrencies by all Iranian financial institutions, including banks and credit 

institutions. The decision also bans currency exchanges from buying and selling virtual currencies 

or adopting measures to facilitate or promote them.1

The CBI’s action was in line with Iran’s recent efforts to address deficiencies in its policies on 

anti-money laundering and combating the financing of terrorism, with the aim of complying with 

the action plan of the Financial Action Task Force on Money-Laundering (FATF). The FATF, an 

intergovernmental organization established to combat international money-laundering and terrorist 

financing, will determine at its plenary meeting in June 2018 whether to remove Iran from the 

FATF list of Non-Cooperative Countries or Territories.2 Previously, the CBI had only sought to 

warn people of the potential risks inherent in cybercurrencies,3 although a directive passed by the 

Money and Credit Council, the most important policy decision-making organ of the CBI, “[had] 

 

1 Iranian Financial Institutions Barred from Using Crypto-Currencies, FINANCIAL TRIBUNE (Apr. 22, 2018), 

https://financialtribune.com/articles/business-and-markets/85114/iranian-financial-institutions-barred-from-usingcrypto (available by subscription). 

2 Id.; Barry Lerner, Iran: IMF Evaluates Iran’s Legislative and Institutional Efforts to Combat Money Laundering 

and Terrorism Financing, GLOBAL LEGAL MONITOR (Apr. 13, 2018), http://www.loc.gov/law/foreignnews/article/iran-imf-evaluates-irans-legislative-and-institutional-efforts-to-combat-money-laundering-andterrorism-financing, archived at https://perma.cc/J5NX-YLWK. 

3 No Bitcoin Trade for Moneychangers, FINANCIAL TRIBUNE (Dec. 23, 2017), https://financialtribune.com/articles/ 

economy-business-and-markets/78454/no-bitcoin-trade-for-moneychangers, archived at https://perma.cc/8EM7-

XESG. The CBI is responsible for, inter alia, “formulating the monetary and credit system of the country, 

formulating the regulations pertaining to outflow as well as repatriation of Iranian and foreign currency, [and] 

foreign exchange transactions.” Laws & Regulations, CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN, 

https://www.cbi.ir/section/1454.aspx (last visited Mar. 19, 2018), archived at https://perma.cc/38FZ-SXVC. 
Regulation of Cryptocurrency: Iran 

The Law Library of Congress 46

deemed non-physical and virtual transactions against the law, meaning that Iranian [currency 

exchanges could] not deal in cryptocurrencies.”4

II. Previous Objections to Cryptocurrencies 

According to the CBI’s statement of April 22, the decision to ban cryptocurrencies was actually 

made on December 30, 2017, during the thirtieth meeting of Iran’s High Council on Anti-Money 

Laundering.5

 While the Bank’s decision is in accord with CBI governor Valiollah Seif’s statement 

of January 10, 2018, that the CBI “[did] not approve of Bitcoin in any way” and that investors 

were urged to choose safer investment options,6 Seif was reported as saying eleven days earlier 

that “CBI is also striving to bring about relative security to [the trade of Bitcoin].”7 Moreover, the 

head of the Electronic Banking Department at the Monetary and Banking Research Institute had 

stated in October 2017 that the general air surrounding cryptocurrencies was positive at the Central 

Bank, which viewed them as something that could be controlled and not as multilevel marketing 

or a pyramid scheme.8

In the view of CBI officials, cryptocurrencies are problematic because no one clearly knows which 

people or entities are behind them and no one is accountable if someone’s capital is lost, a result 

made more likely when multilevel marketing and pyramid schemes are used to introduce Bitcoin 

as an attractive option for investment.9 CBI officials see cryptocurrencies as risky investments 

because they experience excessive fluctuations and have “turned into arbitrary mechanisms which 

market participants can interpret ambiguously—thus triggering speculation.10 Moreover, because 

virtual currencies, unlike money, are not issued by the Central Bank, the Bank has no means of 

 

4 No Bitcoin Trade for Moneychangers, supra note 3; CENTRAL BANK OF THE ISLAMIC REPUBLIC OF IRAN, CENTRAL 

BANKING IN IRAN, at 12–13, https://www.cbi.ir/page/4252.aspx (last visited Mar. 19, 2018), archived at

https://perma.cc/92DQ-CM3B. 

5 Iranian Financial Institutions Barred from Using Crypto-Currencies, supra note 1. 

6 CBI Does Not Approve of Bitcoin, FINANCIAL TRIBUNE (Jan. 11, 2018), https://financialtribune.com/articles/ 

economy-business-and-markets/79771/cbi-does-not-approve-of-bitcoin, archived at https://perma.cc/L9G3-AJAB. 

7 CBI Governor Urges Caution on Bitcoin Trade, FINANCIAL TRIBUNE (Dec. 31, 2017), https://financialtribune. 

com/articles/economy-business-and-markets/78986/cbi-governor-urges-caution-on-bitcoin-trade, archived at 

https://perma.cc/7HZM-DFMF. 

8

 Maziar Motamedi, Fate of Cryptocurrency in Iran Hangs in Balance, FINANCIAL TRIBUNE (Oct. 19, 2017), 

https://financialtribune.com/articles/economy-business-and-markets/74533/fate-of-cryptocurrency-in-iran-hangs-inbalance, archived at https://perma.cc/L7DR-M376. 

9 Iran Cryptocurrency Policy Soon, FINANCIAL TRIBUNE (Jan. 3, 2018), https://financialtribune.com/articles/ 

economy-business-and-markets/79209/iran-cryptocurrency-policy-soon, archived at https://perma.cc/YG88-RLWT; 

Iran’s CB Issues Warning over Bitcoin and Other Cryptocurrencies, FINANCIAL TRIBUNE (Nov. 14, 2017), 

https://financialtribune.com/articles/economy-business-and-markets/76148/irans-cb-issues-warning-over-bitcoinand-other, archived at https://perma.cc/U8W7-VH3. 

10 Iran’s CB Issues Warning over Bitcoin and Other Cryptocurrencies, supra note 9; Iran Central Bank Warns on 

Cryptocurrency Investment, IRNA (Feb. 1, 2018), http://www.irna.ir/en/News/8281 6292, archived at https://perma. 

cc/4CBE-QRD2. 
Regulation of Cryptocurrency: Iran 

The Law Library of Congress 47

controlling them,11 and transactions made with them through illegal money lenders causes damage 

to the national interest.12

Outside the Bank, the head of the Majlis (Parliament) Economic Commission offered a religious 

objection to cryptocurrencies, stating that “[d]eals and transactions made through Bitcoin are in no 

way in accordance with Islamic and economic fundamentals, therefore related entities, especially 

the central bank, must exert the necessary supervision over these deals.”13

III. Ongoing Discussions on Cryptocurrencies 

The Bank’s decision to ban the use of cryptocurrencies by financial institutions is a blow for those 

in Iran who viewed virtual currencies as a means of overcoming problems related to the banking 

industry and international sanctions.14 Before the ban was announced, the CBI’s Information 

Technology Chief, Nasser Hakimi, had reported that, along with the adoption of a framework that 

should be adhered to for using cryptocurrencies, the Central Bank was considering the adoption of 

a national virtual currency, either to be generated by the Central Bank or another entity.15 One of 

the motivations for developing such a currency was that it could potentially be used to replace the 

US dollar, an attractive prospect for Iran because US sanctions over Iran’s nuclear program bar 

Iran from using the US financial system.16

Iran’s Minister of Information and Communications Technology in February 2018 had announced 

a plan for Iran to develop its own virtual currency, a move that had the backing of Iran’s cybersecurity authority provided that virtual currencies were properly regulated.17 Even the CBI’s 

Hakimi believes that the blockchain system and cryptocurrencies like bitcoin will eventually 

replace the current systems,18 a view shared by Masoud Khatouni, the deputy for information 

technology and communications network at Iran’s biggest bank, Bank Melli Iran (BMI), who has 

stated that cryptocurrencies are “currently shaping the future of banking” and should be recognized 

and widely accepted in the banking system and used by the banks themselves.19

 

11 Id.

12 Iran Cryptocurrency Policy Soon, supra note 9. 

13 Iranian Lawmakers to Discuss Bitcoin, FINANCIAL TRIBUNE (Dec. 19, 2017), https://financialtribune.com/articles/ 

economy-business-and-markets/78221/iranian-lawmakers-to-discuss-bitcoin, archived at https://perma.cc/8LV6-

4XLE. 

14 Iran’s Banks Banned from Dealing in Crypto-currencies, BBC NEWS (Apr. 23, 2018), http://www.bbc.com/news/ 

technology-43865105, archived at https://perma.cc/TQD5-889D. 

