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Bitcoin regulation in 2025

A quick survey of the current, and potential, regulations impacting crypto-asset activities

Bitcoin regulation: The state of play in the UK

_{So far, the UK government has taken a gradual, ‘phased’ approach to cryptocurrency regulation, initially focusing most of its attention on so-called ‘stablecoins’ – cryptocurrencies that are meant to maintain a more stable value by pegging their value to a fiat currency or a precious metal. The main objective, it says, is to regulate crypto-asset activities within the existing legislative framework governing financial services.}

_{As part of this cautious approach, the UK was slower than the US, Hong Kong, and other prominent financial markets to approve the trading of bitcoin ‘spot’ ETFs, to the puzzlement of many local investors. But that all changed in May 2024 when the Financial Conduct Authority gave its blessing for Wisdom Tree’s Physical Bitcoin to list its exchange traded products, or ETPs, on the London Stock Exchange [}_xxx_{]. Two months later, Fidelity International introduced its Fidelity Physical Bitcoin ETP, expanding the range of digital asset ETPs on the LSE [}_xxxi_]_.

_{Unlike the EU, the UK government is not seeking to impose comprehensive new regulations on the crypto industry. That said, it has made some important tweaks to existing legislation, some of which could end up affecting bitcoin owners.}

_{In 2023, parliament passed the Financial Services and Markets Act (FSMA), which extended existing laws to crypto assets, services, and providers. The passage of this act marked a major step in the protection of UK investors in crypto assets [}_xxxii_]_.

_{In its Economic Crime and Corporate Transparency Act (ECCTA) of the same year, the government broadened asset seizure powers, making it easier for UK law enforcement to seize crypto assets in a wide range of cases. Know Your Client (KYC), anti-money laundering (AML) and combating the financing of terrorism (CFT) requirements are already being applied to cryptocurrency assets and markets.}

Bitcoin regulation: The state of play in the UK

_{In late April 2025, HM Treasury published a draft statutory instrument (SI) the Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, which sets out a structure for a new regulatory regime for digital assets.}

_{The regime will create new regulated activities, bring digital asset market participants inside the regulatory boundary, and aim to clarify the definitions and classifications within the sector.}

_{Similarly, the FCA announced that it is seeking views on the future regulation of specific "cryptoasset activities". Its aim is to bring these digital assets within regulation - The Executive Director of Payments and Digital Finance at the FCA said that the intention is to create an environment where firms can safely innovate, whilst also deliver on appropriate levels of market integrity and consumer protection. These papers are under consultation, but any resultant legislation will likely bring much needed clarity to market participants.}

_{It has been interesting to see that UK regulatory and governmental activity in this space seems to have picked up since the US revealed its hand. The US' announcement of its Bitcoin reserve has likely made other authorities around the world take note and review their positions. It may even be somewhat forcing the hands of other country's regulators and leaders to being more accommodative of the asset, to avoid the risk of being left behind.}

Bitcoin regulation: Misconceptions and illicit activity

_{Despite popular misconceptions, illicit activity using bitcoin is relatively low compared to the overwhelming majority of legitimate use cases. It accounted for an estimated 0.14% of all bitcoin transactions in 2024. Interestingly bitcoin is decreasingly used by illicit actors since 2021, in favour of stablecoins, according to a report from Chainalysis, a leading blockchain analysis firm whose analytics are widely used by law enforcement agencies, including US government bodies such as the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), and the Department of Homeland Security (DHS).}

_{In stark contrast to this relatively low level of illicit activity in bitcoin, traditional fiat currencies, including the British pound, are far more commonly used for illicit purposes.}

_{The United Nations Office on Drugs and Crime (UNODC) estimates that between 2-5% of global GDP, or $800 billion to $2 trillion annually, is laundered using fiat currencies like GBP, far exceeding the amount of illicit activity in the cryptocurrency market [}_xxxiv_]_{. Even though anti-money laundering measures have been implemented worldwide, only a tiny fraction of laundered funds – around 0.1% – are intercepted and recovered [}_xxxv_]_.

