was once considered a Wild West or a no man’s land. That’s because there were virtually no rules and no oversight from authorities, leaving market participants to fend for themselves in an environment rife with all sorts of risks. That was the price to pay for entering an uncharted territory and enjoying the perks of a decentralized payment system that bypassed central controls – and many were willing to take their chance.
Before the launch of reputable exchange platforms like Binance, investing in a top cryptocurrency was regarded as a bold undertaking, given the uncertainty and the potential pitfalls that traders and investors exposed themselves to. Fortunes were made and lost during those hectic and exciting times, and crypto pushed forward despite all the challenges, largely flying under regulators’ radar.
Things went on like that for a while until the market grew too big and influential for authorities to ignore it. At one point, it became obvious that digital currencies were not just a fleeting fad but a permanent component of the financial system that was gaining more traction than initially expected. That’s when the first regulations entered the picture sheepishly, trying to bring order and safety to a space dominated by chaos and volatility.
Now that we find ourselves in a different crypto era, it’s a good moment to take a look back at how regulations evolved over time and see how they continue to change as the market matures.
The first attempts at regulating crypto
As mentioned, in the early days of the industry, regulators didn’t care much for crypto or were simply unaware of its existence. Digital currencies were regarded as a niche experiment that only concerned tech enthusiasts, so there was no point for government agencies to get involved in it. Besides, no one really expected that this curious innovation would take off the way it did and leave a dent in the financial sphere, let alone grow into a powerful asset class. As a result, Bitcoin and the few other cryptocurrencies that formed the crypto market developed organically during the first years.
However, around 2013, things started to change. Bitcoin’s price soared significantly, passing the $1K threshold for the first time, and new coins kept entering the market, signaling that digital currencies weren’t going anywhere. That’s when it became clear to governments that they could no longer stand idle. The first agency to intervene was the U.S. Financial Crimes Enforcement Network (FinCEN), which classified crypto exchanges and administrators as money service businesses (MSBs) in 2013. This meant they had to comply with anti-money laundering (AML) and know-your-customer (KYC) requirements. Shortly afterwards, Germany recognized Bitcoin as a unit of account.
In 2014, the collapse of Mt. Gox, the biggest crypto exchange at the time, reinforced the belief that authorities had to intervene and provide some sort of oversight. The first efforts were focused on addressing the risk of fraud and other illicit activities in the crypto space. Once again, the US was ahead of other states, with the U.S. Internal Revenue Service (IRS) classifying cryptocurrencies as property for tax purposes in 2014. Around the world, banks and financial regulatory bodies started warning consumers about volatility risk and lack of protection when engaging with crypto, although they had yet to impose clear restrictions or penalties in this respect.
The ICO boom and global crackdown on digital assets
The 2017 crypto bull market and the surge in initial coin offerings (ICOs) forced regulators to ramp up their efforts and take stronger action. In the U.S., the Securities and Exchange Commission (SEC) published its 2017 DAO Report, stating that many tokens qualified as securities under existing law, a milestone that reshaped token issuance globally.
China took a much stricter approach and banned ICOs entirely, shutting down domestic crypto exchanges in 2017. Other jurisdictions, such as Switzerland and Singapore, adopted clearer classification frameworks that made the distinction between utility tokens, payment tokens, and security tokens. Crypto’s rapid surge triggered a wave of enforcement actions and a growing realization that crypto, despite having started as an outcast, could not exist indefinitely outside regulatory structures.
Framework building and institutional integration
As regulators tried to bring clarity to crypto markets, they came against a major stumbling block: the rules that applied to traditional assets were not applicable to crypto. Digital currencies were atypical – too complex and different from any other asset class to be covered by existing regulatory frameworks. This called for new crypto-specific laws that could provide a higher level of protection for consumers.
The European Union started working on regulatory proposals that would later become the Markets in Crypto-Assets (MiCA) regulation, which aimed to unify rules across member states. In the U.S., regulators intensified scrutiny of stablecoins, publishing reports on their systemic risks and calling for issuer oversight. Meanwhile, in 2021, countries like El Salvador made headlines by adopting Bitcoin as legal tender. During this stage, crypto firms increasingly sought licenses, compliance departments expanded, and traditional financial institutions began entering the space under clearer regulatory conditions.
The shift from enforcement to more comprehensive and coordinated regulatory frameworks
Recent years have seen a clear shift from enforcement to more proactive frameworks that foster innovation and encourage institutional acceptance. The EU formally adopted MiCA, providing one of the most comprehensive crypto regulatory frameworks to date.
This shift has been most notable in the U.S. than in any other country. The approval of spot crypto exchange-traded funds (ETFs) in 2024 proved that with the right structures in place, crypto assets could be integrated into regulated financial markets. 2025 has been one of the most momentous years for crypto regulation, with the market taking big strides toward legitimization. The second Trump administration ushered in a new era of crypto-friendly policies, with a whole set of legislative proposals such as the GENIUS Act and the CLARITY Act aimed at establishing clear rules for stablecoins and modernizing digital asset regulation.
Globally, regulators are now focused on refining rules instead of defining crypto’s existence, treating digital assets as a permanent part of the financial ecosystem rather than a passing experiment. Overall, all these regulatory developments have brought the industry to the verge of achieving something that critics never thought it could, namely, mainstream acceptance.