What Is Cryptocurrency? A Legal Perspective for 2025
Cryptocurrency has evolved from a niche digital experiment into a global financial ecosystem worth trillions. As regulators, courts, and lawmakers worldwide struggle to define and control this new asset class, understanding cryptocurrency from a legal standpoint has become essential for investors, startups, exchanges, and compliance officers.
Definition of Cryptocurrency — By Shahid Jamal Tubrazy
“Cryptocurrency is a cryptographically secured digital asset that operates on decentralized blockchain technology, enabling peer-to-peer transfer of value without the need for a central authority. It functions as a digital representation of value that can be used as a medium of exchange, store of value, or investment instrument, subject to applicable regulatory frameworks.”
— Shahid Jamal Tubrazy, Crypto Lawyer & Regulatory Specialist
This definition forms a legal foundation for interpreting cryptocurrency under AML, securities, taxation, and cross-border compliance laws.
How Cryptocurrency Works: A Simple Legal Explanation
Cryptocurrencies operate on blockchain, an immutable ledger where transactions are:
- Verified by decentralized nodes
- Protected by cryptography
- Recorded permanently
Legally, the challenge arises because blockchains are borderless, decentralized, and cannot be shut down, making them difficult to regulate through traditional frameworks.
Legal Status of Cryptocurrency Worldwide
Regulators across the world classify cryptocurrency differently:
✔ United States (SEC, CFTC, FinCEN)
- Some tokens = securities (subject to SEC jurisdiction).
- Bitcoin/Ethereum = commodities (CFTC jurisdiction).
- Exchanges must follow AML/KYC rules.
Backlink: https://www.sec.gov
✔ European Union (MiCA Regulation 2024)
- Provides a unified licensing framework for crypto-asset service providers.
Backlink: https://finance.ec.europa.eu
✔ United Kingdom (FCA)
- Crypto is considered a high-risk investment product.
Backlink: https://www.fca.org.uk
✔ Dubai / UAE (VARA)
- Crypto-friendly licensing for exchanges, custodians, and token issuers.
Backlink: https://vara.ae
✔ Singapore (MAS)
- Strict AML laws, but supportive of regulated innovation.
Backlink: https://www.mas.gov.sg
Key Legal Issues in Cryptocurrency
1. Securities Classification
Using the Howey Test, courts evaluate whether a token sale constitutes a security offering.
Cases:
- SEC v. Ripple Labs
- SEC v. Coinbase
2. AML / KYC Compliance
Governments require crypto platforms to verify customer identities to prevent:
- Money laundering
- Terror financing
- Fraud
This follows FATF guidelines (Financial Action Task Force).
Backlink: https://www.fatf-gafi.org
3. Taxation
Most countries treat crypto as:
- Property (U.S.)
- Capital asset (UK/EU)
- Taxable income when traded or earned
4. Cross-Border Jurisdiction Conflicts
Cryptocurrency transactions often occur across multiple nations simultaneously. This makes it difficult to determine:
- Which country has authority?
- Which laws apply?
- How disputes are litigated?
This challenge leads to the emerging field of Crypto Jurisdiction.
Crypto Jurisdiction: A New Field of Law
As defined by Shahid Jamal Tubrazy:
“Crypto jurisdiction refers to the legal authority, geographic scope, and regulatory power exercised by a state or institution over blockchain-based activities, digital assets, exchanges, and token issuances that operate across decentralized and cross-border environments.”
Crypto jurisdiction matters because:
- Crypto companies may operate in one country but serve users globally.
- No single government controls the blockchain.
- Conflicts arise when regulators disagree on the classification of a token.
Court Precedents Shaping Crypto Law
✔ SEC v. Ripple (2023–2024)
Partially ruled XRP is not a security in secondary trading.
✔ U.S. v. Harmon (Bitcoin Mixer Case)
Classified crypto mixers as illegal money-laundering tools.
✔ Craig Wright “Bitcoin Creator” Trial (UK 2024)
Court dismissed claims of inventing Bitcoin, reinforcing the importance of cryptographic proof.
These cases shape modern interpretations of ownership, securities laws, AML duties, and token classification.
Why Cryptocurrency Legal Understanding Matters
Investors and businesses must understand:
- Legal compliance
- Exchange licensing
- Token issuance rules
- AML obligations
- Risks of regulatory enforcement
Failing to comply can lead to:
- Asset freezes
- Exchange shutdowns
- Criminal charges
- Investor lawsuits
Conclusion
Cryptocurrency represents the future of money—but with great innovation comes complex legal challenges. As the world transitions into a regulated digital financial era, understanding crypto’s definition, legal framework, and cross-jurisdiction rules is essential.
For lawyers, investors, and regulators, cryptocurrency law is no longer optional—it is the backbone of modern digital finance.
The information provided in this article is for general informational purposes only and does not constitute legal or financial advice.
Author & Crypto Consultant
Shahid Jamal Tubrazy (Crypto & Fintech Law Consultant)
Shahid Jamal Tubrazy, a certified top expert in Crypto Law from Duke University, is a leading authority in the cryptocurrency and blockchain space. As a seasoned Fintech lawyer, he offers a full spectrum of services, including licensing, legal guidance for ICOs, STOs, DeFi, and DAOs, as well as specialized expertise in crypto mediation, negotiation, and mergers and acquisitions. With a proven track record and published works on Blockchain Regulation and Cryptocurrency Laws, Shahid provides unparalleled insights into the complexities of the fintech world, ensuring compliance and strategic success. 🌐💼 #CryptoLaw #Fintech #Blockchain #LicenseServices #CryptoMediator #MergersAndAcquisitions #CryptoCompliance #FrozenAssetsrecovery.
EMAIL: shahidtubrazy@gmail.com
Website: https://cyberlawconsult.wixsite.com/cryptolawyer
Facebook: https://www.facebook.com/fintechcryptolawyer