_{By contrast, bitcoin’s blockchain technology provides a public and transparent ledger that allows authorities to trace transactions far more effectively than traditional banking systems. In the UK, crypto exchanges and custodian wallet providers must comply with the reporting obligations of the Office of Financial Sanctions Implementation (OFSI). Crypto firms must also alert the OFSI promptly if they have reasonable suspicion that a person is subject to sanctions or has committed a financial sanctions offence.}

_{Moves are also afoot on the tax front. In November 2023, the government signed a joint statement with 48 other countries aimed at cracking down on criminals using crypto-currency assets to evade taxes [}_xxxvi_{]. While investors are broadly required to pay capital gains tax on crypto trading profits once their crypto assets have been disposed of, the degree of taxability depends on the crypto activities undertaken and the tax band of the person engaging in the transaction.}

Bitcoin regulation: What’s happening further afield?

_{United States}_{: The US has been steadily moving toward greater regulatory clarity for crypto assets and markets. In 2022, the Biden Administration signed Executive Order 14067, titled “Ensuring Responsible Development of Digital Assets.” This order set out a ‘whole-of-government’ approach aimed at maintaining the US's technological leadership in the growing digital asset space while supporting innovation and addressing risks to consumers, businesses, and the financial system.}

_{In 2023, for the first time, the US Congress debated and advanced crypto-specific bills as standalone legislation rather than bundling them with broader laws. Among these legislative efforts was the Financial Innovation and Technology for the 21st Century Act (FIT 21), which sought to clarify the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading}_{Commission (CFTC) in regulating digital assets. This marked a significant step toward establishing a comprehensive framework for regulating cryptocurrencies in the US, addressing concerns about the fragmented and inconsistent regulatory approach [}_xxxvii_].

_{SEC’s role in cryptocurrency regulation:}_{The SEC, until recently under the charge of former Chair Gary Gensler, has positioned itself as the key regulatory body overseeing the cryptocurrency sector. The SEC has brought more than 100 enforcement actions against cryptocurrency projects over the past decade, primarily targeting those it classifies as unregistered securities. Many of these cases rely on the Howey Test, a legal framework established by the US Supreme Court to determine whether an asset qualifies as a security. According to the Howey Test, an asset is a security if it involves:}

_•_{An investment of money}_•_{In a common enterprise} _•_{With an expectation of profits} _•_{Derived from the efforts of others}

_{In 2019, the SEC ruled that bitcoin does not meet the criteria of the Howey Test. The financial markets regulator concluded that bitcoin is more akin to a commodity because it lacks a central authority or an entity responsible for driving its value, distinguishing it from most other cryptocurrencies. Bitcoin’s decentralised nature means that its value is not tied to the success of any particular group, which is why both the SEC and the Commodity Futures Trading Commission (CFTC) have classified bitcoin as a commodity.}

Bitcoin regulation: What’s happening further afield?

_{United States (continued)}

_{Standing apart from the crowd:}_{Bitcoin’s unique status contrasts sharply with other cryptocurrencies like Ethereum, Solana, Cardano and Ripple. These assets are most often linked to centralised entities or development teams that promote and manage the networks, creating an expectation of profits based on their efforts, thereby satisfying the Howey Test. This has led the SEC to treat most other cryptocurrencies as securities and pursue enforcement actions accordingly, though that may be changing under the new Trump Administration. For instance, in 2024, the SEC versus Coinbase case reaffirmed the SEC's authority to regulate secondary market sales of certain cryptocurrencies, arguing that these transactions meet the criteria for investment contracts. Then, in February 2025, the SEC, possibly under pressure from the Trump Administration or simply reading the way the wind blows, dismissed its Civil Enforcement Action against Coinbase.}

_{Bitcoin is not subject to the ever-changing nature of regulators as it operates without a central entity or developer team influencing its value. This decentralisation is the primary reason bitcoin is seen as the only major cryptocurrency likely to retain its status as a commodity rather than a security, regardless of who is in power.}

_{Court rulings and legislative outlook:}_{Key rulings from federal courts in 2024 continued to shape the future of cryptocurrency regulation. US courts upheld the SEC's view that many digital assets are securities, while also rejecting arguments that cryptocurrencies are exempt from securities laws. These decisions, alongside growing legislative efforts, reflected the US's broader attempt to bring the crypto market under clearer regulatory oversight. Early indications suggest that regulations will be loosened under a more pro-digital assets Trump administration.}

_{The Trump administration’s pivot to a more crypto-friendly stance throws up important questions about risk management, regulatory oversight, and the balance between digital innovation and consumer protection. Regardless of the future direction of policy, one thing is clear: bitcoin’s unique status as a commodity will continue to set it apart from most other digital assets in the eyes of regulators and investors.}

Bitcoin regulation: What’s happening further afield?

