Regulation of cryptocurrency assets in the European Union, the USA, the UK and Dubai in 2025

In recent years, cryptocurrencies and related technologies have attracted significant interest from both an investment and regulatory perspective. As the digital economy has grown, countries around the world have begun to create legislative frameworks to regulate the activities of participants in this sector. This article aims to provide a comprehensive analysis of the current regulatory regimes in the European Union, the United States, the United Kingdom and Dubai, with a special focus on the procedures for registering legal entities and individuals involved in cryptocurrencies. In addition, tax obligations and declaration requirements will be examined, as well as the status of crypto assets in these jurisdictions. Finally, the prospects for future regulatory developments will be analyzed. The presentation is structured to provide a detailed overview of each aspect, drawing on recent legislation, court decisions and official guidance from the relevant regulatory authorities.

1. European Union

Status of different types of crypto assets

In the European Union, crypto assets are considered a new asset class that is distinct from traditional financial instruments such as securities and currencies. Regulation in this area seeks to clearly define asset categories – from cryptocurrencies used as a means of payment to tokenized assets and stablecoins that aim to maintain a stable value. In this context, the European Commission’s Markets in Crypto- Assets Regulation (MiCA) is particularly important, as it aims to establish uniform standards for the issuance, trading and custody of crypto- assets across the EU.

Some of the most important regulations introduced by MiCA are:

1. Licensing of Crypto Service Providers (CASPs)

All companies that offer cryptocurrency-related services (such as exchanges, wallets, and trading platforms) must obtain a license to operate in the EU. This ensures that they meet certain requirements for security, consumer protection, and fraud prevention.

1. Regulation of Stablecoins

MiCA imposes strict requirements on stablecoin issuers, including an obligation to maintain adequate reserves and ensure transparency. Large stablecoins that could affect financial stability will be subject to additional oversight by the European Central Bank (ECB).

1. Consumer protection and prevention of market abuse

Measures are being introduced to protect consumers when investing in crypto assets, including transparency obligations, information about risks and clear rules to combat market manipulation, such as insider trading and price manipulation.

1. Registration and supervision of crypto issuers

Companies issuing crypto assets must publish a whitepaper detailing the project, risks, and business model, allowing regulators to monitor their activities to ensure compliance.

 

MiCA not only introduces greater legal certainty for market participants, but will also encourage innovation by setting specific criteria for the classification and regulation of digital assets. Additionally, guidelines issued by the European Securities and Markets Authority (ESMA) influence how different types of crypto assets are treated, with a focus on consumer protection and ensuring transparency in the trading of these instruments.

Registration of legal entities and individuals and requirements

For legal entities planning to engage in crypto- asset-related activities, EU regulation requires strict compliance with licensing and registration procedures. Depending on the Member State, companies must register with the relevant national authorities – such as central banks or financial supervisory authorities – and submit a detailed business plan that covers the organizational structure, anti-money laundering (AML) measures and know-your-customer (KYC) policies. For individuals engaged in activities such as trading, mining or consultancy, the procedure usually involves registering as self-employed persons or sole proprietors, as well as keeping detailed accounting records. These measures are imposed to ensure full traceability of transactions and to prevent abuses such as terrorist financing or money laundering. The frameworks provided by EU directives, such as Directive (EU) 2018/843 (the fifth Anti-Money Laundering Directive), have a decisive influence on how organizations’ internal procedures and policies are structured.

Declaration and Taxation

From a tax perspective, both legal entities and individuals operating in crypto assets are required to declare their income and profits in accordance with national tax requirements. For legal entities, this involves filing an annual corporate tax return, in which income from trading in crypto assets is reported on the basis of established corporate tax rates. At the same time, accounting standards, such as International Financial Reporting Standards (IFRS), require crypto assets to be reflected in the balance sheet at fair value, which increases the transparency of financial transactions. For individuals, income derived from trading in crypto assets – whether capital gains or regular income from trading – must be declared in annual tax returns. Guidance from tax authorities in Member States, supported by guidance from the European Commission, highlights the importance of keeping detailed accounting records and transparency of transactions. This not only allows for better accountability, but also facilitates inspections by national tax administrations.

Future regulation

In relation to the rapidly developing crypto- asset sector, the European Union is placing emphasis on the adaptability of the regulatory framework. The adoption of MiCA is just one of the initiatives through which the EU seeks to respond to new technological challenges, while ensuring high standards of consumer protection and the fight against financial crime. Future regulations are expected to focus on improving licensing mechanisms, increasing transparency and reporting requirements, as well as strengthening international cooperation between different jurisdictions. This approach will not only facilitate cross-border trading of crypto- assets, but will also contribute to the creation of a competitive and innovative market. In addition, regulators are working closely with organizations such as the European Securities and Markets Authority (ESMA) and the European Anti-Fraud Office to ensure that new legislative measures are in line with international best practices.

