Legal regulation of cryptocurrency in different countries


This article examines the legal regulation of cryptocurrencies in different countries of the world, lucidly highlights the problems faced by states around the world when trying to create an optimal legal foundation for the cryptocurrency market. Due to the significant spread of cryptocurrency over the past six years, states face new challenges related to the problematic legal regulation of cryptocurrency transactions, the optimal use of the advantages of cryptocurrency, the introduction of cryptoinnovation into the current financial and legal systems.

The phenomenon of “cryptocurrency” is that until now there is no unified position on key issues of defining the essence of cryptocurrency, namely:

– What is it (electronic money or monetary surrogates, digital assets such as depository securities, intangible assets, property rights)?

– Is it a means of payment or exchange?

– To levy a value-added tax or from the turnover of cryptocurrency or any other tax or fee?

– Should the activities of cryptocurrency exchanges and other organizers, intermediaries, miners be subject to licensing?

The lack of answers to these questions creates additional problems in law enforcement. The policy of regulating cryptocurrency in different states, whether it is a ban or a permit, as well as complete disregard, is just a refusal to take responsibility. There is still no decent example of successful regulation in any country.

Meanwhile, it is impossible to ignore cryptocurrency for a long time, and it is stupid to resist.There is controversy regarding the future legal status of virtual currencies. But nevertheless, transactions and other operations with bitcoins are already being successfully carried out around the world. Business is already actively using cryptocurrencies, smart contracts and other blockchain developments, the world’s largest banks are not only learning but already implementing blockchain tools and their analogues. Only the lack of legal certainty does not allow these new technologies to fully unfold.

Of the many options for legal regulation policy – from prohibition to the use of blockchain, the majority of states are limited only to focusing on the points of intersection of the unregulated crypto-economy with the conventional economy, mainly on the exchange of cryptocurrency and fiat, the use of cryptocurrency as a means of payment in the legal economy. So, countries can do without a separate law on cryptocurrency at the state level at all and regulate cryptocurrency within the framework of the main legislation against financial crimes, without risks to the quality of regulation.

Countries, depending on the policy applied to cryptocurrencies, are divided into two types: countries where the regulation of the cryptocurrency sphere is at the legislative level and countries that establish a complete ban on the circulation and use of cryptocurrencies.

Countries where cryptocurrency regulation is at the legislative level


To date, the circulation of cryptocurrency in Uzbekistan is regulated by Presidential Decrees dated July 3, 2018 “On measures to develop the digital economy in the Republic of Uzbekistan” and dated September 2, 2018 “On measures to organize the activities of crypto-exchanges in the Republic of Uzbekistan”.

In a decree dated February 19, 2018, President ShavkatMirziyoyev instructed the Central Bank of Uzbekistan and several other departments to develop a legal framework for the use of digital money in Uzbekistan by September 1, 2018.

The central bank in September 2017 expressed the opinion that it is inappropriate to allow transactions with cryptocurrencies due to the danger of terrorist financing and other criminal activities.

Following the Law on Combating Money Laundering, Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction, the rules of internal control for organizations carrying out transactions with funds or other properties are developed and approved by the relevant regulatory, licensing and registration authorities. together with a specially authorized state body, and in the absence of such – a specially authorized state body.

At the same time, it is problematic that persons engaged in activities in the field of cryptocurrency turnover are not included in the list of organizations carrying out transactions with monetary funds or other property defined by this Law.

In this regard, it is proposed to supplement the draft amendment to the Law “On Countering the Legalization of Proceeds from Criminal Activity, Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction” with cash or other property.

It is assumed that the adoption of the draft law obliges persons engaged in activities in the field of cryptocurrency turnover to comply with the requirements of the law and create a legal basis for the adoption and approval of internal control rules for persons operating in the field of cryptocurrency turnover.

