Are there specific restrictions with respect to the issuance or custody of crypto currencies, such as a regulatory or voluntary moratorium?

Banking & Finance (2nd edition)

Israel Small Flag Israel

Israeli lawmakers and regulators have not yet fully-expressed their approach towards issuance of cryptocurrencies. In March 2018, a committee appointed by the Israeli Securities Authority for the examination of regulation of public offering of decentralized cryptocurrencies coins/tokens published an interim report. There are indications in the interim report that payment tokens of certain types (which are designated to be used only for payment, not limited to a certain venture, do no confer extra rights, and are not controlled by a central person) and utility token of certain types (which solely confer a right to access or purchase a product or service), as opposed to security tokens, should not be classified as securities, and as such should not be subject to the regulations applicable to securities (which include, among other things, a requirement to publish a prospectus approved by the Israel Securities Authority prior to the offering of such securities to the public). The committee have not yet published a final report.

Custody or transfer services of cryptocurrencies is regulated under the Financial Services Law which explicitly include "Virtual Currency" as a Financial Asset, and generally imposes license requirement on a business of exchange, sale, transmission, management and custody of such Financial Asset. We note that certain Israeli-licensed entities (e.g. banks, insurers etc.) are exempted from such license requirement under the Financial Services Law. The Financial Services Law imposes various requirements on a licensee under that law, including upcoming AML requirements (a draft of AML regulations was already published).

Austria Small Flag Austria

Depending on the business model of the entity, such activity may require for inter alia a banking license. FMA offers a contact form for enquiries (Kontaktformular FinTech-Modelle).

Cyprus Small Flag Cyprus

The issuance or custody of crypto currencies is not an activity that can be licensed under the Law and therefore banks cannot deal with crypto currencies. Although there are no specific restrictions under the Law with respect to the issuance or custody of crypto currencies, the Law specifically states that an Authorised Credit Institution (‘’ACI’’) shall not exercise on its own account or on a commission basis a commercial activity unless such activity is permitted as stated in question 2.

Finland Small Flag Finland

Finnish law does not yet regulate the issuance of crypto currencies. To the extent that the crypto currency resembles transferable financial instruments, the issue and trade in crypto currencies is subject to Finnish securities markets law and the relevant regulations on the issuance and marketing of transferable securities.

The Finnish Ministry of Finance has, however, prepared a draft Government Bill, including a legislative proposal for the regulation of crypto currencies. The Government Bill also includes a proposal for the implementation of the Fifth Money Laundering Directive (Directive 2018/843) on the registration of crypto currency offerors - including professional exchange service providers, market places, digital wallets service providers as well as issuers of crypto currencies.

The new proposed Act on Offerors of Virtual Currencies, proposed to enter into force in 2019, regulates the business of crypto currency offerors. Upon entry into force of the new act, crypto currency offerors must register with the FFSA. Entities offering crypto currencies occasionally as an ancillary activity to another licensable or registerable activity (e.g. payment services or credit institution services) need not register as crypto currency offerors.

The registration includes information on the offeror, including fit-and-proper evaluations of the key personnel and shareholders (or comparable owners) holding more than 10% of the shareholding or voting rights or comparable interests in the entity. The registration application must also include a description of the measures to ensure segregation of client assets and the entity’s proprietary assets, including sufficient levels of own capital and a description of the know-your-customer policies and marketing activities of the entity.

Offerors of crypto currencies (including crypto currency issuers) will also be liable to report suspicious activities with respect to money laundering and terrorist financing. Crypto currency offerors will also be obliged to maintain records and keep them available to e.g. the FFSA, the Customs Authorities and the law enforcement institutions.

France Small Flag France

At this time, French law does not regulate the issuance or custody of crypto-currencies.
Nevertheless, Article 26 bis A of the draft of PACTE Act, currently under discussion before the Senate, creates a new status of "service provider on digital assets".