1. USA

In the United States, crypto assets are classified differently depending on their specific characteristics and uses. Federal regulators—primarily the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)—often view digital assets through the lens of existing legal frameworks. The SEC considers some crypto assets to be securities, especially when they offer a share of a company’s profits or guarantee certain rights to investors. The CFTC, in turn, classifies crypto assets as commodities, which allows for regulation of derivative instruments and trading activities related to them. Additionally, the Financial Crimes Enforcement Network (FinCEN) defines cryptocurrencies as a medium of exchange, which places them under money transmission and anti-money laundering (AML) regulations. This layered approach to defining crypto assets provides for more flexible, yet challenging, legislation to implement, allowing for adaptation to a rapidly evolving market, while also creating uncertainty about the precise legal characterization of certain digital instruments.

In addition to all this, a method from court cases has also been adopted in practice. The Howey test is a legal standard in the United States used to determine whether a financial instrument is a security . It is based on a 1946 Supreme Court decision in SEC v. Howey Co. and includes four criteria: an investment of money, an expectation of profit, a common enterprise, and a profit dependent on the efforts of third parties. If an asset meets these conditions, it is subject to regulation by the Securities and Exchange Commission (SEC). The application of the test to cryptocurrencies is a contentious issue, with the SEC often arguing that certain tokens fall into this category. This has led to lawsuits and regulatory challenges for companies offering crypto assets to the market.

Registration of legal entities and individuals and requirements

The registration and licensing of entities and individuals engaged in crypto- related activities in the United States is subject to federal and state regulations. Entities that engage in activities such as cryptocurrency exchanges, derivatives trading, or offering investment products are typically required to register as Money Services Businesses (MSBs) with the Financial Crimes Enforcement Network (FinCEN) and comply with strict know-your-customer (KYC) and anti-money laundering (AML) requirements. In addition, some states—such as New York—require additional licensing through specific regulatory regimes such as the BitLicense, which imposes additional requirements for capital adequacy, information security, and internal controls.

Individuals engaged in cryptocurrency trading or mining may register as self-employed individuals or sole proprietors. They are required to maintain detailed accounting records that track all transactions and ensure that they comply with federal and state security and transparency requirements. Additional regulatory requirements may apply if their activities exceed certain thresholds or if they engage in activities that fall under specific legal definitions for offering investment services.

Declaration and Taxation

From a tax perspective, the US treats crypto assets as property for tax purposes. This means that any transaction that results in a profit or loss – whether it’s trading, exchanging or even mining – must be declared on your tax returns. The lead tax agency, the Internal Revenue Service, Revenue The Internal Revenue Service (IRS) has issued specific guidance requiring both businesses and individuals to report all cryptocurrency transactions. For businesses, this means that profits earned from trading or other activities involving digital assets must be included in their annual corporate tax returns, applying standard corporate tax rates. At the same time, individuals must report capital gains or losses earned from trading crypto assets, which can include both short-term and long-term transactions, depending on the time period between purchase and sale. Detailed reporting and recordkeeping are critical, as the IRS conducts regular audits to ensure that all income is properly reported and taxed.

Future regulation

Due to the rapidly changing nature of technology and innovation, the regulation of crypto assets in the United States continues to evolve. Federal regulators are actively working to clarify the legal framework, seeking to ensure a balance between promoting innovation and protecting investors. The SEC and CFTC regularly update their guidelines, attempting to adapt traditional regulatory mechanisms to the new realities of the digital economy. In addition, the continued development of technology is leading to the emergence of new forms of digital assets that require specific attention – such as DeFi (decentralized finance) platforms and the inability to accurately classify some tokenized instruments. In view of this, future regulations may include more specialized regulations to guide the development of the sector, while ensuring that the legal framework remains flexible and adaptable to innovation. International cooperation also plays an important role, with the US seeking to work closely with other jurisdictions and international organizations to develop unified standards and guidelines for the regulation of crypto assets.

• United Kingdom

Status of different types of crypto assets

In the UK, crypto assets are seen as a new class of digital instruments, the characteristics of which can vary significantly depending on their purposes and uses. Financial Conduct Authority (FCA) views crypto assets not as traditional currency, but as financial instruments to which specific consumer protection requirements apply. In this context, assets such as cryptocurrencies, tokenized securities and stablecoins fall into different categories, depending on whether they are used primarily for payment purposes or as an investment instrument. The FCA’s crypto asset guidelines provide a framework for risk assessment and highlight the need for transparency, requiring firms to establish and maintain adequate measures to protect customers and prevent fraud. For their part, HM Revenue & Customs (HMRC) views crypto assets for tax purposes as property, which affects the way profits and losses from their trading are accounted for. This duality in classification – on the one hand as financial instruments, on the other as property – leads to specific challenges that impact on the regulatory framework and the way legal and tax requirements are applied.

