Micronesia (Federated States of)
Retail_Trading_Status
- Analysis ID
- #385
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- 2025-06-26 12:49
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- 5d37fd96...
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Executive Summary
Cryptocurrency trading is legal but unregulated in the Federated States of Micronesia (FSM). There are no specific laws prohibiting crypto trading, and the government has not established a dedicated regulatory framework. While individuals are free to engage in crypto activities, there are no specific consumer protections, licensing requirements for exchanges, or crypto-focused AML/KYC rules imposed by the FSM government. The FSM relies on the U.S. dollar, and its financial laws are influenced by the U.S.
Key Pillars
The primary regulatory pillar is the absence of a specific regulatory framework for cryptocurrencies in the Federated States of Micronesia (FSM). While there is no dedicated regulator, international exchanges serving Micronesian residents may adhere to compliance standards from their home jurisdictions, including KYC/AML. There are no specific licensing or registration requirements for crypto exchanges within the FSM.
Landmark Laws
There are no specific landmark legislations related to cryptocurrency in the Federated States of Micronesia (FSM). The Financial Management Regulations of the FSM, updated in May 2021, do not contain any specific provisions or mentions of cryptocurrencies or digital assets.
Considerations
Cryptocurrencies in the Federated States of Micronesia (FSM) are legally recognized in the sense that they are not banned. However, there is a lack of specific local regulations, prompting users to exercise caution and choose reputable platforms. The absence of a clear regulatory framework can create uncertainty for both individuals and businesses. Discussions around cybersecurity in the FSM have highlighted the need for user awareness regarding potential risks in the digital space due to the increasing prevalence of cryptocurrency.
Notes
Some sources incorrectly conflate the Federated States of Micronesia (FSM) with the Marshall Islands, which has passed comprehensive legislation surrounding Web3 and crypto; the FSM has not taken such steps. One source stated that the legality of Bitcoin and other cryptocurrencies in Micronesia is currently unknown, contrasting with other sources suggesting it is legal in the sense of not being prohibited. Despite the lack of specific regulations, Micronesian crypto exchanges often require ID verification to comply with general KYC regulations to prevent fraud.
Detailed Explanation
Detailed Explanation
As of June 26, 2025, retail cryptocurrency trading in the Federated States of Micronesia (FSM) is legal but unregulated. There are no specific laws or regulations prohibiting individuals from buying, selling, or holding cryptocurrencies. The FSM has not established a dedicated regulatory framework for cryptocurrencies, meaning there are no specific consumer protections, licensing requirements for exchanges, or crypto-focused Anti-Money Laundering (AML) and Know Your Customer (KYC) rules imposed by the FSM government. The FSM relies on the U.S. dollar, and its financial laws are influenced by the U.S. While there's no local crypto-specific regulation, international exchanges offering services to Micronesian residents may adhere to their own compliance standards, often influenced by regulations in their home jurisdictions. Some sources indicate that Micronesian crypto exchanges (or those serving Micronesians) ask for ID verification to comply with general KYC regulations to prevent fraud, even in the absence of specific local mandates.
The government's stance appears to be one of caution and observation. There's an acknowledgement of the growing prevalence of cryptocurrencies globally and even within the Pacific region. However, the FSM itself has not issued distinct licenses for cryptocurrency exchanges nor has it implemented specific tax rules for cryptocurrency transactions. General commercial or financial laws might apply in a broad sense, but the activity of retail crypto trading itself is not specifically governed by a dedicated FSM regulatory regime. The Financial Management Regulations of the FSM, updated in May 2021, do not contain any specific provisions or mentions of cryptocurrencies or digital assets, further underscoring the absence of a formal regulatory framework.
The lack of a clear regulatory framework can create uncertainty for both individuals and businesses. While cryptocurrencies are legally recognized in the sense that they are not banned, the regulatory landscape is still considered to be evolving. Some analyses suggest that while crypto exchanges operate legally, users should exercise caution and choose reputable platforms due to the absence of specific local regulations. The UNDP Pacific Office in Fiji noted on July 29, 2024, the increasing prevalence of cryptocurrency and the need for user awareness regarding potential risks in the digital space. It's important to note that some sources incorrectly refer to
Summary Points
Retail Cryptocurrency Trading Status in Micronesia (Federated States of) - Analysis (2025-06-26)
Overall Status: Allowed-Unregulated
I. Regulatory Status
- Legality: Cryptocurrency trading by individuals is legal in the sense that it is not prohibited.