15 Iran’s CB Issues Warning over Bitcoin and Other Cryptocurrencies, supra note 9. 

16 CBI Governor Urges Caution on Bitcoin Trade, supra note 7. 

17 Iran’s Banks Banned from Dealing in Crypto-currencies, supra note 14.

18 Iranian Lawmakers to Discuss Bitcoin, supra note 13.

19 Iranian Banker Calls for Cryptocurrency Recognition, FINANCIAL TRIBUNE (Jan. 7, 2018), https://financial 

tribune.com/articles/economy-business-and-markets/79459/iranian-banker-calls-for-cryptocurrency-recognition,

archived at https://perma.cc/H9HS-AGWK. 
Regulation of Cryptocurrency: Iran 

The Law Library of Congress 48

Khatouni opposes imposing any limitations on the use of digital currencies so that the country’s 

businesses and players can employ them with more confidence and with higher levels of 

transparency. In his opinion, delaying the formal introduction of digital currencies into the country 

will result in damage to the country’s banking system, and the devising of “comprehensive, precise 

and transparent rules and regulations for the use of digital currencies” on the basis of global 

experience by a specialized group of CBI regulators is essential to prevent the many people in the 

country who buy and sell digital currencies from doing so secretly.20

The secretary of Iran’s High Council of Cyberspace (HCC) likewise welcomes the idea of bitcoin 

and other cryptocurrencies if they are harnessed by clearly-stated regulations for the reason that 

many in Iran are already purchasing, selling, or mining digital currencies, dealing with them in 

exchange shops, and creating content and establishing startups with them.21 The head of the 

Iranian Association of Moneychangers had also recommended that cryptocurrencies “be met with 

regulatory frameworks that would create the opportunity of their use because a lack of regulations 

will eventually lead to fraud.”22 Regarding certified currency exchanges, the CBI’s Hakimi had 

also recommended that they start dealing in bitcoin where possible because such virtual currencies 

can assist traders who are unable to open lines of credit as a result of banking hurdles.23

 

20 Id.

21 Iran Cyberspace Authority Welcomes Bitcoin and Other Crypto-Currencies, FINANCIAL TRIBUNE (Nov. 25, 2017), 

https://financialtribune.com/articles/economy-business-and-markets/76776/iran-welcomes-cryptocurrencies, 

archived at https://perma.cc/VB87-YGF3. 

22 No Bitcoin Trade for Moneychangers, supra note 3. 

23 Motamedi, supra note 8. 
The Law Library of Congress 49

Israel 

Ruth Levush 

Senior Foreign Law Specialist

SUMMARY In accordance with regulations issued in 2016, virtual currency is considered a “financial 

asset” in Israel, for which the provision of financial services requires a license. As a financial 

asset, trade in virtual currency is subject to capital gains taxation. 

 In 2014 the Bank of Israel (Israel’s central bank), together with several regulatory agencies, 

issued a warning about the dangers associated with the use of virtual currency, including 

bitcoin. In a statement made by the Bank in January 2018 it clarified that it does not 

recognize virtual currencies as actual currencies, but rather as a financial asset. Although 

virtual currencies are not recognized as actual currency by the Bank of Israel, the Israel Tax 

Authority has proposed that the use of virtual currencies should be considered as a “means 

of virtual payment” and subject to taxation. 

 The legitimacy of a bank’s refusal to provide banking services to a company that trades in 

bitcoin is currently under review by the Israeli Supreme Court. The Court has issued a 

temporary injunction against the bank’s complete blockage of the company’s activities in 

the account. 

I. Licensing Requirements for Trading in Virtual Currency 

The Supervision on Financial Services (Regulated Financial Services) Law 5776-2016 requires 

persons engaging in providing services involving a “financial asset” to obtain a license issued by 

the Supervisor on Financial Services Providers appointed in accordance with the Law.1 The license 

enumerates conditions and types of activities approved for the licensee.2 “Virtual currency” is 

included in the definition of a “financial asset” for which providing services requires a license.3

 

A license will generally be issued to an Israeli citizen or a resident who has reached the age of 

majority; is legally competent; and has not been declared bankrupt or, in the case of a corporation, 

has not been required to dissolve. Additional licensing requirements include that the licensee has 

a minimum specified equity and, for individuals, has not been convicted of an offense that due to 

its nature makes the licensee unfit to handle financial transactions.4

 

 

1

 Supervision on Financial Services (Regulated Financial Services) Law 5776-2016, § 12, SEFER HAHUKIM [BOOK 

OF LAWS, official gazette] 5776 No. 2570 p. 1098, as amended. 

2 Id. §§ 2 & 12. 

3 Id. § 11, subsec. 7 (defining “financial asset”). 

4 Id. § 15. 
Regulation of Cryptocurrencies: Israel 

The Law Library of Congress 50

II. Warning Regarding Risks Associated with Trading in Virtual Currency 

A statement issued by Bank of Israel and several regulatory agencies on February 19, 2014, warned 

the public against dealing in virtual currencies. The warning laid out the dangers associated with 

trading in virtual currencies, including fraud, money laundering, and financing of terrorism, 

among others.5

III. Legal Status and Taxation of Virtual Currency 

The Bank of Israel said in a January 2018 statement that “it would not recognize virtual currencies 

such as bitcoin as actual currency and . . . it was difficult to devise regulations to monitor the risks 

of such activity to the country’s banks and their clients,” according to Reuters.6 

Although virtual currencies are not recognized as actual currency by the Bank of Israel, the Israel 

Tax Authority has proposed that the use of virtual currencies should be considered as a “means of 

virtual payment” and subject to taxation.7 Specifically, for the purpose of income tax and value 

added tax requirements, virtual currency is viewed as “an asset” and is taxed in accordance with 

relevant transaction classifications under the Income Tax Ordinance (New Version), 1961, and the 

Value Added Tax Law, 5736-1975.8 Accordingly, 

[u]nlike a regular currency, the Israel Tax Authority will regard an increase in the value of 

a cryptocurrency as a capital gain rather than an exchange fluctuation, making it subject to 

capital gains tax. Individual investors will not be liable for value-added tax, but anyone 

engaging in cryptocurrency mining will be classified as a “dealer” and subject to VAT, 

according to the circular. Anyone trading as a business will be classified as a “financial 

institution” for tax purposes, meaning that they will be unable to reclaim VAT on expenses 

but will be subject to an extra 17 percent “profit tax” applied to financial institutions.9

The Israel Tax Authority requires documentation of trade transactions involving virtual currency 

to enable verification of their existence and scope.10

 

 

5

 Joint Press Release, Bank of Israel et al., Public Announcement Regarding Possible Risks Contained in Virtual 

Coins Such as Bitcoin (Feb. 19, 2014), http://www.boi.org.il/, archived at https://perma.cc/VQ7Z-GDRQ. 

6

 Steven Scheer, Bitcoin Is an Asset, Not a Currency - Israel’s Central Bank, REUTERS (Jan. 8, 2018), 

https://www.reuters.com/article/uk-bitcoin-israel/bitcoin-is-an-asset-not-a-currency-israels-central-bankidUSKBN1EX18E, archived at https://perma.cc/3458-ZY58. 

7

 Israel Tax Authority, Taxation of Activity by Means of Virtual Payment (Known as ‘Virtual Currencies’), Israel 

Tax Authority Circular No. 05/2018 (Jan. 17, 2018), https://taxes.gov.il/incometax/documents/hozrim/hor_ 

acc%2015.2.18.pdf (in Hebrew), archived at https://perma.cc/SJ48-L77X. 

8 Id. §§ 3.1–3.2; Income Tax Ordinance (New Version), 1961, 1 LAWS OF THE STATE OF ISRAEL [LSI] (New 

Version) 1967 & Value Added Tax Law, 5736-1975, 30 LSI 46 (1975/76), both as amended. 

9

 Matthew Kalman, Israel Taxman’s Guidelines Killing Cryptocurrency Boom?, BNA (Feb. 21, 2018), 

https://www.bna.com/israel-taxmans-guidelines-n57982089034/, archived at https://perma.cc/J8DE-6AJQ. 

