Top 7 Crypto Tax and Regulation Trends for Global Investors
1. Institutional adoption of crypto assets is surging—BlackRock and Fidelity's Bitcoin ETFs now boast market caps of $50B and $17.5B.
Brokerage firms have been exploring Bitcoin ETFs, or exchange-traded funds, since as early as 2013, but up until 2024 none of them had rolled out a product due to regulatory uncertainty.
Things changed radically in January 2024 when the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs for trading.
Two major investment giants, BlackRock and Fidelity, quickly launched Bitcoin ETF products of their own. As of March 7, 2025, BlackRock's iShares Bitcoin Trust ETF (IBIT) has a market capitalization of about $50 billion, while Fidelity's Fidelity Wise Origin Bitcoin Fund (FBTC) has around $17.5 billion.
To understand the size of these funds, consider that IBIT's market cap is about the same size as the annual gross domestic product of Vermont or Wyoming, and larger than the annual GDP of Latvia.
"So far, hedge funds dominate Bitcoin ETF trading, mainly using arbitrage strategies to exploit price differences between ETFs, futures, and perpetual contracts," says Sam Dorrer, CEO of Echo, an online crypto investment platform based in the Isle of Man, a noted tax destination for crypto investors.
Most capital isn't based on a long-term Bitcoin outlook but on short-term price inefficiencies, making inflows marginal and not reflective of broader market sentiment. However, Bitcoin ETFs solve this by making crypto accessible to institutional investors who prefer traditional investment vehicles. As more long-term investors enter, we should see more stability and sustained demand in the market.
Global Adoption
While the U.S. leads in crypto ETF offerings, several other institutions are already following suit. And a number of institutions around the world have launched ETFs of their own—a total of 12 Bitcoin spot ETFs and two Ethereum ETFs—though none so far are rivalling the BlackRock and Fidelity offerings in size.
2. The percentage of wealth managers recommending crypto to their clients has doubled, from 11% to 22%, since last year.
Financial advisors were initially slow to embrace crypto as an asset class. But that's changing fast: According to the Bitwise/VettaFi 2025 Benchmark Survey, the percentage of advisors recommending crypto to their clients has doubled in the past year, to 22% as of the end of 2024, up from 11% in 2023.
That's a record high for the survey.
Clients are starting to push for it: 96% of advisors report receiving crypto-related questions from their clients over the past 12 months.
Outlook:
99% of advisors currently invested in crypto say they plan to maintain or increase their exposure in 2025.
19% of advisors who have not yet invested in crypto say they are "definitely" or "probably" planning to add crypto to client portfolios in 2025. That's more than double the 8% reported in the survey the previous year.
56% of advisors reported they were more likely to invest in crypto in 2025 as a result of the U.S. presidential election.
3. The U.S. is pivoting to a pro-crypto environment, such as creating a reserve starting with $17B in seized Bitcoin.
Governments worldwide are increasingly accepting cryptocurrencies. Under President Biden, the U.S. maintained a cautious approach. However, the new Trump administration has adopted a strongly pro-crypto stance.
For example:
In January 2025, President Trump signed Executive Order 14178, titled "Strengthening American Leadership in Digital Financial Technology." This move addresses the "debanking" trend under the Biden Administration, under which banks restricted or canceled accounts associated with crypto activities.
In March 2025, the administration announced the creation of a U.S. "Bitcoin Strategic Reserve." This fund will hold Bitcoin, primarily acquired through legal seizures—starting with some $17 billion already seized. The goal is to position the U.S. as a long-term holder of these digital assets, signaling strong support for the crypto industry.
The SEC has also shifted its stance. In January 2025, the SEC revoked Staff Accounting Bulletin 121, which had required financial institutions to treat cryptocurrencies as balance sheet liabilities.This change reduces the cost of custody for digital assets, making it easier for banks to offer crypto services.
Additionally, President Trump nominated Paul Atkins, known for his favorable views on digital assets, as the new SEC Chair. Under his leadership, the SEC dropped its lawsuit against Coinbase, signaling a more supportive regulatory environment for crypto exchanges.
These developments indicate a significant shift in the U.S. and global approach to cryptocurrency regulation, fostering a more favorable environment for the growth and adoption of digital assets.
4. Hong Kong has joined 8 crypto-friendly jurisdictions rushing to attract crypto investments through policies and tax incentives.
An increasing number of countries and jurisdictions are implementing pro-crypto policies to attract investments. These measures include lowering or eliminating taxes on crypto transactions and providing other incentives to position themselves as crypto-friendly markets.
Accelerating Trend of Pro-Crypto Policies
Here are a few of the jurisdictions that have introduced favorable tax regimes and regulatory frameworks to encourage cryptocurrency adoption:
Hong Kong: In late 2024, Hong Kong proposed tax exemptions on gains from cryptocurrencies for hedge funds and investment vehicles, aiming to maintain its status as a leading offshore financial hub.
El Salvador: In 2021, El Salvador became the first country to adopt Bitcoin as legal tender, exempting it from capital gains tax and offering permanent residency to significant investors.
Switzerland: The Canton of Zug, known as "Crypto Valley," has embraced cryptocurrencies by allowing tax payments in Bitcoin and Ethereum and maintaining low tax rates to attract blockchain companies.
