Iceland

Retail_Trading_Status

Allowed-Regulated Unknown

Analysis ID: #391
Version: Latest
Created: 2025-06-26 12:51
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Executive Summary

Retail cryptocurrency trading is legally permitted in Iceland but regulated, primarily focusing on AML/CTF measures. The Central Bank of Iceland supervises Virtual Asset Service Providers (VASPs) under Act No. 140/2018, requiring registration and KYC/AML compliance. Cryptocurrency is not legal tender, and while a comprehensive regulatory framework is evolving, existing laws ensure a regulated environment. Iceland plans to implement the EU's Markets in Crypto-Assets Regulation (MiCA).

Key Pillars

The primary regulator is the Central Bank of Iceland, which supervises VASPs for AML/CTF compliance per Act No. 140/2018. Core compliance requirements include AML/KYC procedures, and VASPs must register with the Financial Supervisory Authority (FSA), now part of the Central Bank of Iceland. There are no specific licenses required beyond AML/CTF registration.

Landmark Laws

Act No. 140/2018 on Measures against Money Laundering and Terrorist Financing: This act brings VASPs under the supervision of the Central Bank of Iceland for AML/CTF compliance. VASPs are required to register with the FSA (now part of the Central Bank) and implement KYC/AML procedures. EU's Markets in Crypto-Assets Regulation (MiCA): Planned implementation in Iceland to bring a more comprehensive regulatory framework for crypto-assets.

Considerations

Cryptocurrencies are not legal tender in Iceland. Capital gains from cryptocurrency trading are subject to taxation for individuals, and corporate profits from cryptocurrency are subject to corporate tax. The Central Bank of Iceland has issued warnings about the risks associated with cryptocurrency trading due to market volatility and limited consumer protection beyond AML/CTF measures. Iceland is also participating in the OECD's Crypto-Asset Reporting Framework (CARF), with implementation planned for exchanges by 2027.

Notes

Iceland's stance on cryptocurrency was initially influenced by capital controls implemented after the 2008 financial crisis, which indirectly impacted cryptocurrency transactions. These restrictions were eased in 2017, allowing for cross-border transactions. The Icelandic government has shown a generally supportive stance towards the crypto economy, particularly in crypto mining, due to the abundance of renewable energy. The government's Sustainable Financing Framework excludes cryptocurrency mining. The Central Bank of Iceland has stated that crypto markets don't require a specific license beyond AML/CTF registration.

Detailed Explanation

Retail cryptocurrency trading is legally permitted in Iceland, subject to regulations primarily focused on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures. While Iceland lacks a comprehensive, standalone cryptocurrency-specific regulatory framework for all trading aspects, the existing legal landscape indicates a regulated environment. Historically, Iceland's stance was influenced by capital controls after the 2008 financial crisis, indirectly impacting crypto transactions. However, these restrictions were eased in 2017, allowing cross-border transactions. Act No. 140/2018 on Measures against Money Laundering and Terrorist Financing governs cryptocurrency service providers, bringing Virtual Asset Service Providers (VASPs) under the supervision of the Central Bank of Iceland for AML/CTF compliance. VASPs, including exchanges and digital wallet providers, must register with the Financial Supervisory Authority (FSA), now part of the Central Bank, and implement KYC/AML procedures. This aligns Iceland with the EU's 4th Anti-Money Laundering Directive (AMLD4) and FATF recommendations. The Central Bank of Iceland has stated that cryptocurrencies are not legal tender and are not subject to legislation on payment services or electronic currency in the same way as fiat currency. The authorities have warned consumers about cryptocurrency trading risks due to market volatility and limited consumer protection beyond AML/CTF. Capital gains from cryptocurrency trading are subject to taxation, and companies dealing with cryptocurrencies are also subject to corporate tax. Iceland participates in international efforts to increase tax transparency, such as the OECD's Crypto-Asset Reporting Framework (CARF), with planned implementation for exchanges by 2027. The Icelandic government is generally supportive of the crypto economy, particularly crypto mining, due to renewable energy, but VASPs must adhere to AML/CTF regulations. There are plans to implement the EU's Markets in Crypto-Assets Regulation (MiCA) in Iceland, which will bring a more comprehensive regulatory framework. The Central Bank supervises VASPs to ensure compliance with Act no. 140/2018.