Digital asset services include, as currently defined in the Draft Act, the following services:

1. the safekeeping on behalf of third parties of digital assets or private cryptographic keys, in order to hold, store and transfer digital assets;
2. the purchase or sale of digital assets in legal currency;
3. the exchange of digital assets for other digital assets;
4. the operation of a platform for trading digital assets;
5. the following other services:
a) the receipt and transmission of orders on digital assets on behalf of third par-ties;
b) the management of digital asset portfolios on behalf of third parties;
c) advice to subscribers of digital assets;
d) underwriting digital assets;
e) the guaranteed investment of digital assets;
f) the unsecured investment of digital assets.

At this stage, the Draft Act offers an option to the service providers in order to let each protagonist (in-cluding the national regulators) the necessary time to assimilate the activities and services and to acquire an adequate level of maturity.

In this respect, two situations shall exist:

- The service provider intends to provide the services mentioned in 1° (custody on behalf of third parties of digital assets or private cryptographic keys, in order to hold, store and transfer digital assets), 2° (purchase or sale of digital assets in legal currency) and 3° (ex-change of digital assets for other digital assets) above: it will have at least to be regis-tered by the AMF before starting any activity.
- The service provider intends to provide one or several digital asset services mentioned listed above: it may decide to apply to the AMF for an approval.

Turkey Small Flag Turkey

Other than the below-mentioned announcements, there is no provision of Turkish law that currently prohibits or otherwise regulates the issuance or custody of crypto currencies.

According to the BRSA announcement dated November 25, 2013, it has been clarified that Bitcoin does not fall within the definition of “electronic money” under the Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions (Law No. 6493) due to its present structure and functioning and obstacles in surveillance and supervision of the same as there are no guarantees provided by any authority in Turkey for Bitcoin since it is not issued by a public or private entity in Turkey. Additionally, the CMB has issued a letter dated December 1, 2017 wherein it has stated that brokerage companies and customers shall not carry out spot or derivative transactions based on virtual currencies with their consumers since no regulations or definitions are available and virtual currencies are not listed among underlying assets under the Capital Market Law.

The Financial Stability Committee announced in its press release dated January 11, 2018 numbered 2018/01 that it is decided to establish a working group for the development of regulations on crypto currencies which do not have a legal basis and to inform the public on the risks relating to crypto currencies. The Financial Stability Committee further noted that the persons trading with crypto currencies should be aware of the risks they might face and negative sides to dealing in crypto and they should be careful as not to make losses or suffer any damage. Lastly, the CMB has provided a definition for “digital assets” and further indicated that most of the practices for raising money by using block chain technology (e.g. crypto currencies, token sales) do not fall under the regulation or supervision area of the CMB, in the CMB bulletin dated September 27, 2018 numbered 2018/42. Bearing in mind that crypto currency and token sale practices have similarities and differences with public offering and crowdfunding, any transaction relating to these activities needs to be analyzed on a case-by-case basis in order to determine whether it should fall within the scope of the CMB regulations.

In a nutshell, since there is not yet any piece of legislation that prohibits or indicates the illegality of issuance of crypto currencies or transacting with the same, these transactions are not deemed unlawful by the authorities in Turkey, however, also not secured with any guarantee by such authorities as the risks relating to the same are set forth on numerous occasions.

Germany Small Flag Germany

BaFin takes a rather pragmatic view vis-à-vis crypto assets. BaFin qualifies crypto assets with a view to their respective features in existing categories such as (debt or equity) securities, vouchers etc. According to such qualification BaFin applies the existing rules and, for example, requires the publication of a securities prospectus for the public offering of crypto assets that are qualified as securities. With respect to the typical “crypto currencies” BaFin holds the view that they qualify as financial instruments in the form of “units of account”. As a consequence, rules relating to financial instruments, including licence requirements, apply to dealings in crypto currencies, including custody. As a general rule BaFin stated in a note that mining of crypto currencies is generally licence-free in Germany, however, dealings in crypto assets could, depending on the actual activity, qualify as investment brokering, investment advice, portfolio advice, safe custody business or the operation of a multilateral trading facility. Further, it should be noted that BaFin apparently started to intervene in token-generating events where it comes to the conclusion that the risks for the market attached to the token-generating event are not acceptable.