The creation of a regulatory sandbox for the development of digital technologies “Uzbekistan Blockchain Valley” is also being discussed with the participation of the National Agency for Project Management (NAPM). Such an initiative is aimed at attracting foreign investment, creating favourable conditions for startups operating in the cryptocurrency industry, and regulating the turnover of cryptocurrency.Priority tasks include the implementation of e-government through the implementation of blockchain and smart contracts.

European Union

In November 2015, the European Court of Justice ruled that bitcoin, as the most popular type of cryptocurrency, must be considered a currency (means of payment), and not a commodity (in terms of taxation). Accordingly, transactions on the turnover of bitcoins instead of traditional fiat currency should not be subject to value-added tax. Prior to this decision, national governments treated the taxation of cryptocurrencies differently.

In the European Union, cryptocurrencies are not subject to the Directive “On Markets in Financial Instruments” in relation to electronic money and are not subject to financial regulation of the European Union.

At the same time, it is proposed to adopt several directives on the mandatory registration or licensing of cryptocurrency exchanges and crypto wallet providers, to create a central database of users of digital currencies.


In America, cryptocurrency is classified as valuable property. Since 2014, a guide to taxation of cryptocurrency turnover has been used.

Among developed countries, the United States is less interested in the legal regulation of cryptocurrency than others. However, at the federal, agency and state levels, several current legislative trends and variations are being developed. The measures mainly concern cryptocurrency indirectly, as part of measures against money laundering, human trafficking, prostitution and terrorist financing.


In December 2013, the People’s Bank of China banned Chinese financial companies from conducting transactions with bitcoins on the grounds that bitcoin is not a currency.Financial companies are prohibited not only from direct transactions with bitcoins but also from the publication of quotes or insurance of financial products related to bitcoin. As for individuals, they can freely participate in Internet transactions at their own risk. Cryptocurrencies are viewed as commodities, not cash. On September 4, 2017, the People’s Bank of China declared ICO-related transactions illegal. The financial regulator ordered the termination of all ongoing ICO campaigns and banned the exchange of cryptocurrencies for fiat money.


In 2014, the tax office equated cryptocurrency with goods. The Monetary Authority of Singapore treats tokens as commodities and securities. Singapore has no capital gains tax and is subject to a territorial taxation principle. The advantage of this system is that it reduces the number of tax liabilities compared to other countries.

In January 2020, the Law on Payment Services was passed, providing companies engaged in cryptocurrency transactions with the opportunity to obtain licenses.This regulation has given the Monetary Authority of Singapore formal authority to oversee cybersecurity risks and control money laundering and terrorist financing with cryptocurrencies.

Also, the Singapore authorities have developed an international blockchain-based payment network Ubin.


The first country in the world to grant most cryptocurrencies legal tender status. Moreover, all cryptocurrency transactions must be registered and entered into the register of the Japan Financial Services Agency.Bitcoin has been a legal tender with the tax on purchases since 2016. The profit gained from the turnover of crypto-assets is equal to the profit from doing business, therefore, only capital gains are taxed.


In Germany, bitcoin is recognized as a currency of account, that is, it is assigned the status of private money. The use of cryptocurrency is considered legal. The amount of tax is different for users, miners, exchanges and businesses.At the end of August 2015, Germany made a statement that bitcoin cannot be classified as a foreign or electronic currency, but must be recognized as a multilateral clearing operation.

Great Britain

Cryptocurrencies are considered foreign currencies, taxation is carried out as with foreign currencies. To date, standards are being developed to regulate the activities of virtual currency exchanges.Since January 2020, the FCA – the financial regulator in the United Kingdom – has been involved in the fight against money laundering and terrorist financing, including controlling crypto assets in the UK.


Bitcoin has been equated to currency. It is important to note that income from “bitcoin mining” is considered in Sweden to be income from employment, not business.


Since 2017, bitcoin has been assigned the status of the property by the currency regulation law, in which bitcoin cannot be a means of payment. Therefore, the sale of virtual currency is considered the sale of the property, and income is subject to taxes: VAT and income tax.