_{European Union}_{: For its part, the EU has been busy over the past few years crafting sweeping regulation for cryptocurrencies and stablecoins. In March 2025, the European Union approved 10 stable coin issuers including Circla and Societe Generale, though interestingly not Tether (USDT).}

_{This flurry of activity has already spawned the Anti-Money Laundering Authority, which will be the EU’s central coordinating authority for implementing anti-money laundering and counter-terrorism financing (AML/CTF) rules. The bloc has also unified information sharing between competent authorities in the EU for tax information for crypto assets.}

_{In June 2023, the EU finalised its Market in Crypto-Assets Regulation (MiCA), setting out a comprehensive framework for Europe’s crypto asset market. A report by the European Securities and Markets Authority (ESMA) points to the scale and scope of the regulation [}_xxxix_].

_{“The regulation covers crypto-assets that are not currently regulated by existing financial services legislation: Key provisions for those issuing and trading crypto-assets (including asset-reference tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions. The new legal framework will support market integrity and financial stability by regulating public offers of crypto-assets and by ensuring consumers are better informed about their associated risks.”}

_{The focus is now on defining requirements and technical standards and bringing about supervisory convergence across the 27-nation bloc. At the same time, the EU is making strides on the digital euro, the bloc’s proposed central bank digital currency, or CBDC, which moved into a two-year preparation stage in November 2023}₍_{more on CBDCs in the next section}₎_.

Bitcoin regulation: What’s happening further afield?

_France_{: As MiCA gradually comes into effect, all 27 EU Member States will become subject to its rules. This negates the need to cover the G7 nations of Germany and Italy in this summary. France, however, is a bit of a special case.}

_{The Macron government has spent the past few years trying to convince cryptocurrency firms to set up in France ahead of MiCA, with the goal of establishing France as Europe’s preeminent crypto hub. It has had some success in this endeavour. By setting clear rules for crypto as early as 2019, lowering taxes for companies in the sector and offering sweeteners in the form of government subsidies, France has been able to lure major exchanges like Binance, Crypto.com, and OKX, as well as stablecoin issuer Circle, all of which have}_{made Paris their European headquarters.}

_{But the future is far from certain. When Emmanuel Macron called snap legislative elections in June 2024 after an embarrassing performance in the European elections, his party suffered a landslide defeat. The main victor was a new ‘Popular Front’ of left-wing parties, one of whose stated policy goals was to abolish Macron’s corporate tax cuts that helped bring foreign investment into the country, including from the crypto sector [}_xl_{]. However, without an absolute majority, the left-wing alliance was unable to find other political parties with which to form a coalition government, and Macron instead appointed veteran conservative Brexit negotiator Michel Barnier as prime minister.}

_{However, the resulting government collapsed almost as quickly as it formed, and with Macron’s popularity sinking to record lows the future of France’s budding crypto sector is still very much up in the air.}

Bitcoin regulation: What’s happening further afield?

_Canada_{: Ottawa has taken a more pro-active approach than most countries to crypto regulation.}

_{From a taxation viewpoint, it treats cryptocurrency similarly to other commodities. As TRM Labs notes: “The CSA, Canada’s umbrella organisation for provincial securities regulators, [has] introduced a pre-registration requirement for crypto asset trading platforms.}

_{To continue operating in Canada while their registration applications are under review, platforms must commit to customer asset segregation and custody, retain a chief compliance officer and file financial information with the CSA.” [}_xli_]

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_Japan:_{By contrast, Japan has taken a more progressive approach to crypto regulation.}

_{In 2020, the government set up the Japanese Virtual Currency Exchange Association (JVCEA), in which all crypto exchanges are members. It also recognises cryptocurrencies as legal property and has been working on several regulatory fronts, including taxation and money laundering laws.}

