ICO Regulations by Country

ICO investmentSince we first published this guide to the legality of initial coin offerings (ICOs) in various countries, there has been a hardening of opinions on the acceptability of the risks involved in this investment opportunity. While bitcoin’s historic price spike continues with no signs of abating, China and South Korea’s banning of ICOs and Japan’s changing of opinions on the acceptability of altcoins have led to many nations taking an aggressive position in warning and protecting prospective investors.

This changing political attitude has led many in the ICO world to take self-regulation seriously. For example, the blockchain platform Waves – with participation from entities like Deloitte CIS, the ICO Governing Foundation, and the Ethereum Competencies Centre – has announced the launching of a self-regulatory body to set standards for legal, tax, accounting, know your customer (KYC), and business due diligence for the industry. Waves offers a platform-as-a-service for the development of decentralized applications (DAPPs) and ICOs.

This article details the status of ICOs across the world and discusses why some nations are moving toward finally codifying their positions on the controversial investment device.

The Perceived Problem with ICOs

One of the problems that many countries have with ICOs is that, technically, they represent a regulatory workaround. The idea behind ICOs is that instead of seeking an initial public offering, businesses can seek low amount seed funding without the due diligence, regulatory requirements, time, or fiduciary permissions a traditional IPO would require. For a small business dealing with untested or unknown technologies, this peer-based alternative offers funding opportunities to businesses otherwise ineligible for traditional funding approaches.

This approach, however, can be rife with fraud. China and South Korea both claim that the possibility of scammers using ICOs to defraud investors is the primary reason they have moved to ban the creation or selling of them in their countries. Meanwhile, the US SEC has issued an alert indicating that public companies may be engaging in “pump-and-dump” schemes to manipulate their market prices.

Many nations are pursuing changes to their regulatory policies to codify adherence to anti-money laundering/know your customer (AML/KYC) practices into law for ICOs and require additional oversight, such as registrations and disclosure statements.

Additionally, if the ICO relates to property transfers or to fiat currencies, these ICOs, in fact, may be dealing with securities. This has implications for taxation and securities integrity.

Embracing the Future

However, there are also nations that are seeking regulations to protect ICOs.

The unregulated nature of ICOs leaves them subject to exposure to additional regulations that may be excessive. A case of this is Wyoming in the US, which requires 25 percent of the value of all exchanges transmitted in or to Wyoming to be held in deposit. These incidents of “over-regulation” have a chilling effect on new ICO development.

The Isle of Man and Switzerland have indicated that they will seek regulations to close these loopholes. Thus, as many countries seek to tighten controls on ICOs, others are looking to become leaders in the ICO world.

The chart below list nations that have indicated potential or actual changes to regulations. This information is correct as of December 12, 2017. As always, it is the responsibility of the investor to do his or her due diligence before investing in any ICO. While regulations can help to reduce the investment risk, the best risk reduction practice is extensive research and preparation.


Country Name Status Notes
European Union Allowed/Subject to future regulations ICOs are allowed, given they are in adherence to Anti-Money Laundering/Know Your Customer (AML/KYC) policies and to required business regulations and licenses, per the ICO’s business function.
On November 13, 2017, the European   Securities and Market Authority took a stricter stance on ICOs, however, declaring that ICOs represent a high risk to investors and requiring firms dealing with ICOs to meet relevant regulatory requirements. This suggests that the EU is ready to embrace America’s position on ICOs, which is a   reversal of the Union’s previous position.
Canada Allowed

/See Notes

The Canadian Securities   Administrators have ruled that ICOs and altcoins are securities, subject to regulations on a case-by-case basis. The Canadian authorities have developed a “regulatory sandbox” for the purposes of regulating fintech projects that would not normally fit in the national regulatory scheme, such as ICOs.
China Banned ICOs are banned for all businesses and individuals by order of the People’s  Bank of China. Chinese ICOs that have completed their funding cycles have been requested to refund any altcoins raised. The PBoC has indicated it will investigate any company or individual found to be in violation of its ruling.
Estonia Allowed Estonia is currently considering starting its own ICO to raise funds. However, the Eurozone rule on nation states not having their own currencies continues to split opinions about the possibility of this happening.
Germany Allowed Germany has no specific regulations for ICOs, but expect ICOs to adhere to existing regulations, including those encapsulated in the Banking Act, Investment Act, Securities Trading Act, Payment Services Supervision Act, and Prospectus Acts.

However, the Federal Financial Supervisory Authority has issued a warning regarding the risks of ICO investments. Per the statement, “Due to the lack of legal requirements and transparency rules, consumers are left on their own when it comes to verifying the identity, reputability, and credit standing of the token provider and understanding and assessing the investment on offer. It can also not be guaranteed that personal data will be protected in accordance with German standards.”