10 Israel Tax Authority Circular No. 05/2018, supra note 7, § 3.3. 
Regulation of Cryptocurrencies: Israel 

The Law Library of Congress 51

IV. Legitimacy of Refusal to Provide Banking Services to Traders in Bitcoin 

On February 25, 2018, the Supreme Court issued a temporary injunction prohibiting a bank from 

blocking activities in an account held by a company engaging in trade in bitcoin until a decision is 

made in an appeal over the district court ruling recognizing the legitimacy of permanent 

authorization for such blockage.11

The bank argued that its decision to block the company’s activities had been reached in accordance 

with the 2014 warning by the Bank of Israel and the regulatory agencies regarding risks associated 

with the bitcoin trade. It further asserted that the dangers described in the warning had in fact 

materialized “by the occurrence of several events perceived to be connected to fraud, furtherance 

of criminal objectives including suspicions for money laundering and financing of terrorism.”12

The bank alleged that activities exposing the bank to such unlawful acts might harm its reputation 

and public trust in the bank.13

In her decision Justice Anat Baron noted that the review of a request for a temporary injunction 

for the duration of an appeal requires an evaluation of two cumulative elements: the chances that 

the appeal will be accepted, and a balancing of the respective inconvenience caused to either party 

if a temporary injunction is not approved.14 

According to Justice Baron the reasonableness of a bank’s decision to refuse enabling trade 

activities in virtual currencies is an issue that has not yet been determined by the Supreme Court. 

The issue involves a determination regarding the nature of the risk posed by trade in virtual 

currencies, especially in view of the characteristics of the company’s activities as a company the 

objective of which is to trade in bitcoin. The risk evaluation must also take into account the steps 

undertaken by the company to minimize the risk. It similarly must evaluate legal questions 

regarding the proper balancing between the duty of a bank to provide banking services vis-à-vis 

its responsibility to prevent prohibited activity such as money laundering or the financing of 

terrorism. An examination of these questions, Justice Baron concluded, leads to a conclusion that 

the chances of the appeal cannot be said to be null.15 

According to Justice Baron a rejection of the request for temporary relief would result in 

endangering the continued existence of the company. Considering the financial guarantees 

deposited by the company with the Court, and the bank’s proven ability to prevent unlawful 

activities, Baron concluded that the temporary injunction should be granted as the bank would be 

able to obtain a remedy if it incurred damages as a result of the injunction.16

 

11 CA 6389/17 Bits of Gold Ltd. v. Bank Leumi LeIsrael Ltd., ¶¶ 3–4, available at the Nevo Legal Database, 

http://www.nevo.co.il (by subscription, in Hebrew), archived at https://perma.cc/R76Z-2AQX. 

12 Id. ¶ 4. 

13 Id. 

14 Id. ¶ 11. 

15 Id. ¶ 12. 

16 Id. ¶ 13. 
Regulation of Cryptocurrencies: Israel 

The Law Library of Congress 52

To remove any doubt, Baron emphasized that although the injunction prohibited the bank from 

fully blocking the company’s account activities, it did not affect the bank’s right to examine 

individual activities in the account, nor did it affect the bank’s ability to take steps to minimize 

risks it deemed to be associated with the business activities of the company.17

 

17 Id. ¶ 14. 
The Law Library of Congress 53

Japan 

Sayuri Umeda 

Foreign Law Specialist

SUMMARY Since April 2017, cryptocurrency exchange businesses operating in Japan have been 

regulated by the Payment Services Act. Cryptocurrency exchange businesses must be 

registered, keep records, take security measures, and take measures to protect customers, 

among other things. Cryptocurrency exchanges are also subject to money 

laundering regulations. 

I. Background 

After Mt. Gox, then one of biggest bitcoin exchanges, alleged the theft of around 850,000 bitcoins 

that it was holding for itself and on behalf of its customers and claimed insolvency in 2014,1 the 

Japanese government started to develop new regulations for cryptocurrencies. A study group and 

a working group on “sophistication of payment and settlement operations” were established in the 

Financial Services Agency (FSA) in 2014 and 2015.2 The working group’s final 

report recommended 

 the introduction of a registration system for cryptocurrency exchange businesses, 

 making cryptocurrency transactions subject to money laundering regulations, and 

 the introduction of a system to protect cryptocurrency users.3 

 

1

 David Meyer, After Bitcoin Spike, MtGox Creditors Want to Yank the Failed Exchange Out of Bankruptcy, 

FORTUNE (Dec. 13, 2017, http://fortune.com/2017/12/13/bitcoin-mtgox-bankruptcy-creditors/, archived at

https://perma.cc/SEJ2-A5CX. 

2 議事録・資料等 [Minutes and Materials], FSA, https://www.fsa.go.jp/singi/singi_kinyu/base_gijiroku.html (last 

visited Apr. 5, 2018), archived at https://perma.cc/DPV4-WXZP. 

3 決済業務等の高度化に関するワーキング・グループ報告 [REPORT FROM THE WORKING GROUP ON 

SOPHISTICATION OF PAYMENT AND SETTLEMENT OPERATIONS], ch. 5 (Dec. 22, 2015), https://www.fsa.go.jp/ 

singi/singi_kinyu/tosin/20151222-2/01.pdf, archived at https://perma.cc/SR3V-FG84. 
Regulation of Cryptocurrency: Japan 

The Law Library of Congress 54

The report was submitted to the Financial Council of the FSA. Later, the government submitted a 

bill to amend the Payment Services Act, among other things, to the Diet (Japan’s parliament),4 and 

the Act was amended in 2016.5 The amendments took effect on April 1, 2017.6 

II. Registration of Cryptocurrency Exchange Business 

The Payment Services Act defines “cryptocurrency”7 as 

 property value that can be used as payment for the purchase or rental of goods or provision of 

services by unspecified persons, that can be purchased from or sold to unspecified persons, 

and that is transferable via an electronic data processing system; or 

 property value that can be mutually exchangeable for the above property value with 

unspecified persons and is transferable via an electronic data processing system.8 

The Act also states that cryptocurrency is limited to property values that are stored electronically 

on electronic devices; currency and currency-denominated assets are excluded.9

 

Under the Payment Services Act, only business operators registered with a competent local 

Finance Bureau are allowed to operate cryptocurrency exchange business.10 The operator must be 

a stock company or a “foreign cryptocurrency exchange business” that is a company, has a 

representative who is resident in Japan, and an office in Japan.11 A “foreign cryptocurrency 

exchange business” means a cryptocurrency exchange service provider that is registered with a 

foreign government in the foreign country under a law that provides equivalent registration system 

to the system under the Japanese Payment Services Act.12 Documents that show its system for 

properly conducting a cryptocurrency exchange business must be attached to the registration 

 

4 情報通信技術の進展等の環境変化に対応するための銀行法等の一部を改正する法律案 [Bill to Amend 

Parts of the Bank Act and Other Acts in Order to Correspond with Changes in the Environment Made by 

Information and Communications Technologies], Cabinet Bill No. 43 of the 190th Diet Session, 

http://www.shugiin.go.jp/internet/itdb_gian.nsf/html/gian/honbun/g19005043.htm, archived at

https://perma.cc/CZ97-Y9VX. 

5

 情報通信技術の進展等の環境変化に対応するための銀行法等の一部を改正する法律 [Act to Amend Parts 

of the Bank Act and Other Acts in Order to Correspond with Changes in the Environment Made by Information and 

Communications Technologies], Act No. 62 of 2016. 

6

 資金決済に関する法律 [Payment Services Act], Act No. 59 of 2009, amended by Act No. 62 of 2016. 

7

 In Japanese, the phrase 仮想通貨 (“virtual currency”) is used. 

8

 Payment Services Act art. 2, para. 5. 

9 Id. 

10 Id. arts. 63-2 & 63-3. Because the Cabinet delegates its authority over most of the matters under the Payment 

Services Act to the Financial Services Agency (FSA), id. art. 104, the FSA is the regulatory agency that handles 

cryptocurrency transactions. See also Details of Screening for New Registration Application as Virtual Currency 

Exchange Service Provider, FSA, http://www.fsa.go.jp/en/news/2017/20170930-1/02.pdf (last visited Apr. 30, 

2018), archived at https://perma.cc/BVU7-PGSW. 

11 Payment Services Act art. 63-5, para. 1. 

12 Id. art. 2, para. 9. 
Regulation of Cryptocurrency: Japan 

The Law Library of Congress 55

application.13 The competent Finance Bureau examines the application; if it reject the registration 

it must notify the applicant of the reasons.14 

III. Regulation of Cryptocurrency Exchange Businesses 

The Act requires cryptocurrency exchanges businesses to establish security systems to protect the 

business information they hold.15 When such a business entrusts part of its operations to a 

contractor, it must take measures to ensure that business is appropriately conducted.16 The Act 

also requires cryptocurrency exchange businesses to provide information regarding fees and other 

contract terms to their customers.17 Cryptocurrency exchange businesses must separately manage 

customers’ money or cryptocurrency apart from their own. The state of such management must be 

reviewed by certified public accountants or accounting firms.18 The exchange business must have 

a contract with a designated dispute resolution center with expertise in cryptocurrency exchanges 

if such a designated center exists. If not, it must establish its own system to deal with complaints 

from customers.19 It appears that there is no designated cryptocurrency dispute resolution center 

at present. 