Countries To Avoid
While many jurisdictions are adopting pro-crypto policies, others maintain stringent tax regimes:
India: Imposed a 30% tax on cryptocurrency transactions, aiming to discourage speculative investments.
Portugal: Initially a tax-free destination for crypto investors, Portugal revised its policies in 2023, increasing taxes on digital assets.
Japan: Despite its pro-tech culture, Japan enforces taxes on crypto investments that can reach up to 45%.
"But global crypto investors don't have to worry about that," says Sam Dorrer. "You can ignore crypto-hostile countries and focus on developed, secure markets with favorable tax and asset protection laws, such as Malta and the Isle of Man."
5. The number of countries introducing central bank digital currencies (CBDCs) has skyrocketed 282.9% since 2020.
As of 2024, 134 countries are actively considering some form of CBDC, a dramatic increase from just 35 countries in May 2020, according to the Atlantic Council Central Bank Digital Currency Tracker.
What are CBDCs?
Central bank digital currencies are electronic forms of a national currency issued directly by central banks.
What countries have issued CBCDs so far?
China rolled out the digital yuan (e-CNY) in a series of stages between 2020 and 2022.
The Bahamas, Nigeria, and Jamaica have all already launched their own CBCDs.
The European Central Bank (ECB) is actively developing a digital euro, with a decision expected later in 2025.
The United States is not among them: President Trump signed an executive order in January of 2025 blocking development of a U.S. CBCD.
6. The tokenization of real world assets increased 85% over 12 months to reach $15.38B.
Tokenization—the process of representing ownership of physical assets, such as real estate or commodities, through digital tokens on a blockchain—has exploded in recent months.
As of Dec. 31, 2024, the tokenized real-world asset (RWA) market, excluding stablecoins, reached approximately $15.38 billion, marking an 85% year-over-year increase.
"Imagine owning a fraction of a luxury hotel in Dubai or a piece of a masterpiece painting by Van Gogh," continues Sam Dorrer. "In the traditional financial world, such investments would be out of reach for most people, reserved for the wealthy and well-connected.
"But tokenization democratises access, allowing anyone with an internet connection to buy, sell, and trade fractions of these high-value assets. This fractional ownership not only opens up new investment avenues but also increases the liquidity of traditionally illiquid assets," says Dorrer.
Tokenized assets (again, excluding stablecoins) have increased another 16% year-to-date, as of March 10, reaching $17.89 billion from 107 different issuers.
If you include stablecoins, the total tokenized market has soared to $217.26 billion.
Asset Classes Embracing Tokenization
A diverse array of asset classes has become investable through tokenization, including:
Real estate/REITs
Private credit
Commodities, including everything from gold to wine
Treasuries
Music revenue streams/royalties
… and much more.
Outlook
Theoretically, the increased liquidity should enhance the value of these assets, thanks to the liquidity premium. So, tokenization of previously illiquid assets is a value-add in and of itself.
The Cambridge Centre for Alternative Finance reports that more than 70% of surveyed financial institutions plan to integrate tokenization of real-world assets over the next five years. They also project that this market will surpass $16 trillion by 2030, with private credit, real estate, and commodities leading the charge.
7. Bitcoin’s utility as a diversifier remains strong—a 5% allocation in a 60/40 portfolio can significantly increase the total portfolio return.
Cryptocurrencies remain highly volatile, having low correlation against a wide variety of asset classes—including stocks, bonds, and real estate.
That means that cryptocurrencies, as represented by Bitcoin, are an effective diversifier against a wide range of asset classes.
According to Modern Portfolio Theory, that means that a relatively small allocation of Bitcoin to a traditional investment portfolio can meaningfully improve the risk-adjusted expected return of an otherwise conventional and even conservative portfolio.
For example, according to a report from Fidelity, a 5% allocation to Bitcoin in a traditional 60/40 portfolio from June 1, 2020 through May 30, 2024, rebalanced quarterly, would have improved the risk-adjusted returns, as measured by the Sharpe ratio, by as much as 40%. Additionally, annualized returns were 450 bps higher for the portfolio with the highest allocation to Bitcoin.
As the graph above shows, the addition of a 5% allocation of Bitcoin to a 60/40 stock/bond portfolio, rebalanced quarterly, would have added measurably to the total portfolio return, with only a modest increase in volatility.
Of course, past performance is not indicative of future results. But this example illustrates how the addition of even a very volatile asset can potentially improve risk-adjusted returns, if correlations are low enough.
Bitcoin correlation with U.S. stocks have declined since 2023, but have settled into a trading range of between about 0.22 and 0.4.
As institutions weigh into the crypto market, we expect that correlations will likely rise from here in the intermediate term. That’s because institutions will likely treat crypto like other risky assets as they adopt "risk on/risk off" postures over time. But there will still be a useful diversification benefit to be had.
Meanwhile, the rise of stablecoins makes it easy and inexpensive to balance back and forth between Bitcoin and stablecoins or other conservative digital assets.
"To maximize the benefit, it’s important for crypto investors to hold assets in jurisdictions such as the Isle of Man and Malta, which have low or no capital gains taxes on crypto transactions," says Dorrer.