- Regulation: There is no specific regulatory framework for cryptocurrencies in the Federated States of Micronesia (FSM).
- Consumer Protection: Lack of specific consumer protections related to crypto trading.
- Licensing: No specific licensing requirements for cryptocurrency exchanges operating in or serving Micronesian residents.
- Taxation: No specific tax rules for cryptocurrency transactions. General commercial/financial laws may apply broadly.
- Evolving Landscape: The regulatory landscape is considered to be evolving, creating uncertainty for individuals and businesses.
II. Key Regulatory Bodies and Their Roles
- None Specifically: The FSM has not established a dedicated regulatory body for cryptocurrencies.
- Influence of US Laws: FSM financial laws are influenced by the U.S. due to the use of the U.S. dollar as the official currency.
III. Important Legislation and Regulations
- Absence of Crypto-Specific Laws: No specific laws or regulations directly addressing cryptocurrencies.
- Financial Management Regulations (May 2021): Do not contain any provisions or mentions of cryptocurrencies or digital assets.
IV. Requirements for Compliance
- No Local Mandates: No specific AML/KYC rules directly imposed by the FSM government on crypto platforms.
- International Compliance: Exchanges serving Micronesian residents may adhere to compliance standards from their home jurisdictions.
- KYC Practices: Some exchanges serving Micronesians require ID verification to comply with general KYC regulations to prevent fraud, even without local mandates.
V. Notable Restrictions or Limitations
- Lack of Consumer Protections: Absence of specific consumer protections increases risk for retail traders.
- Uncertainty: The lack of a clear regulatory framework creates uncertainty for both individuals and businesses.
- Reliance on Reputable Platforms: Users are advised to exercise caution and choose reputable platforms due to the absence of specific local regulations.
VI. Recent Developments or Changes
- Government Stance: Cautious observation of the growing prevalence of cryptocurrencies globally and within the Pacific region.
- Cybersecurity Awareness: Discussions around cybersecurity in the FSM have touched upon the increasing prevalence of cryptocurrency, highlighting the need for user awareness regarding potential risks.
- UNDP Initiatives: UNDP is promoting digital resilience and user awareness regarding risks associated with technology, including cryptocurrency.
VII. Important Considerations
- Distinction from Marshall Islands: The Federated States of Micronesia should not be confused with the Marshall Islands, which has its own digital currency and related laws.
- Source Discrepancies: Some sources state the legality of crypto as "unknown," while others state it is legal in the sense of not being prohibited. The consensus is that there is no specific regulation.
Full Analysis Report
Full Analysis Report
Report on Retail Cryptocurrency Trading Status in Micronesia (Federated States of)
Date: 2025-06-26
Topic: Retail_Trading_Status
Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).
Retail_Trading_Status
Status: Allowed-Unregulated
Narrative Explanation:
Cryptocurrency trading by individual citizens and residents in the Federated States of Micronesia (FSM) is currently considered legal, primarily because there are no specific laws or regulations prohibiting it. The FSM has not established a dedicated regulatory framework for cryptocurrencies. This means that while individuals are generally free to buy, sell, and hold digital assets, they do so in an environment lacking specific consumer protections, licensing requirements for exchanges, or crypto-focused Anti-Money Laundering (AML) and Know Your Customer (KYC) rules directly imposed by the FSM government.
The FSM relies on the U.S. dollar as its official currency and its financial laws are influenced by the U.S. While there's no local crypto-specific regulation, international exchanges that offer services to Micronesian residents may adhere to their own compliance standards, often influenced by regulations in their home jurisdictions. Some sources indicate that Micronesian crypto exchanges (or those serving Micronesians) ask for ID verification to comply with general KYC regulations to prevent fraud, even in the absence of specific local mandates.