IV. Supervision 

Cryptocurrency exchange businesses must keep accounting records of cryptocurrency 

transactions20 and submit annual reports on business to the Financial Services Agency (FSA).21 

The FSA is authorized to order exchange businesses to submit reports and reference materials and 

to dispatch its officials to inspect the offices of an exchange business where necessary to secure 

the exchange business’s proper conduct.22 The FSA may issue orders to such businesses to 

improve their practices.23 The FSA may rescind registration of a cryptocurrency exchange 

business or suspend its business for up to six months in cases where 

 

 

13 Id. art. 63-3, para. 2. 

14 Id. art. 63-5. 

15 Id. art. 63-8. 

16 Id. art. 63-9. 

17 Id. art. 63-10. 

18 Id. art. 63-11. 

19 Id. art. 63-12, para. 1. 

20 Id. art. 63-13. 

21 Id. art. 63-14. 

22 Id. art. 63-15. 

23 Id. art. 63-16. 
Regulation of Cryptocurrency: Japan 

The Law Library of Congress 56

 the exchange business no longer meets one or more of the requirements for registration, 

 the FSA discovers that the exchange business applied for registration illegally, or 

 the exchange business violates the Payment Services Act or orders based on the Act.24 

On January 26, 2018, Coincheck, one of Japan’s biggest cryptocurrency exchange businesses, lost 

about $400 million in NEM (cryptocurrency) tokens. The local Finance Bureau ordered 

Coincheck to submit a report on the same day, examined it and issued an order of business 

improvement on January 29, 2018.25 The following day the FSA requested all cryptocurrency 

exchange businesses to review their system-risk management plans and report the results to the 

FSA.26 On March 2, 2018, the FSA conducted an on-site inspection of Coincheck. On March 8, 

2018, local Finance Bureaus issued business-improvement orders to seven exchange businesses,27

again including Coincheck.28 Two of the seven were ordered to suspend business for a 

specified period.29

A group of cryptocurrency exchange businesses publicized their decision to form new selfregulating body on March 2, 2018. All registered exchange businesses will join it.30 They aim to 

obtain authorization from the FSA under the Payment Services Act.31 

 

 

24 Id. art. 63-17. 

25 コインチェック株式会社に対する行政処分について [Regarding Administrative Disposition against 

Coincheck Company], KANTO FINANCE BUREAU (Jan. 29, 2018), http://kantou.mof.go.jp/rizai/pagekthp 

0130000001_00004.html, archived at https://perma.cc/6Q6W-K5XX. 

26 仮想通貨交換業者に対するシステムリスク管理態勢の自己点検について [Regarding Self-check Request of 

System-risk Management System Against Cryptocurrency Service Providers), FSA (Jan. 30, 2018), http://www.fsa. 

go.jp/policy/virtual_currency/08.pdf, archived at https://perma.cc/LM5W-RC8K. 

27 Yuki Hagiwara et al, 金融庁:仮想通貨交換業者7社を行政処分、2社に業務停止命令 [FSA: 

Administrative Disposition for 7 Cryptocurrency Exchange Businesses, Suspension of Business Order for 2], 

BLOOMBERG (Mar. 8, 2018), https://www.bloomberg.co.jp/news/articles/2018-03-08/P58WVH6JIJUP01, archived 

at https://perma.cc/RGM9-DXCH. 

28 コインチェック株式会社に対する行政処分について [Regarding Administrative Disposition Against 

Coincheck Company], KANTO FINANCE BUREAU (Mar. 8, 2018), http://kantou.mof.go.jp/rizai/pagekthp01300 

00001_00013.html, archived at https://perma.cc/QBG7-JE6A. 

29 Hagiwara et al., supra note 27. 

30 仮想通貨の自主規制団体、「みなし業者も参加を」 [Cryptocurrency Self-regulated Body, “Calling for 

Registration-pending Business, Too”], NIKKEI (Mar. 5, 2018), https://www.nikkei.com/article/DGXMZO27693400 

V00C18A3000000/, archived at https://perma.cc/Z8EQ-S4X2. 

31 Payment Services Act art. 87. 
Regulation of Cryptocurrency: Japan 

The Law Library of Congress 57

V. Money Laundering Regulation 

When the Payment Services Act was amended in 2016, the Act on Prevention of Transfer of 

Criminal Proceeds32 was amended by the same bill.33 The amended Act added cryptocurrency 

exchange businesses to the list of entities subject to money laundering regulations.34 The 

cryptocurrency exchange businesses are obligated to check the identities of customers who open 

accounts, keep transaction records, and notify authorities when a suspicious transaction 

is identified.35

VI. Possible ICO Regulation 

The regulations under the current Payment Services Act do not cover initial coin offerings (ICOs). 

The FSA established a new study group on cryptocurrency exchange businesses in March 2018. 

The study group will discuss the regulation of ICOs, among other things.36 The first meeting was 

held on April 10, 2018.37 Meanwhile, a private study group comprised of Japan’s three megabanks and big security companies released their recommendations, consisting of seven basic rules 

and two guidelines, on April 5, 2018. One of the group members commented that he hopes the 

recommendations will facilitate discussion of new regulations for ICOs.38

VII. Taxation 

According to the National Tax Agency (NTA), the profit earned by sales of cryptocurrency is, in 

principle, considered miscellaneous income,39 rather than capital gains,40 under the Income Tax 

Act. The NTA compiled questions and answers regarding the tax treatment of cryptocurrency and 

 

32 犯罪による収益の移転防止に関する法律 [Act on Prevention of Transfer of Criminal Proceeds], Act No. 22 

of 2007, amended by Act No. 67 of 2017. 

33 Act No. 62 of 2016, supra note 5. 

34 Act on Prevention of Transfer of Criminal Proceeds, art. 2, para. 2, item 31. 

35 Id. arts. 4, 7–8. 

36 Press Release, FSA, 「仮想通貨交換業等に関する研究会」の設置について [Regarding the Establishment of 

“Cryptocurrency Exchange Business Study Group”] (Mar. 8, 2018), https://www.fsa.go.jp/news/30/singi/2018 

0308.html, archived at https://perma.cc/ZV4E-KB7M. 

37 Press Release, FSA, 「仮想通貨交換業等に関する研究会」(第1回)の開催について [Regarding the First 

Meeting of “Cryptocurrency Exchange Business Study Group”] (Apr. 5, 2018), https://www.fsa.go.jp/news/ 

30/singi/20180405-1.html, archived at https://perma.cc/7VUE-BFHP. 

38 Yuki Hagiwara & Yuji Nakamura, 仮想通貨によるICO、活用のルール提言-3メガ参加研究会 [ICO of 

Cryptocurrency, Rules Recommended – By Study Group that 3 Megabanks Joined], BLOOMBERG (Apr. 5, 2018), 

https://www.bloomberg.co.jp/news/articles/2018-04-05/P6OS8U6S972B01, archived at https://perma.cc/Q2DBZQJA. 

39 所得税法 [Income Tax Act], Act No. 33 of 1965, amended by Act No. 74 of 2017, art. 35.

40 Id. art. 33. 
Regulation of Cryptocurrency: Japan 

The Law Library of Congress 58

posted it online on December 1, 2017.41 Miscellaneous income is added to the amount of other 

income, excluding specified capital gains,42 when a person’s taxable income is calculated 

and taxed.43 

 

41 NTA, 仮想通貨に関する所得の計算方法等について(情報)[Regarding Calculation Method of Income 

Relating to Cryptocurrency (Information)], Individual Taxation Information], No. 4 (Dec. 1, 2017), http://www.nta. 

go.jp/law/joho-zeikaishaku/shotoku/shinkoku/171127/01.pdf, archived at https://perma.cc/M22N-53MF. 

42 租税特別措置法 [Act on Special Measures concerning Taxation], Act No. 26 of 1957, amended by Act No. 4 of 

2017, arts. 8 through 8-5. 

43 Income Tax Act art. 89. 
The Law Library of Congress 59

Jersey 

Clare Feikert-Ahalt 

Senior Foreign Law Specialist

SUMMARY Jersey has introduced legislation that regulates cryptocurrency exchanges with an annual 

turnover of £150,000 (approximately US$210,000) or more. These exchanges are 

supervised by the Jersey Financial Services Commission and must comply with anti-money 

laundering and counterterrorist financing laws, including know-your-customer 

requirements. By excluding exchanges with a turnover below £150,000, Jersey aims to 

create a means for companies to test various methods of financial technology without being 

subject to regulation. 

