INSTITUTIONAL AND LEGAL FRAMEWORKS FOR CRYPTOCURRENCY REGULATION: COMPARATIVE ANALYSIS OF GLOBAL MODELS AND THE UKRAINIAN CONTEXT

Abstract

This comprehensive study provides an in-depth analysis of the institutional foundations and regulatory frameworks governing cryptocurrencies within both global and national contexts. The research substantiates the critical importance of establishing an effective and adaptive regulatory system for digital assets, particularly given their unprecedented proliferation and integration into the global financial ecosystem, with market capitalization exceeding $2.3 trillion as of early 2025. The study thoroughly examines the evolutionary trajectory of legal approaches to cryptocurrency regulation, tracing the transformative journey from complete denial of legitimacy and regulatory void to the development of sophisticated, specialized regulatory regimes tailored to address the unique characteristics of digital assets. Through systematic analysis, the research establishes theoretical foundations of institutional regulation within the cryptocurrency market and defines the pivotal role of both state institutions and international organizations in forming comprehensive legal frameworks for digital assets. The study conducts detailed analysis of regulatory architectures implemented across leading global jurisdictions, including the United States with its multi-agency approach involving SEC, CFTC, and FinCEN, the European Union's groundbreaking Markets in Crypto-Assets (MiCA) regulation coordinated through ESMA, and progressive Asian frameworks developed in Japan and Singapore. The research methodology encompasses comparative analysis of classification systems, licensing requirements, and supervisory mechanisms employed by different regulatory authorities. Three distinct regulatory models are systematically identified and analyzed: the centralized model featuring a single mega-regulator with comprehensive powers (exemplified by Singapore's MAS and UAE's VARA), the functional model characterized by distribution of regulatory authority based on activity types and asset classifications (demonstrated by the US system), and the hybrid model that strategically combines centralized coordination with distributed regulatory responsibilities (as implemented in the EU framework). Special emphasis is placed on examining international coordination mechanisms developed through Financial Action Task Force (FATF) recommendations, Basel Committee principles, Financial Stability Board initiatives, and G20 policy frameworks aimed at harmonizing global regulatory approaches. The study provides comprehensive analysis of Ukrainian legislation, revealing significant regulatory gaps including the absence of a coherent tax regime for virtual asset operations, restrictions on payment utility that limit practical applications, insufficient consumer protection mechanisms, and potential jurisdictional conflicts between regulatory bodies. Based on extensive comparative analysis and contextual evaluation, the research develops strategic recommendations including establishment of a high-level coordination council under the Cabinet of Ministers, implementation of regulatory sandbox mechanisms leveraging the Diia.City framework, adoption of risk-based supervisory approaches, and systematic harmonization with European MiCA standards to position Ukraine as a regional cryptocurrency hub while maintaining financial stability and investor protection.