The first country in Europe to start licensing the activities of cryptocurrency exchanges and exchanges. The rules of the National Commission for the Supervision of the Financial Sector have been adopted, which do not allow unregistered crypto companies to operate.But despite strict regulation, the status of the cryptocurrency has been determined: in April 2014, the Financial Sector Supervision Commission announced that the cryptocurrency is equated to regular currencies.


One of the leaders in cryptocurrency regulation and crypto business development. A feature of the regulatory policy is the most stringent regulation that stimulates the development of exclusively “white” crypto business, providing the most “safe” services within the framework of strict requirements.


In 2014, the Spanish Parliament classified cryptocurrency as an electronic means of payment. Moreover, in 2016, the Spanish authorities obliged miners to go through a special registration procedure and pay taxes. Also, other draft legislative acts were submitted to parliament, which were supposed to impose additional taxes on operations with cryptocurrencies, but they were not adopted. At the moment, transactions with cryptocurrencies are exempt from VAT.


There is currently no legal regulation of cryptocurrencies in Russia. There is no prohibition on carrying out such operations in the legislative base of the Russian Federation. Back in early 2017, a conference was held in Moscow, which was dedicated to the status and regulation of cryptocurrencies. The Federal Tax Service of the Russian Federation classifies transactions for the acquisition and sale of cryptocurrencies as foreign exchange transactions.

In July 2020, the law on digital financial assets and digital currency was adopted and came into force on January 1, 2021. The adopted law defines the concept of cryptocurrency, establishes a ban on its use to pay for goods and services.


In this country, cryptocurrencies are viewed as valuable assets. Taxation depends on the purpose of using the virtual currency: for buying, selling or as an investment. Canada allows cryptocurrencies, however, they are not considered legal tender in Canada, which is only the Canadian dollar. The IRS defines cryptocurrency as a commodity, and notes that using cryptocurrency to pay for goods or services should be considered a barter transaction. Otherwise, transactions with cryptocurrencies are subject to Canadian tax laws and regulations, including the Income Tax Act.


Cryptocurrencies in Australia are not considered a financial product and therefore this activity is not licensed. A Code of Conduct for players in the digital currency industry was adopted, which regulates the relationship between participants in the cryptocurrency business in the country. The main feature of the Australian tax system is double taxation on all operations with cryptocurrency, when exchanging fiat money for cryptocurrency, and in the process of paying for goods and services with cryptocurrency, tax is charged. However, when using cryptocurrency as an investment, the capital gains tax is not paid.
Companies that work with virtual money must keep a mandatory record of all transactions by content and dates. Tokens received as payment are equal to regular income and are valued in Australian dollars.


India has announced that they are trying to work out a stance on cryptocurrencies and are warning potential users of the high risks of investing in cryptocurrencies due to high volatility. There is no official ban.

Countries where cryptocurrencies are prohibited:

Bangladesh – punishment: prison term;

Bolivia – ban on circulation;

Indonesia is not a legal payment instrument;

Kyrgyzstan is not a legal instrument of payment;

Lithuania is not a legal payment instrument;

Ecuador – a ban on circulation similar to other electronic currencies;

Iceland – It is forbidden to buy bitcoins on exchanges, but you can mine them. In this country, an analogue of bitcoin was developed – Auroracoin;

Romania – The Central Bank has ruled that cryptocurrency transactions are illegal;

Kyrgyzstan – Using virtual currency is considered illegal.

Also, cryptocurrencies are prohibited in Taiwan, Vietnam.


PPP: planned changes to the law


On May 10, 2019, the Republic of Uzbekistan adopted the Law “On Public-Private Partnership”.

 After the adoption of the Law on Public-Private Partnership of the Republic of Uzbekistan (Law No. 537 of May 10, 2019), amendments are planned to be done by the Law “On Amendments and Additions, as well as invalidation of some legislative acts of the Republic of Uzbekistan in connection with the improvement of the Law on public-private partnership”. At present, the Law “On amendments and additions, as well as invalidation of some legislative acts of the Republic of Uzbekistan in connection with the improvement of the legislation on public-private partnership” has been approved by the Senate of the Republic of Uzbekistan and is awaiting final approval by the President. The amendments provide a full and specific explanation related to the implementation of public-private partnership projects, contrary to previous version of law, that caused misunderstanding in the application of legal norms in practice. 