Israel Allowed, but subject to future regulations The Israeli Securities Authority is scheduled to report on whether ICOs and altcoins should be regulated on December 31, 2017.
There are positive signs, however, that Israel may be warming up to the idea of ICO crowdfunding.
Japan Allowed, but subject to future regulations The Financial Services Agency is looking at regulations that may help to strengthen AML/KYC protections for altcoins.

There is open fear that a potential crackdown on altcoins may be on the horizon, with the Financial Services Agency following international trends by issuing an investor warning on ICOs.

Russia Allowed, but unregulated/subject to future regulations The Kremlin issued five orders in October 2017, requiring altcoin miner registration and taxation, the application of securities laws to ICOs, and the use of altcoins to create a   “single payment space” in the Eurasian Economic Union to oppose the Eurozone.
Singapore Allowed. but subject to future regulations In November, the Monetary Authority of Singapore offered a guide on Digital Token Offerings, which indicates how altcoins should be treated under current securities laws. The new guidance dictates that any ICO or altcoin that are “capital market products” under the Securities and Futures Act can be regulated under the MAS. This includes altcoins that either infer an ownership interest in a corporation or product, debt, or a share in an investment scheme.
Switzerland Allowed, but subject to future regulations Recent attempts to regulate ICOs have failed, but the need to codify protections may reignite the regulation efforts. The Swiss Financial Market Supervisory Authority (FANMA) has started to examine ICOs for possible breaches of securities laws, which may be the first signs of a new wave of campaigning for regulatory oversight. Regulations are not thought, however, to be able to stop the current momentum to incorporate ICOs into Swiss culture.
United Kingdom Allowed, but subject to future regulations Like most other nations, the UK   has issued an investor warning on the unregulated nature of ICOs. The Financial Conduct Authority argues that even if the ICO is acting in good faith, investors still stand a good chance of losing their entire investment. “Typically ICO projects are in a very early stage of development and their business models are experimental,” the FCA said.

The UK recognizes altcoins as   “private currency,” similar to “Disney Dollars” at Disney properties. Currently, ICO operators are free to interpret existing laws and regulations as they see fit for their own properties. However, the UK is testing out ICOs and altcoins in its “regulatory sandbox”; new regulations may be released soon.

United States Allowed, but heavily regulated ICO rules vary widely from state to state, from no regulations at all in some states to regulations requiring deposits in equal to or in excess of all local transactions to regulations requiring a license for businesses to engage in altcoin activities. On the federal level, there are no current regulations banning ICOs specifically,   although ICOs are expected to be registered and licensed the same as if they were not ICOs. This includes registering with the SEC if the ICO is to sell or trade securities. The SEC has recently found that some altcoins may be a security, and as such, may be subject to SEC’s ruling in the future. Some SEC commissioners hold the position that most ICOs are securities and should be treated as such. ICOs are expected to adhere to AML/KYC practices. Failure to adhere to these practices may leave an ICO open to legal action or possible seizure.

The United States has also moved to recognize celebrity endorsements of ICOs to be illegal unless all compensation involved is disclosed.

Gibraltar (UK) Allowed, but subject to future regulations Regulators are planning to offer regulations for ICOs by January 2018 in hopes of permanently codifying legal protections for the altcoins.
Isle of Man(UK) Allowed, but subject to future regulations The Isle of Man has indicated that it is seeking to forge regulations in the future that will establish and protect ICOs’ legal status.
South Korea Banned South Korea has banned all ICOs in the country on September 29. The Financial Services Commission cited the growing risk of scams for being the reason behind the crackdown.
Thailand Allowed, but subject to future regulations The Securities and Exchange Commission has released a statement paper, welcoming the use of altcoins, but leaving open the possibility of regulating altcoins thought to be securities.
Hong Kong (China) Allowed, but subject to future regulations Regulators have indicated that certain altcoins might be securities and should be treated as such.
Philippines Allowed, but subject to future regulations Regulators have recognized Bitcoin as a valid form of remittance payment. However, the country also feels that regulations addressing AML/KYC protections may also be needed. Additional, companies offering exchange services are now required to register.
Australia Allowed/Regulated One of the first countries to   formally launch ICO regulations, Australia requires ICOs that involve combined investment to adhere to the Corporations Act, to keep track of those shares (if the ICO issues shares) and to issue a disclosure document and acquire a financial services license if the ICO offers financial advice to customers.

However, Australia has issued draft laws that would allow the establishment of a regulatory sandbox for FinTech startups that would allow them to operate without being fully licensed.


It is clear that regulation of ICOs is a work in progress in many countries around the world. As this process continues, Bitcoin Market Journal will continue to provide updates on the status of ICOs globally. You can stay in the know by taking the time to subscribe to the Bitcoin Market Journal newsletter today!

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