I. Introduction 

Jersey is a Crown Dependency of the United Kingdom and is a low-tax jurisdiction with a large 

financial sector. The jurisdiction issued a consultation on the regulation of cryptocurrencies in 

2015, noting “[t]he creation of a business-friendly framework that encourages innovation, jobs and 

growth in both the financial services and digital sectors is a priority for the Government of Jersey.”1 

The majority response to the consultation was that cryptocurrencies should be regulated only 

insofar as necessary to ensure compliance with anti-money laundering laws and to counter the 

financing of terrorism.2 The government of Jersey rejected “a full prudential and conduct of 

business regime” for cryptocurrencies, as it considered it was too early to issue such regulations 

given that cryptocurrencies are in the early stages of development and that doing so could be overburdensome, and restrict development and innovation.3

 

II. Policy and Laws Regulating Cryptocurrencies 

The result of the consultation was the issuance of a policy document that aims to 

further enhance Jersey’s proposition as a world leading Fintech jurisdiction . . . [and] 

outline Jersey’s commitment to creating an environment that encourages confidence and 

innovation in the digital sector whilst protecting the Island from the most prominent money 

laundering and terrorist financing risks that are presented by virtual currencies in their 

current form.4

 

1

 Chief Minister’s Department, Regulation of Virtual Currency: Consultation Paper (July 9, 2015; presented to the 

States July 10, 2015), available at http://www.statesassembly.gov.je/assemblyreports/2015/r.80-2015.pdf, archived 

at https://perma.cc/K5PY-GZRP. 

2

 Chief Minister’s Department, Regulation of Virtual Currency Policy Document ¶ 1.1 (Oct. 21, 2015), available at 

https://www.gov.je/SiteCollectionDocuments/Government and administration/P Regulation of Virtual Currency 

20151021 GP.PDF, archived at https://perma.cc/9QBL-YQNT. 

3 Id. ¶ 1.2. 

4 Id. at 2. 
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Jersey’s anti-money laundering laws and counterterrorist financing laws were extended to cover 

cryptocurrencies, entering into force on September 26, 2016.5 “Virtual currencies” are defined in 

the Proceeds of Crime Act as a currency rather than a commodity, thus enabling the currency to 

fall within the pre-existing regulatory framework and be regulated by the Jersey Financial Services 

Commission.6

 Specifically, the Proceeds of Crime Act defines virtual currency as 

(4) . . . any currency which (whilst not itself being issued by, or legal tender in, 

any jurisdiction)– 

(a) digitally represents value; 

(b) is a unit of account; 

(c) functions as a medium of exchange; and 

(d) is capable of being digitally exchanged for money in any form. 

(5) For the avoidance of doubt, virtual currency does not include any instrument which 

represents or stores (whether digitally or otherwise) value that can be used only to 

acquire goods and services in or on the premises of, or under a commercial agreement 

with, the issuer of the instrument.7

A “virtual currency exchange” is defined in the Act as “ the exchange of virtual currency for money 

in any form, or vice versa,” but “a reference to providing a service to third parties shall not include 

a company’s providing that service to a connected company.”8 

Virtual currencies were also brought within the ambit of the Money Laundering (Jersey) Order 

2008,9 which requires individuals operating a “money service business” to register with the Jersey 

Financial Services Commission10 and comply with the jurisdictions anti-money laundering and 

counter terrorism financing laws if they have an annual turnover greater than £150,000 

(approximately US$210,000).11 These laws require such businesses to adopt policies and 

procedures to prevent and detect money laundering and terrorist financing, appoint a money 

laundering compliance officer and reporting officer, and ensure that record keeping and customer 

 

5

 Proceeds of Crime (Miscellaneous Amendments) (Jersey) Regulations 2016, R&O 63/2016, https://www.jersey 

law.je/laws/enacted/PDFs/RO-063-2016.pdf, archived at https://perma.cc/F2H5-2KNV; Proceeds of Crime 

(Supervisory Bodies) (Virtual Currency Exchange Business) (Exemption) (Jersey) Order 2016, REVISED LAWS OF 

JERSEY, https://www.jerseylaw.je/laws/revised/PDFs/08.785.80.pdf, archived at https://perma.cc/A8W9-7753. 

6

 Proceeds of Crime Act 1999, Sched. 2, Part B, ¶ 9, https://www.jerseylaw.je/laws/revised/Pages/08.780.aspx#_ 

Toc468266188, archived at https://perma.cc/K2YU-7KA4. 

7 Id. Sched. 2, Part B, ¶¶ 4, 5. 

8 Id. Sched. 2, Part B, ¶ 9(2)(a)–(b). 

9

 Money Laundering (Jersey) Order 2008, REVISED LAWS OF JERSEY, https://www.jerseylaw.je/laws/revised/Pages/ 

08.780.30.aspx, archived at https://perma.cc/2ENA-U4AQ. 

10 Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008, REVISED LAWS OF JERSEY, https://www.jerseylaw. 

je/laws/revised/PDFs/08.785.pdf, archived at https://perma.cc/U5CQ-EQGY; 

11 Money Laundering (Jersey) Order 2008, REVISED LAWS OF JERSEY, https://www.jerseylaw.je/laws/revised/ 

Pages/08.780.30.aspx, archived at https://perma.cc/PT5L-A4X6. 
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due diligence measures are implemented,12 such as know-your-customer measures, prior to 

entering into a business relationship with a person, or before conducting a “one-off” for all 

transactions greater than €1,000 (approximately US$1,220).13 

III. Exemptions 

Individuals who operate a virtual currency exchange as a business but have an annual turnover of 

less than £150,000 are exempt from the Act. These businesses must notify the Jersey Financial 

Services Commission that they are conducting such a business, but that they are exempt.14 There 

is no fee for this notification, but it makes the business known to the Jersey Financial Services 

Commission and enables them to “build a good profile of the businesses in this sector”15 and to 

investigate the business for any suspected breaches of legislation.16 The aim of this exemption is 

to create “an innovative regulatory sandbox . . . allowing Exchangers with turnover of less than 

£150,000 per calendar year to test virtual currency exchange delivery mechanisms in a live 

environment without the normal registration requirements and associated costs.”17

IV. High Value Dealers 

Businesses that trade in goods and receive payments in cryptocurrency of €15,000 (approximately 

US$18,500) and above per transaction, or in groupings of transactions, are considered to be “high 

value dealers” under the Proceeds of Crime Act 1999.18 Such dealers must be registered and 

supervised by the Jersey Financial Services Commission and comply with Jersey’s money 

laundering and counterterrorist financing laws.19 

 

 

12 “Customer due diligence measures” are defined in the Proceeds of Crime Act 1999, Sched. 2, Part B, ¶ 3. 

13 Chief Minister’s Department, Regulation of Virtual Currency Policy Document, supra note 2, ¶ 1.14. See also 

Money Laundering (Jersey) Order 2008, Revised Laws of Jersey, https://www.jerseylaw.je/laws/revised/ 

Pages/08.780.30.aspx, archived at https://perma.cc/5QDP-PE8Y. 

14 Proceeds of Crime (Supervisory Bodies) (Virtual Currency Exchange Business) (Exemption) (Jersey) Order 2016, 

REVISED LAWS OF JERSEY, https://www.jerseylaw.je/laws/revised/PDFs/08.785.80.pdf, archived at

https://perma.cc/A8W9-7753; see also Jersey Strengthens Financial Crime Regulation with Extension to Cover 

Virtual Currency, JERSEY FINANCE (Oct. 24, 2016), https://www.jerseyfinance.je/news/jersey-strengthens-financialcrime-regulation-with-extension-to-cover-virtual-currency#.WrI4_v6os5s, archived at https://perma.cc/TX8J-KE5R. 

15 Chief Minister’s Department, Regulation of Virtual Currency Policy Document, supra note 2, ¶ 1.8. 

16 Id. 

17 Virtual Currency Regulation in Jersey Takes Effect, OGIER (Oct. 4, 2016), http://www.ogier.com/publications/ 

virtual-currency-regulation-in-jersey-takes-effect, archived at https://perma.cc/AHT8-HJBZ. 

18 Proceeds of Crime Act 1999, Sched. 2, Part B, ¶ 4. 

19 Id.; AML/CFT Handbook for Estate Agents and High Value Dealers, JERSEY FINANCIAL SERVICES COMMISSION, 

https://www.jerseyfsc.org/pdf/Consolidated-Estate-Agents-and-HVD-Section-1-to-10.pdf (last visited Mar. 21, 

2018), archived at https://perma.cc/H5CA-UEGK. 
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V. Distributed Ledger and Blockchain Technology 

At the time of the consultation, the government considered the regulation of distributed ledger and 

blockchain technology, but determined that this area was evolving too quickly to regulate 

effectively.20 It opted to actively monitor these areas for development and consideration of 

regulation in the future.21 

 

20 Chief Minister’s Department, Regulation of Virtual Currency Policy Document, supra note 2, ¶ 1.34. 

21 Id. ¶ 1.36. 
The Law Library of Congress 63 

Mexico 

Gustavo Guerra 

Senior Foreign Law Specialist

SUMMARY In March 2018, Mexico enacted a law that provides broad rules applicable to virtual assets 

(i.e., cryptocurrencies). These assets, which are not legal currency, are defined as 

representations of value electronically registered, utilized, and transferred by the public as a 

means of payment. Mexico’s central bank has been granted broad powers on virtual assets, 

to be exercised through the issuance of pertinent regulations to be published within a year 

from the enactment of the law. Furthermore, services involving virtual assets is an activity 

classified as vulnerable to money laundering. As such, relevant transactions that reach or 

exceed a certain amount must be reported to the Mexican government starting in 

September 2019. 