On a general note it can be mentioned that legislative initiatives have been started to create a bespoke legal framework for crypto assets.

Switzerland Small Flag Switzerland

There are no specific rules in place with respect to the issuance or custody of crypto currencies. For such activities, a case-by-case analysis is necessary in order to determine whether the general prospec-tus, banking (deposit taking), anti-money-laundering or other rules and regulations apply.

There is no regulatory moratorium with respect to crypto assets in place, either. To the contrary, Switzer-land is very crypto friendly and the legislator and regulators try to be ahead of the curve in addressing the challenges and questions the new blockchain technology brings with it. Notwithstanding this, certain Swiss banks have installed a self-imposed crypto restriction/moratorium that they likely only discontinue when there is more legal certainty in some of the remaining open questions.

Slovakia Small Flag Slovakia

We are not aware of any such restrictions at the moment. Except to guidance of the Ministry of Finance of Slovak Republic, which concerns taxation of crypto currencies, so far there is no national regulation for crypto currencies.

Singapore Small Flag Singapore

At the time of writing, Singapore does not have a specific regulatory regime catering specifically to crypto currencies. MAS’s position is that, a crypto currency will be subject to the existing regulatory framework to the extent that it has features or functionalities that make it a product that is within the scope of existing Singapore regulatory laws. In this regard, MAS has published a “Guide to Digital Token Offerings” that explains how the SFA, the FAA or other regulatory law might potentially apply to a crypto currency.

Japan Small Flag Japan

With respect to the custody of crypto currencies, pursuant to the amendment to the Payment Service Act, which took effect in April 2017, registration as a virtual currency exchange service provider is required if custody services are provided in connection with an exchange service. Registered virtual currency exchange service providers are required to perform KYC checks and report suspicious transactions to the FSA, among others.

As of January 2019, there is no requirement to register as a virtual currency exchange service provider to provide custody services if an exchange service will not be provided. However, there is a proposal to impose a registration requirement for crypto currency custody service providers, similar to virtual currency exchange service providers.

There is also a proposal by the Study Group on Virtual Currency Exchanges in the FSA, which is likely to lead to legislation, to strengthen the regulations on virtual currency exchange service providers, including imposing registration requirements on service providers dealing in virtual currency margin trading with conduct regulations and a leverage ratio limitation.

With respect to the issuance of crypto currencies, while it is currently not explicitly regulated, there is a proposal to explicitly regulate investment-like initial coin offerings (ICO), similar to securities under the FIEA. If such proposal is enacted, in addition to registration with the FSA and filing disclosure documents, the offer of newly issued crypto currencies to non-qualified investors will also be restricted.

Oman Small Flag Oman

All lawful currency of Oman is issued by the CBO pursuant to the Banking Law. There are no policies or guidelines to regulate digital or cryptocurrencies issued by the CBO or otherwise. The CBO has in the past issued informal guidance that people wishing to transact in any way in crypto currencies should exercise caution when so doing.

No person may establish or issue a crypto currency in Oman. Any person wishing to deal in a crypto currency in Oman for the account of others will need to be licensed by the CBO.

Georgia Small Flag Georgia


Liechtenstein Small Flag Liechtenstein

Liechtenstein is known to be a crypto and FinTech friendly jurisdiction. The financial center welcomes and encourages the research and development of crypto-based business models and financial solutions.

Dealings in crypto-currencies may be subject to licensing requirements, if they fall within the scope of financial markets regulation, e.g. if the respective currency qualifies as financial instrument or security under Liechtenstein law. Virtual currencies do not constitute an official currency, but, depending on the specific design of the token or coin, may qualify as security, financial instrument or other form of asset as the case may be.

The issuing and sale of token that do not qualify as financial instrument or security under Liechtenstein law, are allowed in Liechtenstein. Sales of token, however, which qualify as security under Liechtenstein law, require compliance with the respective legal framework for a public offering of securities. Other po-tentially applicable rules or regulations depend on the individual circumstances, business activity and instruments involved.

