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Who regulates cryptocurrency exchanges?

The simple question about who regulates cryptocurrency exchanges actually hides a very complex answer.

First of all, it must be said that not only does there not exist a global regulation for crypto exchanges but also at a local level there is often no specific regulation.

The US is an example. Every single US state regulates the activity of exchanges in a different way, some regulate it explicitly, while in many other states there is no specific regulation.

The State of New York is the one with the most stringent regulatory framework: it is necessary to request and obtain a specific license to be able to offer cryptocurrency trading services on its territory.

There are many exchanges in the world, even very famous, that have chosen not to allow residents of the State of New York to operate on their platforms precisely because of the very stringent regulation.

In other states of the US, a license to operate is not necessary, although everyone follows their own regulation.

However, it does not appear that any of these states have a specific regulation for crypto exchanges, so the rules to follow are those that apply to other similar services.

In other countries of the world, it is necessary to obtain a specific licence as well, starting with Malta, the European state in which many exchanges are opening their offices. But also in Japan and South Korea, two of the largest markets in the world for cryptocurrency trading, it is necessary to obtain a specific license in order to operate in this sector.

In these cases, the need to obtain a specific licence in order to operate as a cryptocurrency exchange means that specific rules must also be respected.

In Switzerland, on the other hand, it is not necessary to apply for a specific licence, but it is necessary to obtain an authorisation in order to prove that you are in compliance with the anti-money laundering laws (AML).

Although Switzerland is considered to be the crypto nation, it does not have large volume trading platforms,” notes Lars Schlichting, Partner of the Kellerhals-Carrard law firm.

This situation is mainly due to the fact that the deposit of fiat currencies in Switzerland today requires a very complex banking licence. Only from the 1st of January, it will be easier to obtain a fintech authorization, although limited to the deposit of up to CHF 100 million. However, we are witnessing the opening of several new exchanges in Switzerland and the situation may change in the near future“.

In other countries, such as Italy, there are no licenses or authorizations. What is required is only compliance with the general rules in force for those offering online financial asset trading services.

In reality, this creates more problems than in countries that already have specific regulations, because it is difficult to have a clear idea of how to apply previous regulations to a completely new sector.

So much so that in countries like Italy, without specific regulations on the subject, there are very few exchanges that have decided to locate their headquarters there, while in Malta or South Korea, where the regulation on crypto is quite clear and reliable, there are already several trading platforms.

Special cases are those states like Hong Kong where there are no specific rules and the current ones are generic and not very stringent, thus encouraging the establishment of these type of activities.

Therefore, regulation varies from state to state and, where there are specific rules to follow, it is the local financial market supervisory authorities that are responsible for verifying compliance with the rules, such as the SEC in America and FINMA in Switzerland.

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".