The government's stance appears to be one of caution and observation. There's an acknowledgement of the growing prevalence of cryptocurrencies globally and even within the Pacific region. However, the FSM itself has not issued distinct licenses for cryptocurrency exchanges nor has it implemented specific tax rules for cryptocurrency transactions. General commercial or financial laws might apply in a broad sense, but the activity of retail crypto trading itself is not specifically governed by a dedicated FSM regulatory regime.
The lack of a clear regulatory framework can create uncertainty for both individuals and businesses. While cryptocurrencies are legally recognized in the sense that they are not banned, the regulatory landscape is still considered to be evolving. Some analyses suggest that while crypto exchanges operate legally, users should exercise caution and choose reputable platforms due to the absence of specific local regulations. It's important to note that while some sources refer to "Micronesia" in a broader sense that sometimes includes the Marshall Islands (which has its own digital currency and related laws), the Federated States of Micronesia itself has not taken such steps.
The Financial Management Regulations of the FSM, updated in May 2021, which govern public financial management, do not contain any specific provisions or mentions of cryptocurrencies or digital assets, further underscoring the absence of a formal regulatory framework in this area. Recent discussions around cybersecurity in the FSM have touched upon the increasing prevalence of cryptocurrency, highlighting the need for user awareness regarding potential risks in the digital space.
Supporting Excerpts and Sources:
- Proelium Law LLP (Cryptocurrency Regulation Tracker): "Micronesia, Federated States of. Undecided. Cryptocurrency has no legal status; There is no cryptocurrency regulation."
- Note: While this source states "Undecided" and "no legal status," other recent sources suggest it is "legal" in the sense of not being prohibited, alongside the consistent observation of no specific regulation.
- UEEx Technology (Best Crypto Exchanges in Micronesia 2025 - Updated April 29, 2025): "Yes, crypto exchanges are legal in Micronesia, but the country does not have clear regulations specifically for cryptocurrencies. Since Micronesia relies on the U.S. dollar and follows financial laws influenced by the U.S., some exchanges may operate with compliance with international standards. However, there are no local government-backed crypto regulations or licensing requirements." And, "While crypto exchanges operate legally, there are no specific local regulations, so users should choose reputable platforms."
- UPay Blog (Crypto Adoption Around the World: Micronesia - Updated December 16, 2024): "Cryptocurrencies are legal in Micronesia, though no specific regulations currently govern their use, indicating an open but cautious approach to digital assets." And, "The lack of a clear regulatory framework can create uncertainty for businesses and individuals looking to adopt cryptocurrencies. While cryptocurrencies are legally recognized, the regulatory landscape is still evolving, which can hinder widespread adoption."
- Invezz (7 Best Exchanges to Buy Bitcoin in Micronesia 2025 - Updated April 17, 2025): "Yes, buying Bitcoin is legal in Micronesia. You can safely buy and sell cryptocurrency using a Micronesian crypto exchange. However, many cryptocurrency exchanges aren't regulated in Micronesia, as the legislation has yet to catch up with the reality of the crypto market." And, "Micronesian crypto exchanges ask for ID verification in order to comply with KYC (Know Your Customer) regulations, which are in place to prevent fraud."
- Bitrawr (4 Best Exchanges To Buy Bitcoin in Micronesia (2025) - Accessed June 26, 2025): "The legality of bitcoin and other cryptocurrencies in Micronesia is currently unknown." And, "After signing up to an exchange you will need to verify your identity and address, which is part of the Know Your Customer (KYC) process. This is an unavoidable legal requirement for almost all exchanges in Micronesia."
- Note: This source states the legality is "unknown," which contrasts with other sources but aligns on the point of exchanges typically requiring KYC.
- MIDAO - DAO LLC Incorporation (Crypto Regulation: A Guide for Crypto Businesses - Accessed June 26, 2025): "Micronesia - Micronesia has been significant in adopting cryptocurrencies and is a beacon for many Web3 projects looking for friendly jurisdictions. Specifically, the Marshall Islands has passed comprehensive legislation surrounding Web3 and crypto."