To date Liechtenstein has not implemented specific regulation on crypto-related business other than anti money laundering provisions. However, currently a draft bill “Act on Transaction Systems Based on Trustworthy Technologies” (TTA) is going through the legislative process Liechtenstein. The bill does not only address the issuance or custody of crypto currencies, but also deals with tokenization of assets and generally seeks to provide for a functioning legal environment for businesses, transactions and in-vestments related to crypto currencies. The bill, however, will not address activities subject to traditional banking and financial regulation. The act is expected to come into force in 2019. As Liechtenstein is part of the EEA, the Liechtenstein legal environment will be influenced by legal developments on a European level.

Luxembourg Small Flag Luxembourg

There is no specific legal framework governing virtual currencies and initial coin offerings (the "ICOs") in Luxembourg. On 14 March 2018, the CSSF issued two warnings on risks related to cryptocurrencies and ICOs, recommending the investors to be prudent in their acquisitions of virtual currencies and setting out the risks associated with these.

Portugal Small Flag Portugal

There is no specific regulation for crypto currencies per se, including for their issuance and custody, except that where a crypto currency befalls on the category of securities, financial markets and securities laws will apply by default.

Malta Small Flag Malta

Yes. However, in order to determine whether the issuance or custody of crypto-currencies is captured by Maltese law, the crypto-currency would first need to be classified in accordance with a ‘Financial Instru-ment Test’ (the ‘Test’). This was introduced by virtue of the Virtual Financial Assets Act (Cap. 590 of the laws of Malta, the ‘VFAA’), and constitutes a step-by-step assessment of ‘DLT Assets’, defined as as-sets which utilise distributed ledger technology. The Test necessitates the assessment of the characteris-tics, features, and functions of the crypto-currency, and includes an analysis of the underlying technical protocol and software. The crux of the Test is the adoption of a ‘substance-over-form’ approach, cou-pled with a forward-looking schema which takes into consideration the inter-operability, exchangeability and convertibility of the crypto-currency and its underlying technical specifications. This is particularly important owing to the multi-use nature of certain crypto-currencies necessitating a holistic assessment. The Test then leads to the classification of the crypto-currency into one of the four mutually exclusive DLT Asset classes, so as to ascertain whether it falls to be classified as either: (i) a virtual token; (ii) a financial instrument; (iii) electronic money; or (iv) a virtual financial asset. The results of this classification would then determine the applicable regulatory regime.

Virtual tokens (treated under Maltese law as the legal equivalent of pure ‘utility tokens’, the usage of which is limited to that within the platform on which it was issued, or within a limited network of plat-forms), fall outside the regulatory perimeter. In the case of financial instruments, one would need to comply with the traditional financial services framework, principally the Prospectus Directive (and the impeding Prospectus Regulation) in the case of issuances and MiFID II in the case of custody, in each case as transposed into Maltese law.

In a report on crypto-assets issued on 9th January 2019, the European Securities and Markets Authority (‘ESMA’) announced its preliminary view that in the case of MiFID II financial instruments, having control of private keys on behalf of clients might be regarded as safekeeping services subject to MiFID II regu-latory requirements. Should the MFSA follow that view, this may trigger the need to obtain a Category 4 Investment Service licence under the Investment Services Act (Cap. 370 of the laws of Malta), and sub-jecting the custodian to the rules applicable to the safekeeping and segregation of client assets. The exact licence category requirement will, however, depend on how the MFSA will interpret and implement ESMA’s advice, and whether it will treat private key custody in the same manner as traditional custody services such as custody of collective investment schemes.

In the case of classification as electronic-money, the applicable regulatory regime would be the Financial Institutions Act (Cap. 371 of the laws of Malta), transposing the provisions of the Electronic Money Di-rective and the Payment Services Directive, amongst others. Where a crypto-currency classifies as elec-tronic-money, which may be the case with certain ‘stable-coins’, an issuer is required to obtain an elec-tronic money institution licence under the said Financial Institutions Act.

Finally, where the crypto-currency is classified as a virtual financial asset, the issuance and custody would be subject to the provisions of the VFAA. Having entered into force on the 1st of November 2018, the VFAA regulates three principal aspects of VFAs: (i) the initial offering of virtual financial assets to the public (“IVFAO”); (ii) the admission of virtual financial assets to trading on a VFA Exchange; and (iii) the provision of virtual financial asset services in or from within Malta.

