Crypto Exchanges Under Regulatory Pressure: Which Jurisdictions Remain Stable?

Just a few years ago, crypto exchanges were operating in relatively comfortable conditions. Maintaining minimal compliance requirements and serving a global user base seemed like a sustainable model. However, regulators around the world have now caught up with the market and are acting firmly and systematically.

Pressure is mounting not only on centralized exchanges, but also on financial institutions, payment providers, token issuers, and developers across the entire ecosystem. Against this backdrop, the key question is where crypto businesses can still operate in a stable and predictable manner.

One of the most visible turning points was the collapse of FTX. Once the third-largest exchange by trading volume, FTX was founded in 2019 and suddenly collapsed in November 2022 due to the misappropriation of customer funds, which led to a loss of trust. Customers rushed to withdraw their funds, revealing that there were insufficient reserves. This shocked the market and triggered a chain reaction of bankruptcies.

These events made the industry impossible to ignore. For governments, cryptocurrency ceased to be an experiment and became part of the financial system, meaning it would be subject to the same standards as banks.

Licences became mandatory. KYC/AML requirements became more detailed and costly. Cross-border operations became more complex in terms of both reporting and liability. Exchanges had to choose between exiting certain markets and fundamentally restructuring their business models.

The market is entering a phase of segmentation. Some jurisdictions emphasize strict supervision and investor protection, while others focus on regulatory clarity, proportional oversight, and ongoing dialogue with industry participants.

The introduction of the Markets in Crypto-Assets (MiCA) regulation represents one of the most comprehensive crypto frameworks globally. MiCA establishes uniform rules for exchanges, stablecoin issuers, and service providers across all EU member states.

For large exchanges and infrastructure providers, the primary advantage is regulatory harmonization: a single licence can provide access to the entire EU market. However, this comes at the cost of extensive compliance obligations, high capital requirements, and lengthy approval timelines. MiCA is best suited to well-capitalized firms willing to operate under bank-like regulatory standards.

Switzerland represents a different regulatory model. Through FINMA, authorities apply a principles-based approach that emphasizes substance over form. Regulatory expectations are typically communicated early, and enforcement is consistent but predictable.

This environment favors projects that are structurally compliant from inception. A Swiss licence is difficult to obtain but carries strong credibility. The jurisdiction prioritizes governance, custody, and transparency, making it attractive for institutional-grade platforms rather than rapid-growth retail exchanges.

The UAE has taken an active and competitive approach to crypto regulation. Dubai’s Virtual Assets Regulatory Authority (VARA) oversees virtual asset service providers under a clearly defined rulebook. While the framework is relatively new, it is already operational, with around 40 licences issued and more than 400 applications currently under review.

This reflects a deliberately selective strategy. Rather than prioritizing rapid market entry, VARA emphasizes phased approvals, making regulatory access dependent on demonstrated compliance rather than speed.

Hong Kong has recently strengthened its regulatory framework for cryptocurrency, moving beyond exchange licences to introduce a formal regime for stablecoins. The city’s Stablecoin Ordinance came into effect in 2025 and establishes a licensing system for issuers of fiat-referenced stablecoins, with the first licences expected to be granted in early 2026.

Regulators have also signalled broader expansion of crypto rules, including licensing for dealers and custodial services as part of a broader effort to position Hong Kong as a major digital-asset hub.

This environment emphasizes risk management, reserve quality, and investor safeguards, offering regulated access to a major Asian financial centre for companies that can meet stringent requirements on reserves, redemption rights, and governance.

A lesser-known but increasingly influential jurisdiction in the crypto space, Kyrgyzstan has emerged as a rising example of state-led digital asset regulation. In 2022, the country advanced a national digital transformation strategy supported by the adoption of a legal framework governing virtual asset service providers (VASPs).

Rather than focusing solely on licensing private exchanges for retail activity, Kyrgyzstan’s approach emphasizes sovereign oversight and supervised digital asset initiatives. The Law on Virtual Assets establishes defined requirements around licensing, custody, reporting, and compliance, alongside preparations for regulated stablecoin models and a central bank digital currency pilot.

These measures position Kyrgyzstan as a jurisdiction that combines regulatory clarity with direct institutional oversight, particularly in areas such as settlement, cross-border use, and financial system modernization.

Regulatory pressure is reshaping the market. Crypto is gradually moving from being an “alternative system” to becoming a complementary component of the existing financial architecture.

The transition is complex, but it strengthens the industry. In the coming years, those who can operate within transparent jurisdictions, build constructive regulatory relationships, and implement hybrid models adapted to different legal regimes will have the advantage.

These approaches are shaping the next phase of global crypto infrastructure development.