Summary Points

Retail Cryptocurrency Trading Status in Iceland (2025-06-26)

Overall Regulatory Status: Allowed-Regulated

Retail cryptocurrency trading (buying, selling, and holding) is legally permitted.
Activity is subject to specific regulations, primarily focused on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF).
No comprehensive, standalone cryptocurrency-specific regulatory framework exists for all aspects of trading (e.g., detailed investor protection beyond AML/CTF).
Iceland is planning to implement the EU's Markets in Crypto-Assets Regulation (MiCA), which will bring a more comprehensive regulatory framework for crypto-assets.

Key Regulatory Bodies and Their Roles:

Central Bank of Iceland:
- Supervises Virtual Asset Service Providers (VASPs) for AML/CTF compliance.
- Does not consider cryptocurrencies legal tender.
- Has issued warnings about the risks associated with cryptocurrency trading.
Financial Supervisory Authority (FSA):
- Now part of the Central Bank of Iceland.
- VASPs are required to register with the FSA.
Skatturinn (Icelandic Tax Authority):
- Enforces taxation of cryptocurrency-related income and capital gains.

Important Legislation and Regulations:

Act No. 140/2018 on Measures against Money Laundering and Terrorist Financing:
- Key legislation governing cryptocurrency service providers.
- Brings VASPs under the supervision of the Central Bank of Iceland for AML/CTF compliance.
- Requires VASPs to register with the FSA and implement KYC/AML procedures.
General Tax Laws:
- Capital gains from cryptocurrency trading are subject to taxation.
- Companies dealing with cryptocurrencies are subject to corporate tax.

Requirements for Compliance:

Registration: VASPs (exchanges, digital wallet providers) must register with the FSA.
KYC/AML Procedures: VASPs must implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.
Taxation: Individuals and companies must report and pay taxes on cryptocurrency-related income and capital gains.
Adherence to Act No. 140/2018: VASPs must comply with all requirements of the Act on Measures against Money Laundering and Terrorist Financing.

Notable Restrictions or Limitations:

No Legal Tender Status: Cryptocurrencies are not legal tender in Iceland.
Limited Investor Protection: Consumer protection beyond AML/CTF measures is limited.
Capital Controls (Historical): While largely lifted in 2017, past capital controls indirectly impacted cryptocurrency transactions.
Exclusion from Sustainable Financing: Crypto-currency mining is excluded from sustainable financing frameworks.

Recent Developments or Changes:

Easing of Capital Controls (2017): Allowed for cross-border transactions, effectively lifting the indirect ban on cryptocurrency.
Implementation of Act No. 140/2018 (2018): Introduced AML/CTF regulations for VASPs.
Planned Implementation of MiCA: Iceland intends to implement the EU's Markets in Crypto-Assets Regulation (MiCA).
OECD's Crypto-Asset Reporting Framework (CARF): Iceland is a participant in international efforts to increase tax transparency for crypto-assets, with an intention to implement it for exchanges to commence by 2027.

Full Analysis Report

Retail_Trading_Status: Iceland

Date: 2025-06-26

Status: Allowed-Regulated

Detailed Narrative Explanation:

Retail cryptocurrency trading, encompassing the buying, selling, and holding of cryptocurrencies by individual citizens and residents, is legally permitted in Iceland. However, this activity is subject to specific regulations, primarily focused on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures. While Iceland does not have a comprehensive, standalone cryptocurrency-specific regulatory framework for all aspects of trading (such as detailed investor protection rules beyond AML/CTF), the existing legal landscape and official actions clearly indicate a regulated environment rather than an unregulated or banned one.