In the case of an IVFAO, prospective issuers of a VFA are subject to a registration regime, whereby is-suers are required to draw up and register a whitepaper with the MFSA. The whitepaper must conform with the form and content requirements specified by Schedule 1 to the VFAA, and sets out the terms of the public offering, details of the issuer and its technology. In addition to this requirement to register its whitepaper, a VFA issuer is subject to initial and ongoing regulatory requirements, including inter alia: (i) the appointment and retention of a VFA Agent; (ii) I.T. and cyber-security; (iii) board of administration and governance; and (iv) annual filings.

In relation to custodian services, the VFAA requires service providers to obtain a VFA Service Provider licence where such service falls within the list of VFA Services included in Schedule 2 to the VFAA. In this respect, the VFAA deems the “acting as a custodian, or nominee holder of a VFA and/or private cryptographic keys”, or the “holding of a VFA and/ private cryptographic keys” to be a licensable activi-ty. The Virtual Financial Assets Regulations (subsidiary legislation 590.01, the ‘VFA Regulations’) elabo-rate on the scope of this service by providing that: “the terms "hold", "control", "place", "safeguard" and "deposit" shall be deemed to encompass custody services provided in relation to virtual financial assets, and shall extend to any physical or digital representation of such assets or to a right to transact such assets or any physical or electronic device, keys, codes or any other information which gives the custo-dian control or access to such virtual financial assets, including private cryptographic keys belonging to the client”.

Consequently, an entity wishing to provide custody services in relation to crypto-currencies that classify as VFAs is required to obtain a VFA Service Provider Licence. In terms of the VFA Regulations this re-quires, as a minimum, a VFAA Class 2 licence, with the licensing conditions attaching thereto including, inter alia, the requirement to: (i) appoint a VFA Agent at licensing stage; (ii) prudential capital and liquidi-ty; (iii) governance and policies; (iv) conduct of business (including client classification and treatment); (v) I.T and cyber-security; and (v) annual filings.

The VFAA extends the reach of anti-money laundering legislation by acknowledging VFA Issuers and VFA Service Providers as ‘subject persons’, and are thus required to have in place adequate and appro-priate know-your-customer, due diligence, and risk assessment measures in place.

Lastly, the VFAA contemplates a grandfathering period, temporarily exempting VFA Issuers and VFA Service Providers from the regulatory requirements, subject to prior notification to the MFSA and subject further to compliance on a ‘best-efforts’ basis in the interim. The transitory period is that of three (3) months in the case of VFA Issuers, and twelve (12) months for VFA Service Providers, in each case commencing from the 1st of November 2018.

Qatar Small Flag Qatar

QCB Circular No. 6 of 2018 regarding trading in Bitcoin provides that such currency is illegal. Indeed, the Central Bank urges all banks operating in Qatar not to deal with Bitcion, or exchange it with another currency, or open an account to deal with it, or send or receive any money transfers for the purpose of buying or selling this currency.

The Central Bank shall impose penalties in accordance to the provisions of the QCB Law in case of any violations of the above mentioned instructions.

Romania Small Flag Romania

Crypto currencies are not currently regulated in Romania and accordingly are not defined or controlled by law. We note that the NBR issued press releases on 11 March 2015 and 6 February 2018, in which the NBR specified that crypto currencies are not recognized as a national or foreign currency and that the acceptance by vendors of payments using crypto currencies is not mandatory. Furthermore, the NBR affirmed that crypto currency is not deemed to be a form of e-money in terms of Law 127/2011 on the issuance of e-money. The NBR has stated that it will continue to monitor the evolution of crypto currency schemes in view of potential systemic risks to the financial sector.