- Note: This source seems to conflate the Federated States of Micronesia with the Marshall Islands regarding legislative action. The FSM has not passed comprehensive crypto legislation.
- UNDP Pacific Office in Fiji (Empowering Digital Resilience in the Federated States of Micronesia - July 29, 2024): Bhartu (UNDP) "reminded participants that while technology is expanding, especially in accessing information, it is essential to keep users informed about risks. 'We are making strides in making education accessible through technology, but we need to make sure everyone knows how to stay safe, especially with the increasing prevalence of Artificial Intelligence (AI) and cryptocurrency,' he said." This indicates an awareness of cryptocurrency at an institutional level, though not a regulatory action.
Direct URL Links to Sources:
- https://www.proeliumlaw.com/crypto-regulation-tracker/ (Note: The specific text for Micronesia is visible when scrolling or searching within the page's content.)
- https://ueex.com/en/blog/best-crypto-exchanges-in-micronesia/
- https://upay.com/blog/crypto-adoption-around-the-world-micronesia/
- https://invezz.com/exchange/best-bitcoin-exchange/micronesia/
- https://skillsforafrica.org/course/blockchain-and-cryptocurrency-in-financial-services-transforming-the-financial-landscape-micronesia-federated-states-of/ (Provides general context on blockchain education but not specific FSM regulations)
- https://www.bitrawr.com/buy-bitcoin/micronesia
- https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory (General reference, FSM not specifically detailed with primary source links for its status.)
- https://midao.com/blog/crypto-regulation-a-guide-for-crypto-businesses
- https://igamingtoday.com/gambling-regulation-in-micronesia/ (Discusses lack of gambling regulation, mentions crypto as a payment method for offshore casinos.)
- https://www.elibrary.imf.org/view/journals/063/2019/003/article-A001-en.xml (General IMF FinTech note, lists FSM but no specific regulatory details for it.)
- https://www.chainalysis.com/blog/crypto-regulation-journey-margins-mainstream/ (Global overview, FSM listed in a country dropdown but no specific information provided.)
- https://www.bitget.com/en/buy-crypto/micronesia/busd (Exchange stating services are accessible in FSM.)
- https://gov.fm/files/FINANCIAL_MANAGEMENT_REGULATIONS_MAY_2021.pdf
- https://www.undp.org/pacific/news/empowering-digital-resilience-federated-states-micronesia
- https://brokerchooser.com/best-brokers/best-bitcoin-btc-futures-brokers-in-micronesia-fed-st (Information on brokers offering Bitcoin futures to FSM residents, not on FSM's specific regulations.)
## Report on Retail Cryptocurrency Trading Status in Micronesia (Federated States of)
**Date:** 2025-06-26
**Topic:** Retail_Trading_Status
**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).
---
### Retail_Trading_Status
**Status:** Allowed-Unregulated
**Narrative Explanation:**
Cryptocurrency trading by individual citizens and residents in the Federated States of Micronesia (FSM) is currently considered legal, primarily because there are no specific laws or regulations prohibiting it. The FSM has not established a dedicated regulatory framework for cryptocurrencies. This means that while individuals are generally free to buy, sell, and hold digital assets, they do so in an environment lacking specific consumer protections, licensing requirements for exchanges, or crypto-focused Anti-Money Laundering (AML) and Know Your Customer (KYC) rules directly imposed by the FSM government.
The FSM relies on the U.S. dollar as its official currency and its financial laws are influenced by the U.S. While there's no local crypto-specific regulation, international exchanges that offer services to Micronesian residents may adhere to their own compliance standards, often influenced by regulations in their home jurisdictions. Some sources indicate that Micronesian crypto exchanges (or those serving Micronesians) ask for ID verification to comply with general KYC regulations to prevent fraud, even in the absence of specific local mandates.
The government's stance appears to be one of caution and observation. There's an acknowledgement of the growing prevalence of cryptocurrencies globally and even within the Pacific region. However, the FSM itself has not issued distinct licenses for cryptocurrency exchanges nor has it implemented specific tax rules for cryptocurrency transactions. General commercial or financial laws might apply in a broad sense, but the activity of retail crypto trading itself is not specifically governed by a dedicated FSM regulatory regime.
