Blockchain has consistently ranked among the most discussed technological trends in recent years, and 2021 was no exception. The non-fungible token (NFT) market experienced explosive growth, and the concept of the metaverse gained significant traction, leading many to label 2021 as the “Year of NFT” and the “Year of the Metaverse.” Although cryptocurrencies saw volatile price movements, Bitcoin still reached a new all-time high. Additionally, major economies worldwide accelerated their efforts to develop central bank digital currencies (CBDCs).
It is undeniable that the blockchain industry remains highly dynamic, with its underlying technology penetrating an increasing number of sectors. At the same time, as policymakers and financial regulators deepen their understanding of cryptocurrencies and blockchain technology, national approaches to crypto regulation are diverging significantly.
In 2021, global regulatory trends toward cryptocurrencies generally fell into three categories: supportive, neutral or uncertain, and prohibitive. This article reviews representative countries from each category and offers insights into the future direction of the crypto industry.
Countries Embracing Cryptocurrency
El Salvador
One of the most notable events in the crypto world this year was El Salvador’s adoption of Bitcoin as legal tender—a world first. President Nayib Bukele argued that this move would stimulate investment and help provide financial services to the approximately 70% of Salvadorans without access to traditional banking.
In November, Bukele further announced plans to build a “Bitcoin City,” powered by geothermal energy from volcanoes for Bitcoin mining. Official data indicates that El Salvador’s treasury currently holds 1,241 Bitcoins, valued at over $63 million.
Switzerland
Switzerland has maintained its crypto-friendly stance, though its approach is more regulatory than El Salvador’s. The country has long allowed the issuance and trading of crypto assets under a clear legal framework.
The northern region of Zug, known as “Crypto Valley,” is home to 11 unicorn companies—each valued at over $1 billion—including Ethereum, Cardano, and Solana. In September, the Swiss Financial Market Supervisory Authority (FINMA) approved the country’s first crypto-focused investment fund. That same month, the digital exchange operated by SIX Swiss Exchange received a license to offer blockchain-based securities trading and custody services.
Switzerland’s blockchain ecosystem is mature and stable, with continued government support fostering further industry growth.
United Arab Emirates
Dubai, the most populous city in the UAE, has also taken significant steps toward becoming a crypto hub. On December 20, authorities announced that the Dubai World Trade Centre (DWTC) would serve as a crypto zone and regulatory agency for virtual assets. On the same day, Binance signed an agreement with the DWTC Authority to join what is touted as the world’s first comprehensive crypto asset ecosystem.
Countries with Uncertain or Evolving Regulations
United States
The U.S. has shown increasing openness toward cryptocurrency, though regulatory clarity remains incomplete. Major developments included Coinbase’s successful public listing and the launch of Bitcoin futures ETFs—the latter seen as a milestone in U.S. crypto regulation.
Traditional financial players have also played a role in promoting crypto adoption. Visa, for instance, recently introduced cryptocurrency consulting services for financial institutions and merchants. Competitors like Mastercard and PayPal have also increased their crypto-related activities.
At the municipal level, Miami Mayor Francis Suarez announced he would take his salary in Bitcoin and share city crypto profits with residents. Similarly, newly elected New York City Mayor Eric Adams expressed his intention to make New York a crypto-friendly city, setting up a friendly rivalry with Miami.
In December, the House Financial Services Committee held a hearing titled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States,” which was widely regarded as the most constructive and bipartisan crypto-related congressional hearing to date.
Nevertheless, the Securities and Exchange Commission (SEC) rejected yet another application for a Bitcoin spot ETF in late December. Such ETFs are already available in countries including Canada, Brazil, and the UAE.
India
India experienced significant regulatory uncertainty throughout 2021. In late November, the government proposed a bill aimed at regulating cryptocurrencies and introducing an official digital currency—while banning all private cryptocurrencies. This led to brief panic selling among crypto users.
However, the bill was not discussed during the winter parliamentary session ending December 22, leaving the legal status of cryptocurrencies unclear.
Kazakhstan
Cryptocurrency mining is legal in Kazakhstan, but using crypto remains prohibited. Following China’s crackdown on mining, Kazakhstan’s share of global Bitcoin mining hashrate surged to 18.1% by August—making it the second-largest mining hub after the U.S. Two years earlier, its share was only 1.4%.
The rapid influx of miners has strained local energy infrastructure, prompting the government to consider imposing taxes on registered mining operations.
Countries Banning or Restricting Cryptocurrency
A recent report from the U.S. Law Library of Congress identified nine countries that have implemented absolute bans on cryptocurrencies: Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia.
China
One of the biggest crypto-related stories of the year was China’s comprehensive ban on cryptocurrency transactions. Throughout 2021, authorities intensified their crackdown on crypto mining and trading. On September 24, the People’s Bank of China and nine other agencies reaffirmed the prohibition of all crypto transactions.