Serbia Small Flag Serbia

Issuance of crypto currencies has not been regulated in Serbian jurisdiction. The National Bank of Serbia has no legal authority to issue permits for virtual currencies trade, or to set up virtual currency ATMs, etc. Since the National Bank of Serbia does not issue licenses for virtual currency trade, the subjects that trade in crypto currency as well as virtual currency trade internet platforms cannot be considered subjects of the National Bank of Serbia supervision in terms of the laws regulating financial institutions in the Republic of Serbia.

United Kingdom Small Flag United Kingdom

Cryptocurrencies and other crypto assets may fall within the existing UK regulatory perimeter and in particular tokens may be specified investments under the Regulated Activities Order, may be financial instruments under the Markets in Financial Instruments Directive II, may be e-money under the e-money regulations or may be captured under the Payment Services Regulations. On 23 January 2019, the UK FCA launched a consultation on guidance for cryptoassets which is open for comment until 5 April 2019.

United States Small Flag United States

The US federal government has not undertaken to restrict the issuance or custody of cryptocurrencies, although, as a result of the characterization of some crypto assets as securities or commodities under existing law, such products have become subject to complex regulatory frameworks that have practically restricted the offering of such interests in the US. In the US’s fragmented approach to financial regulation, when a cryptocurrency is classified as a commodity, as in the case of bitcoin and ether, it is subject to the US Commodity Exchange Act and certain aspects of the underlying market will be regulated by the US Commodity Futures Trading Commission (CFTC). When classified as a security, conduct with respect to such cryptocurrency will be subject to regulation by the US Securities Exchange Commission (SEC). Both agencies have brought a few enforcement actions with respect to cryptocurrency related violations of law, ranging from fraud to failing to register initial coin offerings under the US Securities Act of 1933. Neither the OCC nor the FRB have specifically restricted cryptocurrency activities nor engaged in enforcement with respect to cryptocurrencies. Many states (including, notably, New York, which requires a BitLicense) have subjected those involved in the business of selling or buying cryptocurrencies to various licensing regimes.

Italy Small Flag Italy

In Italy there is not yet a complete legislation on crypto currencies.

In particular, with reference to the issuance of crypto currencies, in the absence of specific rules, the practice is to follow the interpretation of the Italian Financial Markets Supervisory Authority (“CONSOB”) on the nature of crypto currencies which, until now, has qualified them as financial instruments pursuant to article 1, paragraph 1, let. u), of the Legislative Decree no. 58 of 24 February 1998 (“Italian Financial Act”). As a consequence, embracing CONSOB’s interpretation, all the restrictions provided for in the Italian Financial Act for the issuance of financial instruments will be applicable to the issuance of crypto currencies.

With reference to the custody of crypto currencies, the Legislative Decree no. 90 of 25 May 2017 (i) has amended the Legislative Decree no. 231 of 21 November 2007, introducing the definition of “crypto currencies” and of “providers of services related to the use of crypto currencies” in order to apply the Italian anti money laundering legislation to the exchange and the deposit of crypto currencies; (ii) has amended the Legislative Decree no. 141 of 13 August 2010, introducing the obligation for such providers of services related to the use of crypto currencies to register in a special section of the register of agents and ombudsman held by the Italian Ombudsman Body and supervised by the MEF.

Thailand Small Flag Thailand

BoT has issued the Notification Re: Guideline to Undertake Digital Asset Business of Financial Institutions and Companies in Financial Business of the Financial Institutions dated 1 August 2018.

Under the Notification, companies engaged in financial business (except financial institutions) are allowed to undertake digital assets business under specific conditions e.g. the financial institution which is the parent company must apply for a prior approval from the BoT (in case no specific regulator supervises the member of the financial business groups engaging in the digital assets business) and the financial institution which is the parent company must monitor the overall risks of the financial business groups.

The Notification prohibits financial institutions from being an initial coin offering issuer (ICO Issuer), investing in or acting as an exchange or broker dealer of digital assets, etc. However, if a financial institution wishes to be an ICO Issuer or invest in digital assets, for the purpose of developing FinTech or increasing efficiency and quality of customers’ services, it must enter a testing process under the guideline for regulatory sandbox.

Slovenia Small Flag Slovenia

No. Crypto currencies are not regulated in Slovenia.

Updated: May 14, 2019