I. Law on Virtual Assets 

Mexico’s Law to Regulate Financial Technology Companies, enacted in March 2018, includes a 

chapter on operations with “virtual assets,” commonly known as cryptocurrencies.1

 This chapter 

defines virtual assets as representations of value electronically registered and utilized by the public 

as a means of payment for all types of legal transactions, which may only be transferred 

electronically.2

 It also provides that Mexico’s legal currency may not, under any circumstance, be 

considered a virtual asset.3 

Mexico’s central bank, Banco de México, is granted broad powers under the Law to regulate 

virtual assets, including 

 specifying those virtual assets that financial companies are allowed to operate with in the 

country, defining their particular characteristics, and establishing the conditions and 

restrictions applicable to transactions with such assets; 

 authorizing financial companies to perform transactions with virtual assets; and 

 imposing fines due to unauthorized transactions using virtual assets.4

 

1

 Ley para Regular las Instituciones de Tecnología Financiera [Law to Regulate Financial Technology Companies] 

arts. 30–34, DIARIO OFICIAL DE LA FEDERACIÓN [D.O.F], Mar. 9, 2018, available as originally enacted on the 

website of Mexico’s House of Representatives at http://www.diputados.gob.mx/LeyesBiblio/pdf/LRITF_ 

090318.pdf, archived at https://perma.cc/SB6N-RQY7. 

2 Id. art. 30. 

3 Id. 

4 Id. arts. 30–32, 88, 104(I). 
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Pertinent regulations applicable to these assets must be issued by Mexico’s central bank within a 

year from the enactment of the law.5

 

Financial companies that carry out transactions with virtual assets must disclose to their clients the 

risks applicable to these assets.6

 At a minimum, these companies must inform their clients, in a 

clear and accessible manner on their respective websites or through the means that they utilize to 

provide services, that 

 a virtual asset is not a legal currency and is not backed by the federal government nor by 

Mexico’s Central Bank; 

 once executed, transactions with virtual assets may be irreversible; 

 the value of virtual assets is volatile; and 

 technological, cybernetic, and fraud risks are inherent in virtual assets.7

II. Law on Anti-Money Laundering Pertaining to Virtual Assets 

Providing services involving virtual assets is an activity classified as vulnerable to money 

laundering.8

 Thus, providers of such services must report relevant transactions that reach or exceed 

a particular amount (equivalent to approximately US$2,780 as of April 2018) to the Mexican 

government starting in September 2019.9 Furthermore, providers of such services will have a 

number of additional duties, including 

 identifying their clients and verifying their identity through official identification documents, 

a copy of which must be kept by the provider; 

 asking the client for information on his/her occupation if a business relationship is 

established; and

 keeping records pertaining to transactions and clients.10

Regulations further detailing pertinent requirements for financial companies are to be published 

by August 2018.11 

 

5 Id. DISPOSICION TRANSITORIA SEXTA (II). 

6 Id. art. 34. 

7 Id.

8

 Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita [Federal Law 

for the Prevention and Identification of Transactions with Resources of Illicit Origin] art. 17(XVI), Nota de 

vigencia, D.O.F., Oct. 17, 2012, available as amended through March 2018 on the website of Mexico’s House of 

Representatives at http://www.diputados.gob.mx/LeyesBiblio/pdf/LFPIORPI_090318.pdf, archived at

https://perma.cc/4UVN-GM98. 

9 Id. 

10 Id. arts. 17, 18. 

11 Ley para Regular las Instituciones de Tecnología Financiera art. 58, DISPOSICION TRANSITORIA SEGUNDA. 
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III. Taxation 

Tax experts opined that, as of March 2018, Mexican law did not appear to provide for clear 

statutory rules on taxation pertaining to virtual assets.12 These experts also indicated that pertinent 

regulations on virtual assets must be enacted in order to determine the specific tax rules applicable 

to such assets.13 

 

12 Dainzú Patiño, Se abre camino para cobrar impuestos a bitcoins, EXPANSION.MX (Mar.14, 2018), 

https://expansion.mx/economia/2018/03/14/se-abre-camino-para-cobrar-impuestos-a-bitcoins, archived at

https://perma.cc/K9NF-ALYK. 

13 Id. 
The Law Library of Congress 66 

Switzerland 

Jenny Gesley 

Foreign Law Specialist 

SUMMARY Switzerland classifies virtual currencies as assets (property). It has relaxed regulatory 

burdens on and entry barriers for innovative Fintech companies, while keeping risks 

associated with Initial Coin Offerings (ICOs) and cryptocurrencies related to investor 

protection, financial crime, and cyber threats in mind. There are currently no ICO-specific 

regulations, but depending on how the ICO is designed, financial market laws may be 

applicable. This is assessed on a case-by-case basis. Money laundering and securities 

regulation are the most relevant laws in this respect. Cryptocurrencies may also be subject 

to wealth, income, and capital gains tax. 

I. Introduction 

In 2014, the Swiss Federal Council, the Swiss government, published a report on virtual 

currencies that explained their economic significance, legal treatment, and risks.1 The term 

“virtual currencies” is generally used synonymously with “cryptocurrencies.” The report stated 

that a virtual currency is a “digital representation of a value which can be traded on the Internet” 

and takes on the role of money, but is not regarded as legal tender and therefore should be 

classified as an asset (property).2

 It concluded at that point that the economic importance of 

virtual currencies as a means of payment was marginal and would remain so.3

 

This evaluation has changed since publication of the report. The Federal Council still cautions 

against risks in the areas of money laundering, terrorist financing, and investor protection, but 

emphasizes the advantages and potential that new technologies, in particular blockchain 

technologies, have to offer.4 In light of this, regulatory barriers for Fintech firms, including 

providers of mobile payment systems, virtual currencies, and online peer-to-peer lending, were 

reduced by amending the Banking Regulation.5

 By exempting providers that accept public funds 

 

1

 FEDERAL COUNCIL, FEDERAL COUNCIL REPORT ON VIRTUAL CURRENCIES IN RESPONSE TO THE SCHWAAB 

(13.3687) AND WEIBEL (13.4070) POSTULATES (June 25, 2014), https://www.news.admin.ch/NSBSubscriber/ 

message/attachments/35355.pdf, archived at http://perma.cc/7VAB-FNBJ. 

2 Id. at 7. 

3 Id. at 3. 

4

 Press Release, Swiss Federal Department of Finance [FDF], G20 Meeting of Finance Ministers in Argentina: 

Challenge of Digitization (Mar. 20, 2018), https://www.efd.admin.ch/efd/en/home/dokumentation/nsbnews_list.msg-id-70165.html, archived at http://perma.cc/YJ57-ZHMY. 

5

 FDF, BACKGROUND DOCUMENTATION (Nov. 2, 2016), https://www.newsd.admin.ch/newsd/message/attachments/ 

45938.pdf, archived at http://perma.cc/RR63-L3RM; Press Release, Federal Council, Federal Council Puts New 

Fintech Rules Into Force (July 5, 2017), https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id67436.html, archived at http://perma.cc/9A6A-LVE3; Verordnung über die Banken und Sparkassen 

[Bankenverordnung] [BankV] [Regulation on Banks and Savings Banks] [Banking Regulation], Apr. 30, 2014, 

SYSTEMATISCHE RECHTSSAMMLUNG [SR] [SYSTEMATIC COLLECTION OF LAWS] 952.02, art. 5, para. 3, let. c, art. 6, 

https://www.admin.ch/opc/de/classified-compilation/20131795/201708010000/952.02.pdf, archived at
Regulation of Cryptocurrencies: Switzerland 

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up to a total value of CHF1 million (approximately US$1.05 million) from the requirement to 

have a banking license, Switzerland aims to create a means for companies to “test innovative 

business ideas within a limited framework without having to comply with costly and timeconsuming regulations” (regulatory sandbox).6

 Firms that take advantage of this exemption must 

inform their customers in writing that the firm is not subject to supervision by the Swiss 