The lack of a clear regulatory framework can create uncertainty for both individuals and businesses. While cryptocurrencies are legally recognized in the sense that they are not banned, the regulatory landscape is still considered to be evolving. Some analyses suggest that while crypto exchanges operate legally, users should exercise caution and choose reputable platforms due to the absence of specific local regulations. It's important to note that while some sources refer to "Micronesia" in a broader sense that sometimes includes the Marshall Islands (which has its own digital currency and related laws), the Federated States of Micronesia itself has not taken such steps.
The Financial Management Regulations of the FSM, updated in May 2021, which govern public financial management, do not contain any specific provisions or mentions of cryptocurrencies or digital assets, further underscoring the absence of a formal regulatory framework in this area. Recent discussions around cybersecurity in the FSM have touched upon the increasing prevalence of cryptocurrency, highlighting the need for user awareness regarding potential risks in the digital space.
**Supporting Excerpts and Sources:**
* **Proelium Law LLP (Cryptocurrency Regulation Tracker):** "Micronesia, Federated States of. Undecided. Cryptocurrency has no legal status; There is no cryptocurrency regulation."
* *Note: While this source states "Undecided" and "no legal status," other recent sources suggest it is "legal" in the sense of not being prohibited, alongside the consistent observation of no specific regulation.*
* **UEEx Technology (Best Crypto Exchanges in Micronesia 2025 - Updated April 29, 2025):** "Yes, crypto exchanges are legal in Micronesia, but the country does not have clear regulations specifically for cryptocurrencies. Since Micronesia relies on the U.S. dollar and follows financial laws influenced by the U.S., some exchanges may operate with compliance with international standards. However, there are no local government-backed crypto regulations or licensing requirements." And, "While crypto exchanges operate legally, there are no specific local regulations, so users should choose reputable platforms."
* **UPay Blog (Crypto Adoption Around the World: Micronesia - Updated December 16, 2024):** "Cryptocurrencies are legal in Micronesia, though no specific regulations currently govern their use, indicating an open but cautious approach to digital assets." And, "The lack of a clear regulatory framework can create uncertainty for businesses and individuals looking to adopt cryptocurrencies. While cryptocurrencies are legally recognized, the regulatory landscape is still evolving, which can hinder widespread adoption."
* **Invezz (7 Best Exchanges to Buy Bitcoin in Micronesia 2025 - Updated April 17, 2025):** "Yes, buying Bitcoin is legal in Micronesia. You can safely buy and sell cryptocurrency using a Micronesian crypto exchange. However, many cryptocurrency exchanges aren't regulated in Micronesia, as the legislation has yet to catch up with the reality of the crypto market." And, "Micronesian crypto exchanges ask for ID verification in order to comply with KYC (Know Your Customer) regulations, which are in place to prevent fraud."
* **Bitrawr (4 Best Exchanges To Buy Bitcoin in Micronesia (2025) - Accessed June 26, 2025):** "The legality of bitcoin and other cryptocurrencies in Micronesia is currently unknown." And, "After signing up to an exchange you will need to verify your identity and address, which is part of the Know Your Customer (KYC) process. This is an unavoidable legal requirement for almost all exchanges in Micronesia."
* *Note: This source states the legality is "unknown," which contrasts with other sources but aligns on the point of exchanges typically requiring KYC.*
* **MIDAO - DAO LLC Incorporation (Crypto Regulation: A Guide for Crypto Businesses - Accessed June 26, 2025):** "Micronesia - Micronesia has been significant in adopting cryptocurrencies and is a beacon for many Web3 projects looking for friendly jurisdictions. Specifically, the Marshall Islands has passed comprehensive legislation surrounding Web3 and crypto."
