Cryptocurrency Regulations in Western Europe and North America

CoinLoan team closely monitors emerging cryptocurrency regulations. Last year, we renewed the European virtual currency provider license and were surprised to learn CoinLoan was the only regulated crypto lending platform licensed by Estonian Financial Intelligence.

We know our users track the recent laws on cryptocurrency and prepared a blog post that will shed some light on the diverse attitudes towards blockchain and cryptocurrencies. Next time we will examine other regions.

United States

Not every American state has a favorable view on cryptocurrency. Yet, the situation is gradually changing as fintech marches through the world.

For instance, the Financial Crimes Enforcement Network (FinCEN) doesn't consider cryptocurrencies legal, but they classify exchanges and some of our competitors as money transfer services, making them register as such. Companies must report their activities directly to FinCEN, including Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs).

At the same time, the Internal Revenue Service defines crypto as property eligible for taxation. One of the key US regulatory institutions, the Securities and Exchange Commission (SEC), sees crypto as securities. In March 2018, SEC was looking into extending securities laws to digital wallets and exchanges.

In 2019, several US states realized crypto could become a new fuel for their economies and started exempting it from existing money and security laws. As of now, 70% of them have enacted laws regarding the crypto or blockchain sphere. For example, Wyoming passed a bill that lifted the property tax. Arizona and Georgia were among the first to accept cryptocurrency for tax payments. Check out the Coinbase map showcasing the highest crypto ownership in the US.

Source: Coinbase


Officially, the country's fintech companies should have a hard time following the Fintech Act enacted on March 9, 2018. Banxico, the central bank of Mexico, was behind regulatory measures striving to control crypto-related activities and keep finance at home. That has made coin developers think of roundabout ways to operate.

The legislation has created an unfavorable environment for crypto development. Despite that, the crypto industry in Mexico is thriving.

Mexican crypto companies are resourceful: every company and every coin is finding its own way into the market through exploiting legal loopholes and adapting to the ever-changing environment.

According to Finnovista, the Mexican crypto ecosystem is a leader among its peers in Latin America and on its way to becoming home to 400 active startups. Numbers speak volumes: the market experienced an 18% net growth. With 98 recently created fintech startups, the market reached a gross growth of 29.3% for the year.

Top 3 fintech startups' categories in Mexico:

  • Loans — 81 startups (20.6%)
  • Payments and Remittances — 79 startups (20.1%)
  • Business Finance Management (BFM) — 52 startups (13.2%)

The UK

With more than 1,600 fintech firms, the UK is one of the fintech industry leaders, generating GBP 6.6B annually. With such rapid development, London will soon be able to overtake the title of a fintech unicorn capital of the world from San Francisco. However, the country remains skeptical of cryptocurrency - the UK didn't ban crypto but hasn't issued any specific laws for digital money to date.

The Bank of England (BoE) claimed that the size of the cryptocurrency market is not big enough to undermine the country's financial stability or put the monetary system at risk. Digital currencies were not even classified as money due to the limited adoption in the UK's financial scope in 2014. And despite the rising numbers of use-cases, BoE still doesn't see cryptocurrency as something even remotely close to fiat money.

Recently, the FCA (Financial Conduct Authority) published a guide on digital currencies, illustrating "a number of different elements that firms need to take into account when considering the regulated perimeter."

* RAO - Regulated Activities Order

The FCA also provided several important clarifications and definitions. For instance, cryptocurrencies like Bitcoin and Ethereum are identified as exchange tokens. There are no plans for their regulations, yet they will fall under anti-money laundering regulations.

The only thing the UK's government has banned is derivatives and Bitcoin futures. The main reason driving the ban is the desire to protect retail investors from high crypto market volatility. The final regulations of cryptocurrency-based investment tools are yet to be developed in 2021.


In Germany, selling, buying, and storing cryptos became legal on January 1, 2020. However, back in September 2019, most local politicians were hostile towards digital assets, proving another stereotype about Germans being conservative and risk-averse. Yet, the situation took another turn.

In 2019, the German government adopted a comprehensive blockchain strategy. The plan calls for the development of blockchain business and government apps.

Diving deeper into the country's legislation, we uncovered Germany's plan to fully legalize Bitcoin back in 2013, denoting it as "private money," as Die Welt reports. For the first time, the status of crypto in Germany was discussed by the Member of Parliament, Frank Schäffler. Still, the German Ministry of Finance did not recognize Bitcoin as electronic money.

Things changed in 2017 when Germany called BTC a financial tool. Recent amendments to the Banking Code indicate that Bitcoins are recognized as "units of value."

So why is Germany called a "Bitcoin tax haven"? In 2018, the country exempted Bitcoin transactions from VAT. From now on, Bitcoin buyers must pay a tax only if the sale happens sooner than 12 months after purchase. In this case, a progressive income tax of up to 45% applies for all gains.

In 2019, Germany passed a bill that significantly impacted cryptocurrency services and local crypto enthusiasts. The 5th EU Anti-Money Laundering Directive (AMLD 5) drastically changed licensing requirements and anti-money laundering monitoring obligations for crypto service providers.

This legislation made amendments to the Anti-Money Laundering Act and the Banking Act and set new terms for providers of foreign exchange services and cryptocurrency exchange platforms. The bill went into effect on January 1, 2020, expanding the scope of responsibility for money laundering and terrorist financing (AML / CFT).

German Banking Act equalized crypto assets with financial tools. Any person wishing to provide financial services related to crypto-assets in Germany on a commercial and/or another scale will have to obtain permission from BaFin. During 2020, many European crypto companies shut down over impending EU money-laundering rules, for instance, the crypto mining pool Simplecoin.

The Prospects of Cryptocurrency

Cryptocurrency is on the way to blend in with everyday life. The residents of Eastern European and Asian countries are mentally more prepared for cryptocurrencies than Western Europe or North America.

Many governments want to tap into the benefits of blockchain. For instance, China, Georgia, and Belarus are taking full advantage of the economic perks of mining. Hopefully, new laws and amendments will lead to emerging blockchain hubs rather than impeding their operation.

Thanks for reading to the end! Follow our news and check out the second part of the Cryptocurrency Regulation series. Next time, we will explore several Eastern European countries.