Financial Market Supervisory Authority (Eidgenössische Finanzmarktaufsicht, FINMA) and that 

the deposits are not protected by deposit insurance.7

Furthermore, in January 2018, the Swiss State Secretariat for International Finance 

(Staatssekretariat für internationale Finanzfragen, SIF) reported that it would set up a working 

group on blockchain and initial coin offerings (ICOs).8

 The working group will work together 

with the Federal Ministry of Justice and FINMA and involve interested businesses. It will study 

the legal framework for financial sector-specific use of blockchain technology with a particular 

focus on ICOs and report back to the Federal Council by the end of 2018. The goal is to become 

a “blockchain and fintech nation in international terms.”9

II. Federal Regulatory Framework 

A. Anti-Money Laundering Legislation 

The Anti-Money Laundering Act generally applies to “financial intermediaries,” who are defined 

as natural and legal persons who accept or hold deposit assets for third parties or who assist in 

the investment or transfer of such assets on a professional basis.10 In its 2014 report, the Federal 

Council concluded that professional trading in virtual currencies and the operation of trading 

platforms in Switzerland generally come under the scope of the Anti-Money Laundering Act and 

therefore give rise to a range of due diligence obligations.11 The due diligence requirements 

include verifying the identity of the contracting party and establishing the identity of the 

beneficial owner.12

 http://perma.cc/UTN4-MEVM, unofficial English translation available at https://assets.kpmg.com/content/ 

dam/kpmg/ch/pdf/ordinance-on-banks-and-savings-banks-en.pdf, archived at http://perma.cc/L2ZK-KAX9. 

6

 Banking Regulation art. 6, para. 2; FDF, supra note 5, at 4, no. 5. 

7

 Banking Regulation art. 6, para. 2, let. c. 

8

 Press Release, FDF, Blockchain/ICO Working Group Established (Jan. 18, 2018), https://www.admin.ch/gov/en/ 

start/documentation/media-releases.msg-id-69539.html, archived at http://perma.cc/9WHU-K2D5. 

9

 Press Release, supra note 4. 

10 Geldwäschereigesetz [GwG] [Anti-Money Laundering Act] [AMLA], Oct. 10, 1997, SR 955.0, art. 2, para. 1, 

let. a, art 2, para. 3, https://www.admin.ch/opc/de/classified-compilation/19970427/201601010000/955.0.pdf, 

archived at http://perma.cc/E9UX-3EBW, unofficial English translation available at https://www.admin.ch/opc/ 

en/classified-compilation/19970427/201601010000/955.0.pdf, archived at http://perma.cc/M4M6-UW5U. 

11 Federal Council, supra note 1, at 14–17. 

12 AMLA arts. 3, 4. 
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FINMA guidelines clarified that anti-money laundering legislation is applicable to persons who 

exchange cryptocurrencies for fiat money and vice versa as well as for a different cryptocurrency 

on a commercial basis (cryptocurrency exchanges), and to custodian wallet providers.13

B. Financial Market Law 

1. FINMA’s Strategic Goals for 2017 to 2020 

In November 2016, FINMA published its strategic goals for the period 2017 to 2020. Among 

others things, the goals provide that innovative business model in the area of financial services 

should be supported by removing unnecessary regulatory obstacles and introducing specificallytailored authorization categories.14

2. Regulatory Treatment of ICOs 

On February 16, 2018, FINMA published guidelines on the regulatory treatment of ICOs,15

which complement its earlier FINMA Guidance from September 2017.16 Currently, there is no 

ICO-specific regulation, nor is there relevant case law, or consistent legal doctrine.17 FINMA 

stated that due to the fact that each ICO is designed in a different way, whether and which 

financial regulations are applicable must be decided on a case-by-case basis. In an ICO, investors 

receive blockchain-based coins or tokens in exchange for the funds they transfer. The tokens are 

created and stored either on a blockchain specifically created for the ICO or on a preexisting blockchain.18 

FINMA differentiates between payment tokens (cryptocurrencies), utility tokens, and asset 

tokens. Payment tokens (cryptocurrencies) are defined as tokens that are used as a means of 

payment or as a means of money or value transfer. Utility tokens are those that provide digital 

access to an application or service by means of a blockchain-based infrastructure. Asset tokens 

represent assets such as a debt or an equity claim against the issuer. According to FINMA, asset 

tokens are analogous to equities, bonds, and derivatives.19

 

13 FINMA, Guidelines for Enquiries Regarding the Regulatory Framework for Initial Coin Offerings (FINMA ICO 

Guidelines) (Feb. 16, 2018), https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/ 

1bewilligung/fintech/wegleitung-ico.pdf?la=en, archived at http://perma.cc/PV9L-5AEK. 

14 FINMA, STRATEGIC GOALS 2017–2020, goal no. 5 (Nov. 16, 2016), https://www.finma.ch/en/~/media/finma/ 

dokumente/dokumentencenter/myfinma/finma-publikationen/20161116-finma-strat-ziele-2017-2020_de.pdf?la=en, 

archived at http://perma.cc/DWV3-BCB8. 

15 FINMA ICO Guidelines, supra note 13. 

16 FINMA, FINMA Guidance 04/2017. Regulatory Treatment of Initial Coin Offerings (FINMA Guidance) 7, 

no. 3.7 (Sept. 29, 2017), https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/ 

4dokumentation/finma-aufsichtsmitteilungen/20170929-finma-aufsichtsmitteilung-04-2017.pdf?la=en& 

hash=9DCC5C1FF8F61C9AA9412FAD2D7C70533F341EF2, archived at http://perma.cc/6YGB-LSCP. 

17 FINMA ICO Guidelines, supra note 13, at 2, no. 3. 

18 Id. at 1, no. 1. 

19 Id. at 3, no. 3.1. 
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The Law Library of Congress 69 

Operators of financial market infrastructures are subject to authorization by FINMA.20 If the 

tokens received in an ICO qualify as securities, trading will require authorization. “Securities” 

are defined as “standardised certificated or uncertificated securities, derivatives and 

intermediated securities which are suitable for mass standardised trading,” 21 meaning they are 

“publicly offered for sale in the same structure and denomination or are placed with more than 

20 clients, insofar as they have not been created especially for individual counterparties.”22

FINMA does not treat payment tokens or utility tokens whose sole purpose is to confer digital 

access rights as securities. However, utility tokens that have an additional investment purpose or 

a sole investment purpose at the time of issue, as well as asset tokens that are standardized and 

suitable for mass standardized trading, are classified as securities.23

Funds raised in an ICO generally do not qualify as deposits within the meaning of the Banking 

Act. However, if there are liabilities with debt capital character—for example, a promise to 

return capital with a guaranteed return—then such an ICO would require the organizer to obtain 

a banking license.24 When assets collected as part of the ICO are managed externally by third 

parties, the provisions of the Collective Investment Schemes Act apply.25 Provisions on 

combating money laundering and terrorist financing (Anti-Money Laundering Act) apply to the 

ICO of a payment token (cryptocurrency) as soon as the tokens can be technically transferred on 

a blockchain infrastructure.26 

3. Fake Cryptocurrencies 

In September 2017, FINMA closed down the unauthorized providers of the fake cryptocurrency 

“E-Coin,” liquidated the companies, and issued a general warning about fake cryptocurrencies to 

 

20 Finanzmarktinfrastrukturgesetz [FinfraG] [Financial Market Infrastructure Act] [FMIA], June 19, 2015, SR 958.1, 

art. 4, https://www.admin.ch/opc/de/classified-compilation/20141779/201708010000/958.1.pdf, archived at

http://perma.cc/5F64-2WFF, unofficial English translation available at https://www.admin.ch/opc/en/classifiedcompilation/20141779/201708010000/958.1.pdf, archived at http://perma.cc/WT73-EMWN. 

21 FMIA art. 2, let. b. 

22 Finanzmarktinfrastrukturverordnung [FinfraV] [Financial Market Infrastructure Ordinance] [FMIO], Nov. 25, 

2015, SR 958.11, art. 2, para. 1, https://www.admin.ch/opc/de/classified-compilation/20152105/2017 

08010000/958.11.pdf, archived at http://perma.cc/NW3S-JAGZ, unofficial English translation available at

https://www.admin.ch/opc/en/classified-compilation/20152105/201708010000/958.11.pdf, archived at

http://perma.cc/2423-R4HG. 

23 FINMA ICO Guidelines, supra note 15, at 4, no. 3.2.1–3.2.3. 

24 Id. at 6, no. 3.4; Bankengesetz [BankG] [Banking Act], Nov. 8, 1934, SR 952.0, arts. 1, 3, https://www.admin.ch/ 

opc/de/classified-compilation/19340083/201601010000/952.0.pdf, archived at http://perma.cc/R5N5-E4KE. 