Bitcoin regulation: A global shift

_{While it is useful to keep track of the crypto regulation trends on a nation-by-nation basis, it is also important to bear in mind that many of the pressures driving these trends are occurring at a global level. This is mainly happening through multilateral fora such as the G20, the World Economic Forum (WEF), the International Monetary Fund (IMF), the Financial Stability Board (FSB), and the Bank for International Settlements (BiS), which is often referred to as the 'central bank of central banks'.}

_{In 2023, the G20 under India’s presidency tried to steer the global community toward common standards for crypto assets. To that end, it enlisted the help of the IMF and the FSB in setting the general direction of global regulations. The outcome of this initiative was an IMF-FSB synthesis paper merging the existing positions of both organisations, the main emphasis of which was on alignment toward international standards set out by the various standard setting bodies (SSBs).}

_{The IMF is calling for comprehensive regulation of crypto rather than outright bans, while cautioning of the need to ensure that policy levers relating to fiat currencies remain effective as crypto adoption rises.}

_{In her December 2023 speech titled 'Leaving the Wild West:}_{Taming Crypto and Unleashing Blockchain', IMF managing director Kristalina Georgieva called for ‘good rules’ that could both dampen crypto’s financial stability risks and 'spur and guide innovation'. [}_xlii_]

_{For its part, the FSB has been working on developing a work plan for addressing the regulatory challenges posed by the rapid growth of crypto currencies and global stablecoins.}

_{In that endeavour, it has enlisted other sectoral standard setting bodies (SSBs) including the Basel Committee on Banking Supervision (BCBS), the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI), the International Organisation of Securities Commissions (IOSCO), the Financial Action Task Force (FATF), the IMF, the World Bank, and the Organization for Economic Cooperation and Development (OECD).}

Bitcoin regulation: A global shift

_{The initiatives identified in the resulting shared work plan include:}

Encouraging cross-border cooperation, to reduce the ability of crypto asset issuers and service providers to exploit regulatory arbitrage opportunities.
Regular monitoring and assessment of vulnerabilities in crypto-asset markets.
Applying existing IOSCO principles and standards to economically equivalent crypto assets and securities.
Assessing the “financial stability implications of multifunction crypto-asset intermediaries, building on the lessons learnt from recent failures of such intermediaries,” presumably in reference to the collapse in 2023 of SFX and Silicon Valley Bank. [xliii]

_{The FSB is still in the process of finalising its global regulatory framework for crypto assets, which will reportedly include high-level recommendations for the regulation, supervision and oversight of “crypto-asset” activities and markets.}

_{In late 2023, the International Organization of Securities Commissions (IOSCO) finalised its Policy Recommendations for Crypto and Digital Asset Markets, which were intended to address concerns related to market integrity and investor protection. Its 18 recommendations reflected IOSCO’s overarching principles and cover six key areas: conflicts of interest, market manipulation, custody and client asset protection, cross-border risks and regulatory cooperation, operational and technology risks and retail distribution.}

_{With so many multilateral organisations working to develop a common set of regulatory principles and priorities on}_{cryptocurrencies, a gradual convergence of government policy is all but inevitable, at least in certain areas. As TRM Labs puts it, ‘clarity and consistency’ have begun to ‘emerge as the common themes. While differences in national philosophies and priorities persist,’ the world is witnessing 'a convergence toward certain standards'.}

Bitcoin regulation: Bitcoin’s unique regulatory treatment

_{As outlined in this section, regulatory approaches to cryptocurrencies around the world are evolving rapidly, with governments introducing new frameworks aimed at balancing innovation with investor protection and financial stability.}

_{Much of the regulatory focus has been on stablecoins, initial coin offerings (ICOs), and other digital assets that exhibit the characteristics of securities, leading to strict oversight under laws such as the Financial Services and Markets Act (FSMA) in the UK, MiCA in the EU, and enforcement actions from the Securities and Exchange Commission (SEC) in the United States.}

_{These broader crypto assets are generally governed by frameworks meant to protect consumers and investors, given the potential for central authorities to influence their value.}