Registration of legal entities and individuals and requirements

For entities providing services related to crypto assets, regulatory requirements in the UK are aimed at ensuring high standards of security and transparency. Firms carrying out activities such as exchanging cryptocurrency, managing digital wallets or offering investment products must register with the Financial Conduct Authority. Conduct Authority (FCA) and comply with established anti-money laundering (AML) and know-your-customer (KYC) regulations. Registration requires the submission of a detailed business plan that demonstrates the organizational structure, information security measures, internal controls and risk management strategies. For individuals engaged in crypto asset trading, mining or consultancy activities, registration as self-employed persons or sole proprietors is required. In this case, the legal requirements include keeping detailed documentation of each transaction, as well as compliance with local and national measures to prevent financial abuse. These procedures are set not only to protect customers, but also to ensure traceability and accountability, which are key in regulating new digital technologies.

Declaration and Taxation

From a tax perspective, HM Revenue & Customs (HMRC) treats crypto assets as property, meaning that profits from trading in these assets are taxed in the same way as capital gains on other assets. Legal entities that make income from trading in crypto assets must include this income in their annual corporate tax returns. The tax rate is determined at general corporate rates, and the assets are accounted for at fair value, in accordance with accounting standards applicable in the UK. For individuals, income derived from trading in crypto assets – whether it relates to short-term transactions or long-term investments – is declared in their personal tax return.

In the UK, the taxation of cryptocurrency income for individuals and legal entities differs. For individuals, there are two types of taxes:

1. Capital Gains Tax – CGT):

Tax exemption: For the tax year 2024/2025 (6 April 2024 to 5 April 2025) the tax-free minimum for capital gains is £3,000. From 30 October 2024: 18% on total income up to £50,270 and 24% on income above that amount.

2. Income tax Tax):

If you receive cryptocurrency as a salary, from mining or staking, this income is subject to income tax.

Personal tax-free amount: £12,570 for the tax year 2024/2025. ​

Rates:

• 20% for incomes between £12,571 and £50,270.
• 40% for incomes between £50,271 and £125,140.
• 45% for incomes over £125,140.

 

Legal entities are subject to Corporation Tax: From 1 April 2024, the basic rate of corporation tax is 25% for companies with profits over £250,000. Companies with profits under £50,000 pay 19%, and those with profits between £50,000 and £250,000 apply a graduated scale.

HMRC has issued detailed guidance on the reporting of crypto transactions, highlighting the need to keep accurate and complete records to allow for evidence in the event of an audit. These measures are particularly important to prevent tax evasion and ensure transparency in financial transactions.

Future regulation

crypto asset sector in the UK is dynamic and rapidly evolving, which places additional demands on the adaptability of the regulatory framework. The Financial Conduct Authority (FCA) is actively working to update its guidance and regulations to respond to new technological and market realities. In addition to existing rules, future regulation may include specialized regulations targeting the unique characteristics of new forms of crypto assets, such as DeFi platforms and other innovative solutions. International cooperation and the exchange of best practices with other jurisdictions are also part of the strategy for developing the regulatory framework. The aim is to create an environment that encourages innovation, while ensuring high standards of consumer protection and preventing financial abuse. The review of future trends shows that the UK will continue to adapt its regulatory mechanisms to remain competitive on a global level and attract investment in the digital economy.

 

1. Dubai (UAE)

Status of different types of crypto assets

In Dubai, crypto assets are seen as an innovative digital asset class that does not fall directly into traditional categories such as currency or securities. The regulatory framework, shaped by authorities such as Dubai Financial Services Authority (DFSA) and Dubai International Financial Centre (DIFC), seeks to classify crypto assets based on their functionality and intended use. In this context, assets such as cryptocurrencies, tokenized assets and stablecoins are given specific legal definitions that aim to create a balanced environment for innovation and investor protection. While some crypto assets are primarily used as a medium of exchange, others are seen as investment or project financing instruments, with the DFSA and DIFC offering guidance to facilitate their correct interpretation in the context of local law:

1. Crypto tokens (Crypto Tokens): These are tokens used or intended to be used as a medium of exchange, payment or investment. Only DFSA recognized crypto tokens can be used in DIFC. As of September 2024, the DFSA has recognized five crypto tokens: Bitcoin, Ethereum, Litecoin, Toncoin and Ripple.
2. Excluded tokens (Excluded Tokens): This category covers non-fungible tokens (NFTs), utility tokens and digital currencies issued by governments, such as central bank digital currencies (CBDCs). These tokens are not regulated by the DFSA in the same way as crypto the tokens.
3. Prohibited tokens (Prohibited Tokens: The DFSA prohibits the use of certain tokens in the DIFC, including privacy tokens. tokens) and algorithmic tokens (algorithmic tokens).