The Law “On Public-Private Partnership”defines the core conceptions and principles of public-private partnership (hereinafter “PPP”), determines procedures for the development and incorporation ofPPP projects, provides for financial support mechanisms for the major participants of PPP projects, including concessions.

Public-private partnership is…?

PPP is a “legally arranged cooperation of public partner and private partner for a definite period based on merging their resources for incorporation of a public-private partnership project”. A significant requirement for PPP projects is that they should be aimed at resolving economic, social and infrastructure issues. Another remarkable point is that the law does not specify spheres in which PPP projects may be implemented, which suggests the possibility of implementing PPP projects in any sphere, which is the subject to the requirement of being aimed at resolution of the aforementioned issues, namely: transport, tourism, agriculture, telecommunications, education, healthcare and others. The law defines that property, property complexes, public infrastructure, works (services) and innovationsmay be objects of PPP.

The Republic of Uzbekistan is defined as the public partner, represented by state bodies and other organizations, authorized by the Cabinet of Ministers, as well as their associations. Commercial entities registered in Uzbekistan or abroad and their associations may act as a private partner.

The current amendments implemented in the PPP legislation expressly envisage application of institutional PPP mechanisms, i.e. incorporation of special project companies by the public partner and private investor for the purposes of incorporation of a PPP project. Thus, the lawprovide the opportunity to use a special project company (SPV), i.e. the company incorporated by the bidder (or consortium), which will execute and perform the PPP agreement in case of winning the tender, registered in accordance with the legislation of the Republic of Uzbekistan.

Moreover, the current Law provides for the announcement of the tender a month before its start in the media, websites of state bodies, the process of determining the circle of stakeholders to participate in the tender. This very circumstance in most cases was the reason for the delay in the tender process for a month. Now, based on domestic and international practice, such concepts as “concession”, “project of public-private partnership”, “applicant” are introduced into the Law, and they are defined. In order to establish provisions corresponding to the mechanisms of market operation, other basic concepts used in the Law are also concretized.The norm of guaranteeing the rights of a private partner is also concretized. In particular, if the subsequent legislation of the Republic of Uzbekistan worsens the conditions for investing in a public-private partnership object, then the private partner has the right to demand a compensatory increase in the payment for the availability of the public-private partnership object and (or) payment for use, as well as to demand from the public partner of a one-time compensation payment and (or) making appropriate changes and (or) additions to the agreement on public-private partnership. Local executive authorities, within the framework of a public-private partnership agreement, are empowered to identify facilities at their disposal, identify factors and problems that impede the timely and effective implementation of public-private partnership projects, including projects with the participation of foreign investors, as well as taking measures to eliminate them. The implementation of this Law in practice will contribute to the harmonization of the legal framework of this area with international practice, ensuring the implementation of uniform rules and requirements in the development and implementation of public-private partnership projects. This will also lead to a reduction in expenditures allocated from the State budget for the development of the economic and social spheres, an increase of the investment environment and the country’s attractiveness, the attraction of direct investment in the industry and the creation of new jobs as a result.

  1. Process of formulation of a PPP project

The process of PPP project formulation consists of following stages:

  1. Project initiation of PPP

The public partner or private party (legal entity or sole entrepreneur) may initiate the PPP project. The concept of PPP project is the principal document at the initiation stage, regardless of whether the PPP project is initiated by the public or private party. The concept of PPP project is developed by the initiator and containsthe cost of the project, the source of financing and the profitability of the project, which includes a justification of the effectiveness and relevance of its implementation. 

In the case of the project being initiated by the private person, the concept should be submitted to the potential public partner, which shall within 30 days decide on the implementation of the project based on such a concept. Furthermore, the law provides a limited list of grounds for refusal to incorporate the PPP project proposed by the private party.