* *Note: This source seems to conflate the Federated States of Micronesia with the Marshall Islands regarding legislative action. The FSM has not passed comprehensive crypto legislation.*
* **UNDP Pacific Office in Fiji (Empowering Digital Resilience in the Federated States of Micronesia - July 29, 2024):** Bhartu (UNDP) "reminded participants that while technology is expanding, especially in accessing information, it is essential to keep users informed about risks. 'We are making strides in making education accessible through technology, but we need to make sure everyone knows how to stay safe, especially with the increasing prevalence of Artificial Intelligence (AI) and cryptocurrency,' he said." This indicates an awareness of cryptocurrency at an institutional level, though not a regulatory action.
**Direct URL Links to Sources:**
1. [https://www.proeliumlaw.com/crypto-regulation-tracker/](https://www.proeliumlaw.com/crypto-regulation-tracker/) (Note: The specific text for Micronesia is visible when scrolling or searching within the page's content.)
2. [https://ueex.com/en/blog/best-crypto-exchanges-in-micronesia/](https://ueex.com/en/blog/best-crypto-exchanges-in-micronesia/)
3. [https://upay.com/blog/crypto-adoption-around-the-world-micronesia/](https://upay.com/blog/crypto-adoption-around-the-world-micronesia/)
4. [https://invezz.com/exchange/best-bitcoin-exchange/micronesia/](https://invezz.com/exchange/best-bitcoin-exchange/micronesia/)
5. [https://skillsforafrica.org/course/blockchain-and-cryptocurrency-in-financial-services-transforming-the-financial-landscape-micronesia-federated-states-of/](https://skillsforafrica.org/course/blockchain-and-cryptocurrency-in-financial-services-transforming-the-financial-landscape-micronesia-federated-states-of/) (Provides general context on blockchain education but not specific FSM regulations)
6. [https://www.bitrawr.com/buy-bitcoin/micronesia](https://www.bitrawr.com/buy-bitcoin/micronesia)
7. [https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory](https://en.wikipedia.org/wiki/Legality_of_cryptocurrency_by_country_or_territory) (General reference, FSM not specifically detailed with primary source links for its status.)
8. [https://midao.com/blog/crypto-regulation-a-guide-for-crypto-businesses](https://midao.com/blog/crypto-regulation-a-guide-for-crypto-businesses)
9. [https://igamingtoday.com/gambling-regulation-in-micronesia/](https://igamingtoday.com/gambling-regulation-in-micronesia/) (Discusses lack of gambling regulation, mentions crypto as a payment method for offshore casinos.)
10. [https://www.elibrary.imf.org/view/journals/063/2019/003/article-A001-en.xml](https://www.elibrary.imf.org/view/journals/063/2019/003/article-A001-en.xml) (General IMF FinTech note, lists FSM but no specific regulatory details for it.)
11. [https://www.chainalysis.com/blog/crypto-regulation-journey-margins-mainstream/](https://www.chainalysis.com/blog/crypto-regulation-journey-margins-mainstream/) (Global overview, FSM listed in a country dropdown but no specific information provided.)
12. [https://www.bitget.com/en/buy-crypto/micronesia/busd](https://www.bitget.com/en/buy-crypto/micronesia/busd) (Exchange stating services are accessible in FSM.)
13. [https://gov.fm/files/FINANCIAL_MANAGEMENT_REGULATIONS_MAY_2021.pdf](https://gov.fm/files/FINANCIAL_MANAGEMENT_REGULATIONS_MAY_2021.pdf)
14. [https://www.undp.org/pacific/news/empowering-digital-resilience-federated-states-micronesia](https://www.undp.org/pacific/news/empowering-digital-resilience-federated-states-micronesia)
15. [https://brokerchooser.com/best-brokers/best-bitcoin-btc-futures-brokers-in-micronesia-fed-st](https://brokerchooser.com/best-brokers/best-bitcoin-btc-futures-brokers-in-micronesia-fed-st) (Information on brokers offering Bitcoin futures to FSM residents, not on FSM's specific regulations.)
Web Sources (8)
Sources discovered via web search grounding
Search queries used (5)
- Retail cryptocurrency trading status Micronesia
- Cryptocurrency regulation Federated States of Micronesia
- Micronesia crypto laws
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- Is crypto legal in Micronesia for individuals?