Financial services related to unrecognized tokens are limited, except for certain cases such as providing custody and certain types of funds.

This regulatory framework aims to encourage innovation while ensuring the stability of the financial system and consumer protection.

Registration of legal entities and individuals and requirements

The registration and licensing of legal entities and individuals carrying out activities related to crypto assets in Dubai is carried out within the free economic zones, such as Dubai International Financial Centre (DIFC) and other dedicated zones promoting the digital economy. Legal entities engaged in activities such as cryptocurrency exchanges, digital wallet management or offering investment products must submit a license application, including a detailed business plan, information on the organizational structure, information security measures, as well as procedures for compliance with anti-money laundering (AML) and customer identification (KYC) measures. Individuals engaged in trading, mining or consulting activities can register as self-employed persons or sole proprietors, and must maintain accurate documentation of all transactions. These requirements are designed to ensure full traceability and transparency of operations, which is essential to prevent financial abuse and build trust in the sector.

Declaration and Taxation

From a taxation perspective, Dubai offers a relatively favorable environment, especially in the free economic zones, where corporate tax rates and obligations are minimal or even non-existent for certain activities. However, legal entities carrying out operations with crypto assets must file annual financial statements and comply with specific requirements imposed by the DIFC and DFSA regulators. This includes reporting profits and losses from trading in crypto assets under established accounting standards, with International Financial Reporting Standards (IFRS) also being applicable. For individuals, income derived from crypto asset-related activities – whether from trading, mining or other forms of digital economic activity – is declared in accordance with local tax regulations, with particular emphasis on maintaining detailed accounting records. Even within the favorable tax environment, transparency and accountability requirements remain strict to ensure compliance with international standards for combating money laundering and other financial crimes.

Future regulation

Dubai is striving to be a leading regional hub for innovation and blockchain technology, with the regulatory framework for crypto assets evolving dynamically in line with international trends. Governing bodies – such as the DFSA and DIFC – are working closely with other international institutions to ensure a flexible and adaptable regulatory environment that encourages investment and technological innovation. Additional regulations can be expected in the future to specialize the regulation of new forms of crypto assets, including decentralized finance platforms (DeFi) and tokenized instruments. These measures will contribute to increasing legal certainty for market participants and facilitate cross-border trade, while ensuring high standards of consumer protection and combating financial abuse. International cooperation and the exchange of best practices remain key components of the future regulatory strategy, which will allow Dubai to remain competitive on a global level.

 

 

Sources:

 

1. European Commission. (2025). https://eur-lex.europa.eu/eli/reg/2023/1114/oj/eng
2. Financial Action Task Force (FATF). (2025). Guidelines on a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers. https://www.fatf-gafi.org/media/fatf/documents/recommendations/RBA-VA-VASPs.pdf
3. Directive (EU) 2018/843 of the European Parliament and of the Council. (2018). Amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (5AMLD). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018L0843
4. European Securities and Markets Authority (ESMA). (2021). ESMA Report on Crypto-Assets. https://www.esma.europa.eu/press-news/esma-news/esma-publishes-report-on-crypto-assets
5. U.S. Securities and Exchange Commission (SEC). (2025). Framework for Analysis of Digital Asset Investment Contracts. https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets
6. U.S. Commodity Futures Trading Commission (CFTC). (2024). CFTC Supervision of Digital Assets. https://www.cftc.gov
7. Financial Crimes Enforcement Network (FinCEN). (2023). Guidance for Implementing FinCEN Regulations on Virtual Currencies. https://www.fincen.gov
8. U.S. Internal Revenue Service (IRS). (2024). Virtual Currency Tax Guidance. https://www.irs.gov
9. Financial Conduct Authority (FCA). (2024). Cryptoassets: Guidance for Firms. https://www.fca.org.uk/publication/guidance/cryptoassets-guide-for-firms.pdf
10. HM Revenue & Customs (HMRC). (2023). Cryptoassets: Tax for Individuals and Businesses. https://www.gov.uk/government/publications/tax-on-cryptoassets
11. Money Laundering, Terrorist Financing and Transfer of Funds (Payer Information) Regulations 2021. https://www.legislation.gov.uk/uksi/2017/692/contents/made
12. Payment Services Regulations 2022. https://www.legislation.gov.uk/uksi/2017/752/contents/made
13. Dubai Financial Services Authority (DFSA). (2024). Guidance Note on Crypto Asset Regulations. https://www.dfsa.ae
14. Dubai International Financial Centre (DIFC). (2024). Regulatory Framework for Digital Assets. https://www.difc.ae
15. Central Bank of the UAE. (2025). Regulation on Virtual Assets and Cryptocurrencies. https://www.centralbank.ae
16. UAE Securities and Commodities Authority. (2025). Digital Financial Assets Guidelines. https://www.sca.gov.ae

Svetlan Iliev, LLM

attorney-at-law