Explainer · Costs & Regulation
Crypto regulation basics for beginners
Crypto is not one product under one rule book. Who regulates it depends on where you live and on what you are actually buying: the coin itself, a derivative on it, or a stablecoin.
Quick answer
It depends on your country and the product. The EU's MiCA regulation sets common rules for crypto firms [2]. The UK FCA calls crypto largely unregulated [4]. In the US, most crypto cash markets are not supervised by a government agency [9]. None of this protects you from price falls.
Key points
- In the EU, MiCA entered into force in June 2023 and sets uniform rules for crypto-assets not covered by older financial laws [2].
- After 1 July 2026, clients of crypto firms not authorised under MiCA do not get MiCA safeguards [3].
- In the UK, crypto exchanges must register with the FCA for anti-money-laundering purposes [6], and selling crypto derivatives to retail clients is prohibited [8].
- In the US, crypto derivatives fall under the CFTC, while spot platforms register with FinCEN, not the CFTC [10].
- Regulation does not stop prices falling: the FCA says be prepared to lose all your money [4].
On this page
Why is crypto regulation so confusing?#
Because there is no single answer. Each country decides its own rules, and inside a country the rules change with the product. Buying a coin on an exchange, trading a contract that tracks its price, and holding a dollar-linked stablecoin can each fall under a different regulator, or under none.
The gap is recent. When the EU wrote its crypto law, it noted that apart from anti-money-laundering rules, there were no EU rules for services related to crypto-assets that sat outside existing financial law [1]. It said this absence left holders exposed to risks, especially where consumer protection rules did not apply [1].
What does the EU's MiCA regulation cover?#
MiCA is Regulation (EU) 2023/1114 of 31 May 2023 on markets in crypto-assets [1]. ESMA says it entered into force in June 2023 and covers crypto-assets not already regulated by existing financial services law [2]. Its subject matter includes disclosure rules for issuing and listing crypto-assets, authorisation and supervision of crypto-asset service providers (CASPs), protection of holders and clients, and measures against insider dealing and market manipulation [1].
MiCA defines a crypto-asset as a digital representation of a value or a right that can be transferred and stored electronically using distributed ledger technology or similar technology [1]. It also names two kinds of token that try to hold a stable value: e-money tokens, which reference one official currency, and asset-referenced tokens, which reference another value, right or mix of them [1]. People often call both stablecoins, but that is not MiCA's own word.
How does the UK regulate crypto?#
Only in part, by the FCA's own description. Its consumer guide, last updated in January 2026, says crypto is largely unregulated in the UK, so it is highly unlikely you would be covered by the Financial Services Compensation Scheme [4]. Its scams page adds that most crypto-related activities are not regulated and you generally cannot take a complaint to the Financial Ombudsman Service [5].
There are two firm rules a beginner should know. First, crypto exchanges, crypto ATMs and custodian wallet providers must be registered with the FCA, and that registration is for anti-money-laundering purposes [6]. It is not a stamp of approval for how the firm treats your money. Second, the FCA banned the sale of crypto derivatives, such as CFDs, options and futures, to retail consumers from 6 January 2021 [7]. The current FCA Handbook rule, in a version effective from 8 October 2025, still says firms must not sell, distribute or market cryptoasset derivatives to retail clients [8].
How does the US regulate crypto?#
Through several agencies, each covering a slice. The CFTC says bitcoin and other virtual currencies have been determined to be commodities under the Commodity Exchange Act, and that most cash markets for them are not regulated or supervised by a government agency [9]. Derivatives that use virtual currencies as the underlying commodity are regulated by the CFTC [10].
A platform where you simply buy and sell coins does not have to register with the CFTC. The CFTC says the US Treasury treats such spot trading companies as money services businesses, which must register with FinCEN [10]. The CFTC page does not describe that registration as customer protection. Separately, the SEC warns that accounts with crypto asset firms do not get the SIPC or FDIC type protections that broker or bank accounts generally have [11].
Stablecoins now have their own law. The GENIUS Act, enacted on July 18, 2025, sets a federal framework for payment stablecoins and bars permitted issuers from paying interest or yield just for holding them [12].
| Question | EU | UK | US |
|---|---|---|---|
| Rules for crypto exchanges | MiCA authorisation for CASPs [1] | FCA registration for anti-money-laundering [6] | FinCEN registration for spot platforms [10] |
| Crypto derivatives for retail | Not covered here | Prohibited [8] | Regulated by the CFTC [10] |
| Compensation if a platform fails | Not stated in our sources | No FSCS cover if the firm fails [5] | No SIPC or FDIC type cover [11] |
| Where to check a firm | ESMA register [3] | FCA Register [6] | NFA BASIC for derivatives firms [10] |
Summary of the sources cited, as of their dates. Rules change; always check the regulator's own site.