_{However, bitcoin occupies a unique position in the digital asset space. Unlike most other cryptocurrencies, bitcoin is widely recognised as a commodity across multiple jurisdictions, including the US. This classification reflects bitcoin's decentralised nature, which sets it apart from digital assets developed and maintained by centralised teams or companies.}

_{In essence, bitcoin’s value is not tied to the efforts of a specific group of individuals or organisations, a key factor in understanding why it is excluded from the Howey Test – the US Supreme Court’s standard for determining whether an asset is a security.}

Bitcoin regulation: Specific regulatory approaches

_{United States}_{: In the US, Gary Gensler and the SEC have consistently argued that bitcoin is a commodity, primarily due to its decentralised and peer-to-peer structure. Bitcoin is regulated by the Commodity Futures Trading Commission (CFTC), which oversees commodity markets, leaving it exempt from the securities regulations that apply to most other digital assets.}_{Prior to the arrival of the Trump administration, legal rulings in 2023 and 2024 further reinforced bitcoin’s distinct status, as courts upheld the view that bitcoin does not meet the criteria for an investment contract.}

_{United Kingdom}_:_{The UK’s approach to bitcoin regulation has been cautious but transparent. With the Financial Conduct Authority (FCA) allowing bitcoin exchange-traded products (ETPs) on the London Stock Exchange from May 2024, bitcoin is gaining mainstream financial recognition. However, as bitcoin is not classified as a security, it does not fall under the same stringent regulatory framework as ICOs or stablecoins. Instead, it is regulated under existing financial services laws, ensuring that bitcoin transactions comply with anti-money laundering (AML) requirements and Know Your Client (KYC) standards.}

_{European Union}_:_{Under the Markets in Crypto-Assets (MiCA) regulation, bitcoin is treated similarly to other crypto assets regarding transparency and transaction security. However, MiCA places more emphasis on regulating centralised issuers and stablecoins, with fewer direct impacts on bitcoin’s operations. Bitcoin’s decentralised nature means it is less affected by the strict issuer and authorisation requirements that apply to asset-backed tokens. That said, bitcoin must still comply with general AML regulations, ensuring that bitcoin transactions are properly monitored.}

_Japan_{: Japan has long been a leader in}_bitcoin_{regulation, having recognised}_bitcoin_{as legal property and implemented clear regulatory guidelines through the Japanese Virtual Currency Exchange Association (JVCEA). In Japan,}_bitcoin_{is subject to strict consumer protection laws, as well as AML/KYC requirements, but it is treated as a commodity, similar to its status in the US. This classification has helped Japan foster a robust and secure market for bitcoin.}

Broader trends and bitcoin’s role within them

_{The global regulatory environment for digital assets is moving toward greater clarity and consistency, with initiatives from multilateral bodies such as the G20, the International Monetary Fund (IMF), and the Financial Stability Board (FSB) aiming to harmonise standards across borders. These efforts, however, have focused largely on stablecoins and other digital assets that function as securities, leaving bitcoin in a category of its own.}

_{Bitcoin’s decentralised nature makes it immune to many of the regulatory challenges facing other digital assets, particularly those reliant on centralised development teams. Unlike assets such as}_{Ethereum or Ripple, which have been subject to lawsuits over their classification as securities, bitcoin's status as a commodity has been consistently upheld by major regulators.}

_{Bitcoin’s unique characteristics – its decentralised protocol, lack of central authority, and open-source development model – continue to set it apart from other cryptocurrencies. While other digital assets face increasing scrutiny under securities laws, bitcoin has been consistently classified as a commodity, regulated more like gold or oil than like an investment contract.}

_{This provides bitcoin with a level of regulatory clarity and stability that is still elusive for most other cryptocurrencies.}

_{In conclusion, while the broader regulatory landscape for digital assets remains complex and evolving, bitcoin’s status as a commodity is clear. Its decentralised nature, transparent public ledger, and relatively well-established regulatory treatment across major markets ensure that bitcoin will continue to operate under a distinct and relatively stable framework.}

_{As governments and regulatory bodies continue to refine their approaches to digital assets, bitcoin’s position as the most recognised and securely self-regulated cryptocurrency is highly likely to remain unchanged.}