Legal and Regulatory Frameworks for Blockchain
Domain overview
This domain tests how law classifies crypto assets and the activities around them. The exam favours substance over labels: what the token gives the holder, how it is marketed, and who performs custody, exchange, transfer, or advice. You should be able to identify the regulatory perimeter and the licence or exemption that applies.
Core concepts
- Token taxonomy: payment/exchange tokens, utility tokens, security/investment tokens, and asset-referenced or e-money stablecoins are regulated differently.
- Investment-contract tests: fact-specific tests, such as the US Howey analysis, look at investment of money, common enterprise, expectation of profit, and reliance on others efforts. Marketing, roadmaps, and promoter statements matter.
- Regulatory regimes: the EU MiCA covers crypto-asset issuers and service providers; the UK FCA registers cryptoasset businesses; Singapore MAS licenses under the Payment Services Act; US federal and state regimes overlap.
- Custody and market conduct: safeguarding client assets, disclosures, market-abuse rules, and stablecoin reserve requirements are recurring exam targets.
Worked example
A startup sells a utility token before its platform exists, promising buyers that token demand will rise as the team builds the network. The label says utility, but the facts point to an investment contract: buyers contribute money, expect profit, and rely on the team. The exam answer should require securities-law compliance or a valid exemption, plus disclosure and transfer restrictions, rather than accepting the label.
Traps that cost marks
A utility label does not control. A platform registration does not approve every token traded on it. Offshore issuance can still reach local customers through marketing. Stablecoin reserve and redemption rules are not optional.