What does crypto regulation not protect you from?#
Price falls, first of all. The FCA tells crypto investors to be prepared to lose all their money, for reasons that include sudden market moves, firm failure, poor segregation of client funds and cyberattacks [4]. The UK compensation scheme said in May 2023 that it cannot protect you if a platform that exchanges or holds crypto goes out of business, and that stolen crypto is hard to get back [13]. The CFTC says there is no assurance of recourse if your virtual currency is stolen [9].
Authorisation is not a guarantee either. Our sources do not say that MiCA authorisation comes with a compensation scheme, so do not assume one exists. Read more in investor protection schemes and lessons from exchange collapses.
- MiCA adopted
- 31 May 2023Regulation (EU) 2023/1114 [1]
- MiCA transition ended
- 1 July 2026unauthorised CASPs lose MiCA safeguards [3]
- UK crypto derivatives ban
- 6 Jan 2021announced 6 Oct 2020 [7]; 92 days later, calculated
- GENIUS Act enacted
- 18 July 2025US payment stablecoin framework [12]
- US stablecoin sales deadline
- 18 July 20283 years after enactment, calculated [12]
That last date matters for anyone using dollar stablecoins in the US: from July 18, 2028, digital asset service providers generally may not offer or sell a payment stablecoin in the US unless it comes from a permitted issuer [12].
How do you check a crypto firm where you live?#
- Name the product
Are you buying the coin itself, a derivative such as a CFD or future, or a stablecoin? The answer decides which rules apply.
- Match the contact details
Scammers copy real firms. The FCA advises checking that the contact details you were given match those on its Firm Checker [6].
- Read what the registration means
UK crypto registration is for anti-money-laundering purposes [6]. It does not by itself mean your money is protected.
- Plan for the worst case
Assume no compensation scheme will repay you if the platform fails, and size your holdings with that in mind.
For a fuller checklist, see how to check a crypto exchange and how to check if a broker is regulated.
Mistakes beginners make with crypto regulation#
- Assuming one country's rules apply everywhere
MiCA is EU law and the FCA rules are UK rules. A platform authorised in one place may serve you from another with different rules.
- Trading crypto CFDs through an offshore firm to get around a ban
The UK ban exists because the FCA judged these products harmful to retail consumers, citing extreme volatility [7]. Using a firm outside UK rules does not make the product any less volatile.
- Reading an old rule as current
Crypto rules have changed often since 2020. Check the date on any page you rely on, including this one.
Frequently asked questions#
Is crypto legal?
Our sources do not describe any of the EU, UK or US banning people from buying crypto. The UK bans the sale of crypto derivatives to retail clients [8], which is a different thing from owning coins. Rules elsewhere vary, so check your own regulator.
Does MiCA protect my crypto if an exchange collapses?
Who regulates bitcoin in the US?
The bottom line#
Crypto regulation depends on your country and on what you buy. The EU now has MiCA, the UK registers exchanges for anti-money-laundering and bans crypto derivatives for retail clients, and the US splits the work between agencies. In all three, regulation will not stop prices falling or guarantee you get money back if a platform fails. Check the firm on the official register, assume no compensation, and read our risk disclosure before you buy.
Sources
- Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937.
- Markets in Crypto-Assets Regulation (MiCA) | ESMA.
- Public Statement: ESMA calls on unauthorised crypto-asset service providers ... (ESMA75-113276571-1710, "MiCA transitional period ends").
- Crypto: The basics | FCA (InvestSmart).
- Crypto investment scams.
- How to check a firm or individual is authorised.
- FCA bans the sale of crypto-derivatives to retail consumers.
- COBS 22.6 Prohibition on the retail marketing, distribution and sale of cryptoasset derivatives and cryptoasset exchange traded notes (FCA Handbook).
- Customer Advisory: Understand the Risks of Virtual Currency Trading.
- Be Smart: Check Registration & Backgrounds Before You Trade.
- Exercise Caution with Crypto Asset Securities: Investor Alert.
- GENIUS Act Implementation (Advance Notice of Proposed Rulemaking), Federal Register, 19 September 2025.
- Five things to consider about cryptoassets.
- Investments | FSCS (What we cover).
Education only. This page is not investment, tax or legal advice. Trading and crypto can lose you money. See our risk disclosure.