In response, major exchanges including Huobi, Binance, and OKEx announced plans to exit the Chinese market. It is worth noting that China was once the world’s largest Bitcoin mining hub.
At the same time, China has accelerated the rollout of its digital yuan, with several cities joining the pilot program. The upcoming Beijing Winter Olympics in February 2022 will serve as a major testing ground for the digital currency.
Turkey
The congressional report also highlighted several countries with implicit bans—including Tanzania, Togo, Turkey, Lebanon, and Bolivia—where banks are barred from dealing in cryptocurrencies or providing services to crypto businesses.
Among these, Turkey stands out. The country has faced a severe currency crisis, with the lira plunging and inflation soaring. Despite this, interest rates were cut repeatedly.
Although crypto trading volumes recently exceeded one million per day, regulators in April issued new rules defining crypto as assets but prohibiting their use as a means of payment.
Russia
Russia, the world’s largest country by area, is at a regulatory crossroads. While cryptocurrency is not currently banned, the central bank has recently proposed a prohibition citing financial stability risks and soaring transaction volumes.
Nigeria
In Nigeria—once Africa’s most active crypto market—the central bank announced in February that financial institutions were barred from dealing with crypto entities. Despite this, cryptocurrency usage has continued to rise. Data from Chainalysis shows that Nigeria received $2.4 billion in crypto in May, up from $684 million in December 2020.
Notably, Nigeria ranked sixth in the 2021 Global Crypto Adoption Index, ahead of the United States in eighth place. Chainalysis attributed high adoption rates in emerging markets like Nigeria, Kenya, Vietnam, and Venezuela to significant peer-to-peer trading activity.
Future Outlook
Many industry experts believe regulators will focus increasingly on specific areas such as stablecoins and decentralized finance (DeFi). In a paper titled “The Risks of Stablecoin USDT and Regulatory Countermeasures,” researchers from the Central University of Finance and Economics in Beijing noted that stablecoins like USDT are becoming critical infrastructure in the crypto economy, with growing influence on both digital and real economies.
The authors also pointed out that USDT poses significant risks—including potential impacts on traditional financial systems, investor rights, and national monetary sovereignty. They emphasized that the U.S. has taken the lead in regulating stablecoins and urged China to develop its own regulatory framework.
Wu Tong, a blockchain and digital economy scholar, noted that 2021 was a critical year for cryptocurrency compliance, with major countries making decisive regulatory choices. “The regulatory posture adopted this year largely sets the framework for the coming years,” he said. “Major economies in Europe and America are establishing sound regulatory and tax systems for cryptocurrencies, and it is highly likely the U.S. SEC will approve a Bitcoin spot ETF in 2022.”
Yu Jianing, Chairman of the Blockchain Committee of the China Communications Industry Association, believes regulatory factors will play an even greater role in 2022: “Policy and industry development will diverge more明显 across countries. Research and discussion on public chains, DeFi, NFTs, and GameFi will deepen, paving the way for regulating emerging business models like decentralized exchanges. In major markets, improved legal frameworks will lead to more compliant asset management products, guiding the industry further into an era of compliance.”
Liu Changyong, Director of the Blockchain Economic Research Center at Chongqing Technology and Business University, offered a broader perspective: “The crypto world is built on decentralized identity, with current applications largely limited to currency and finance. The period from 2021 to 2025 will be critical for establishing decentralized identity systems—and also the period of most intense regulatory conflict.”
Frequently Asked Questions
Which countries have fully embraced Bitcoin?
El Salvador is the first and only country to adopt Bitcoin as legal tender. Other nations like Switzerland and the UAE have created supportive regulatory environments that encourage crypto innovation and investment.
Is cryptocurrency banned in the United States?
No, cryptocurrency is not banned in the U.S. However, regulatory frameworks are still evolving. While Bitcoin futures ETFs are available, spot Bitcoin ETFs have not yet been approved. Federal agencies are actively discussing how to regulate digital assets.
What is China’s stance on cryptocurrency?
China has implemented a comprehensive ban on cryptocurrency trading and mining. However, the country is actively developing its own central bank digital currency (CBDC), the digital yuan, which is currently in pilot testing across multiple cities.
How are stablecoins being regulated?
Stablecoins are increasingly coming under regulatory scrutiny. The U.S. has begun integrating them into existing financial regulations, while other countries are evaluating their potential risks to monetary stability and investor protection. Explore more strategies for navigating the evolving regulatory landscape.
What is the future of DeFi regulation?
Decentralized finance (DeFi) is a growing focus for regulators worldwide. Policies are expected to emerge that address compliance, consumer protection, and financial stability without stifling innovation. The next few years will likely see significant regulatory developments in this area.
Are there any tax implications for cryptocurrency users?
Yes, many countries now require cryptocurrency holders to report their digital asset holdings and transactions for tax purposes. It is important to understand local tax regulations and maintain accurate records of all crypto activities. Get advanced methods for managing crypto taxes and compliance.