The concept of PPP project can be approved, amended or supplemented by various bodies depending on the total value of the potential PPP project:

  • a relevant government authority — if the project total value is up to US$1 million;
  • a relevant government authority by agreement with the PPP Agency — if the project total value is from US$1 million to US$10 million inclusive;
  • the Cabinet of Ministers of the Republic of Uzbekistan— if the project total value exceeds US$10 million.  

Following the approval of the concept of the PPP project and its inclusion in the register, a public partner should adopt a decision on the development of the PPP project and proceed with the private partner selection procedure.

  1. Private partner selection

The tender is the principal mechanism for the selection of a private partner.

The tender may be:

  • a single-stage process – if the PPP project value less than US$1 million

ü two-stage process – if the PPP project value exceeds US$1 millionexcept for the cases specified in article 17 of the law.

The public partner is responsible for the development of the tender documentation, including the draft PPP agreement and establishment of a tender commission, by agreement with the PPP Agency and the Cabinet of Ministers respectively.

In addition, the law allows for execution of the PPP agreement without tendering, based on direct negotiations, in cases:

  • of ensuring the defense capability and security of the state;
  • where a certain person has exclusive rights to the results of intellectual activity, other exclusive rights, land, another real estate object and other property, which is an indispensable condition for the implementation of the project;

ü of enactment of the relevant decree or resolution of the President, as well as by decrees of the Cabinet of Ministers.

  1. Execution of a PPP agreement

A PPP agreement between a public and private partner is concluded for a period of between three and 49 years. The law also lists the mandatory data and provisions to be contained in the PPP agreement:

  • the grounds and procedure for its termination or amendment;
  • the procedure for transferring property and land to a private partner, as well as the procedure for transferring ownership of the PPP object.

In particular, the requirement for mandatory inclusion of provisions concerning the transfer of ownership of a PPP object to the state or to a private partner allows the implementation of PPP projects within the framework prescribed by the law based on different schemes.

Notably, the law does not contain compulsory rules providing that PPP agreements should be governed exclusively by Uzbek law. At the same time, the law establishes that disputes in the field of PPP are subject to resolution in accordance with current legislation. Based on this provision, it can be concluded that parties to PPP agreements have access to both judicial and arbitral methods for resolving disputes.

III. Private Partners guarantees of rights

The law establishes guarantees for stability of the legislation for 10 years from the date of the PPP agreement’s execution. At the same time, the private partner has a discretionary right to apply regulatory provisions that improve PPP project investment conditions or not to apply them (i.e. it is not necessary to constantly update PPP agreements in line with the legislation in force).

  1. Transparency and monitoring

The law provides for the PPP Agency to establish a publicly available registry of PPP projects containing information on ongoing PPP projects. Moreover, the law establishes that the concepts of PPP projects, information on the criteria for selecting a private partner, the main provisions of the PPP agreements, as well as other information should be published on the websites of the PPP Agency and the public partner.

The PPP Agency monitors the implementation of the PPP agreement by both private and public partners. To this end, the private partner should provide the agency with access to the PPP facilities, and the public partner should provide a report to the agency on the implementation of the PPP project every six months.

Enactment of the law is a logical step in the context of the interest of the Republic of Uzbekistan in the development of public-private partnerships in order to stimulate economic growth and improve infrastructure.

  1. Financing of PPP projects

The law provides that organizations financing a PPP project may be parties to a PPP agreement. A PPP agreement may provide for lenders’ step-in rights, which can be exercised by removing or replacing a private partner or the management of a private partner. Additionally, the law expressly prescribes that a private partner is entitled to provide any kind of security to its creditors, including those related to the rights and assets of the PPP project.

Under a PPP agreement, financial support may be provided to a private partner, including in the form of subsidies, budget loans, loans, grants, government guarantees, tax benefits and other kinds of benefits. A PPP agreement may also provide for the implementation of various types of payments, including payments for use and payments for availability.