25 FINMA ICO Guidelines, supra note 15, at 6, no. 3.5; Kollektivanlagengesetz [KAG] [Collective Investment 

Schemes Act] [CISA], June 23, 2006, SR 951.31, https://www.admin.ch/opc/de/classified-compilation/ 

20052154/201607010000/951.31.pdf, archived at http://perma.cc/9HHP-QTY6, unofficial English translation 

available at https://www.admin.ch/opc/en/classified-compilation/20052154/201607010000/951.31.pdf, archived at 

http://perma.cc/8NAX-442E. 

26 FINMA ICO Guidelines, supra note 15, at 6, no. 3.6. 
Regulation of Cryptocurrencies: Switzerland 

The Law Library of Congress 70 

investors.27 Furthermore, three other companies were put on FINMA’s warning list due to 

suspicious activity and eleven investigations were conducted into other presumably unauthorized 

business models relating to such coins.28

C. Tax Treatment 

1. Wealth Tax 

In Switzerland, the individual cantons, the Swiss states, are obligated to levy income tax and 

wealth tax on the total property (assets and rights with a cash value) of taxpayers that are resident 

in their canton.29 Tax rates vary between the individual cantons. Cryptocurrencies are treated like 

foreign currencies for wealth tax purposes.30 Holders of bitcoins or other cryptocurrencies are 

taxed at the rate determined by the tax authorities on December 31st of the fiscal year. As an 

example, the tax rate for bitcoins determined on December 31, 2017, by the Swiss Federal Tax 

Administration was CHF13,784.38 (about US$14,500).31 The Swiss Federal Tax Administration 

provides tax rates for other cryptocurrencies in addition to bitcoins.32 These rates are a 

recommendation to the cantonal tax authorities for wealth tax purposes, but most follow them. 

The rates are based on the average value of different trading platforms.33

2. Income Tax 

If an employee receives bitcoins or other cryptocurrencies as a salary or benefit, it forms part of 

his or her taxable earned income. The Swiss Franc value of the cryptocurrency at the time it was 

received must be recorded on the salary statement.34

 

27 Press Release, FINMA, FINMA Closes Down Coin Providers and Issues Warning About Fake Cryptocurrencies 

(Sept. 19, 2017), https://www.finma.ch/en/news/2017/09/20170919-mm-coin-anbieter/, archived at 

http://perma.cc/VN3C-2ZUK. 

28 Id. 

29 Bundesgesetz über die Harmonisierung der direkten Steuern der Kantone und Gemeinden [StHG] [Federal Act on 

the Harmonization of Direct Taxes Levied by Cantons and Municipalities], Dec. 14, 1990, SR 642.14, art. 2, para. 1, 

https://www.admin.ch/opc/de/classified-compilation/19900333/201801010000/642.14.pdf, archived at 

http://perma.cc/5QP8-2NXP. 

30 See, e.g., Kanton Zug. Finanzdirektion. Steuerverwaltung [Canton Zug. Finance Directorate. Tax Administration], 

Kryptowährungen (Bitcoin, Ethereum, Tokens usw.): Merkblatt Steuern für Privatpersonen [Cryptocurrencies 

(Bitcoin, Ethereum, Tokens etc.): Explanatory Leaflet for Private Persons] (Nov. 30, 2017), https://www.zg.ch/ 

behoerden/finanzdirektion/steuerverwaltung/kryptowaehrungen/download/Kryptowaehrungen - Merkblatt def. - 

30.11.2017.pdf/download, archived at http://perma.cc/VGX2-C5HS. 

31 Course Listing Federal Income Tax 2018, FEDERAL TAX ADMINISTRATION, https://www.ictax.admin.ch/extern/ 

en.html#/ratelist/2018, archived at http://perma.cc/9JCD-MHSE. 

32 The other cryptocurrencies are currently Cardano, Bitcoin Cash, Ethereum, IOATA, Litecoin, Tron Coin, NEM, 

Stellar Lumens, Palladium, Platinum, and Ripple. The list is continuously updated. 

33 Kanton Zug, supra note 30, at 1, no. 3. 

34 Id. no. 4. 
Regulation of Cryptocurrencies: Switzerland 

The Law Library of Congress 71 

If a self-employed person receives bitcoins or other cryptocurrencies for providing goods or 

services, it must be included as part of the principal or additional income from self-employment 

at the Swiss Franc value of the cryptocurrency at the time it was received.35

Any income that a natural person derives from mining cryptocurrencies by making available 

computational power for consideration must be included as assessable income for tax purposes. 

Depending on the specific work arrangement (employee or independent contractor), the 

compensation received will count as income from salaried work or self-employment.36

3. Professional Cryptocurrency Trading 

If cryptocurrency trading is done on a professional basis, any profits are taxable and losses are 

tax deductible. Cryptocurrencies that qualify as business assets are reported on the balance sheet 

with the book value. Price fluctuations have to be accounted for according to general 

accounting principles.37

4. Capital Gains Tax 

Capital gains from movable private assets, which include cryptocurrencies, are generally not 

subject to taxation and any capital losses are therefore not tax deductible.38

III. Cantonal and Municipal Government Agencies 

Individual Swiss cantons are also trying to attract Fintech, blockchain, and cryptocurrency firms 

and start-ups, in particular the Canton of Zug. One association that has been established in Zug is 

the “Crypto Valley Association,” On its website it describes itself as “an independent, 

government-supported association established to take full advantage of Switzerland’s strengths 

to build the world’s leading blockchain and cryptographic technologies ecosystem.”39 Among 

other things, it facilitates exchanges between stakeholders and FINMA, for example with a 

recent roundtable on ICOs.40

On November 2, 2017, the Commercial Register Office in the Canton of Zug started accepting 

bitcoin and ether as payment for administrative costs.41 Furthermore, the Commercial Register 

 

35 Id. 

36 Id. 

37 Id. nos. 5, 6. 

38 Id. no. 6. 

39 About Us. The Association, CRYPTO VALLEY ASSOCIATION, https://cryptovalley.swiss/about-the-association/ (last 

visited Mar. 27, 2018), archived at http://perma.cc/P63Y-JPHW. 

40 FINMA, FINMA ROUNDTABLE ON ICOS (Mar. 2018), https://cryptovalley.swiss/?mdocs-file=42114, archived at 

http://perma.cc/KA3F-B4UF. 

41 Press Release, Kanton Zug [Canton Zug], Handelsregisteramt Zug akzeptiert Kryptowährungen Bitcoin und Ether 

als Zahlungsmittel [Commercial Register Office Zug Accepts Cryptocurrencies Bitcoin and Ether as Means of 

Payment] (Nov. 2, 2017), https://www.zg.ch/behoerden/volkswirtschaftsdirektion/handelsregisteramt/
Regulation of Cryptocurrencies: Switzerland 

The Law Library of Congress 72 

accepts cryptocurrencies as a contribution in kind for purposes of forming a company.42 In the 

city of Zug, municipal services (resident registration) of up to CHF200 (about US$210) can be 

paid with bitcoins.43

On January 1, 2018, the municipality of Chiasso, in the Swiss Canton of Ticino, started 

accepting bitcoins as a tax payment for an amount of up to CHF250 (around US$263).44 

 aktuell/handelsregisteramt-zug-akzeptiert-kryptowaehrungen-bitcoin-und-ether-als-zahlungsmittel, archived at

http://perma.cc/384H-BEUE. 

42 Press Release, Kanton Zug [Canton Zug], HR Zug lässt Kryptowährungen als Sacheinlage zu [Commercial 

Register Office in Zug Accepts Crytocurrencies as a Contribution in Kind] (Sept. 4, 2017), https://www.zg.ch/ 

behoerden/volkswirtschaftsdirektion/handelsregisteramt/aktuell/bitcoin-als-sacheinlage?searchterm=bitcoin, 

archived at http://perma.cc/H5A7-AUJH. 

43 Press Release, Stadt Zug [City of Zug], Von Bitcoin zu Blockchain-Anwendungen [From Bitcoin to Blockchain 

Applications] (Nov. 15, 2016), http://www.stadtzug.ch/de/ueberzug/ueberzugrubrik/aktuelles/aktuelles 

informationen/welcome.php?action=showinfo&info_id=351680&ls=0&sq=&kategorie_id=&date_from=&date_to, 

archived at http://perma.cc/LZL9-CNHR. 

44 Possibilità di pagamento imposte in Bitcoin [Possibility to Pay Taxes in Bitcoin], COMUNE DI CHIASSO 

[MUNICIPALITY OF CHIASSO] (Feb. 1, 2018), https://www.chiasso.ch/possibilita-pagamento-imposte-bitcoin/, 

archived at http://perma.cc/2VR9-STWR.