Historically, Iceland's stance on cryptocurrency was influenced by capital controls implemented after the 2008 financial crisis. These controls indirectly impacted cryptocurrency transactions as they could be seen as leading to capital outflows. However, these restrictions were eased in 2017, allowing for cross-border transactions, which effectively lifted the indirect ban.

The key piece of legislation governing cryptocurrency service providers is Act No. 140/2018 on Measures against Money Laundering and Terrorist Financing. This Act brings Virtual Asset Service Providers (VASPs), including exchanges and digital wallet providers, under the supervision of the Central Bank of Iceland for AML/CTF compliance. These entities are required to register with the Financial Supervisory Authority (FSA), which is now part of the Central Bank of Iceland, and implement KYC/AML procedures. This aligns Iceland with international standards, such as the European Union's 4th Anti-Money Laundering Directive (AMLD4) and recommendations from the Financial Action Task Force (FATF).

While the Central Bank of Iceland has stated that cryptocurrencies are not legal tender and are not subject to legislation on payment services or electronic currency in the same way as fiat currency, and that crypto markets don't require a specific license beyond AML/CTF registration, this does not mean the activity is unregulated. The Central Bank's supervision is specifically targeted at mitigating risks associated with financial crime. The authorities have also issued warnings to consumers about the risks associated with cryptocurrency trading due to market volatility and the limited consumer protection beyond AML/CTF measures.

Taxation of cryptocurrency is also in effect. Capital gains from cryptocurrency trading by individuals are subject to taxation. Companies dealing with cryptocurrencies are also subject to corporate tax. Iceland is also a participant in international efforts to increase tax transparency for crypto-assets, such as the OECD's Crypto-Asset Reporting Framework (CARF), with an intention to implement it for exchanges to commence by 2027.

The Icelandic government has shown a generally supportive stance towards the crypto economy, particularly in the area of crypto mining, due to its abundance of renewable energy. However, this is coupled with the requirement for VASPs to adhere to AML/CTF regulations. There are plans to implement the EU's Markets in Crypto-Assets Regulation (MiCA) in Iceland, which will bring a more comprehensive regulatory framework for crypto-assets.

In summary, individuals in Iceland can legally trade and hold cryptocurrencies. Service providers facilitating these activities are subject to mandatory AML/CTF registration and supervision by the Central Bank of Iceland. Profits from these activities are taxable. While a fully comprehensive crypto-specific regulatory regime covering all aspects of investor protection is still evolving (with MiCA implementation on the horizon), the current framework clearly falls under "Allowed-Regulated" due to the existing AML/CTF laws and supervision.

Specific, Relevant Text Excerpts:

Central Bank of Iceland on VASP supervision: "The Central Bank supervises to ensure that the activities of crypto-asset service providers, which are considered as obliged entities, comply with Act no. 140/2018 on Measures against Money Laundering and Terrorist Financing, cf. Chapter X of the Act."
Central Bank of Iceland on scope of rules: "No rules or laws apply to crypto-assets. Crypto-asset service providers must comply with Act no. 140/2018 on Measures against Money Laundering and Terrorist Financing. There are plans to implement the EU Markets in Crypto-Assets Regulation in Iceland." (Note: The first sentence here refers to specific comprehensive rules for the assets themselves, not the absence of all regulation, as the following sentence clarifies the AML/CTF obligations for service providers).
Coincub on AML and VASP registration: "While adopting a light-touch regulation regarding crypto, Iceland does, however, have strong AML laws and adheres to the European Union's 4th Anti-Money Laundering Directive whereby Virtual Asset Service Providers (VASPs) exchanges and wallets require registration to be able to operate."
IcoHolder on 2018 Law: "In 2018, the Icelandic government introduced a new law that requires cryptocurrency exchanges and other digital currency businesses to register with the country's financial regulator. The law also mandates that these businesses comply with anti-money laundering (AML) and know-your-customer (KYC) regulations."
Freeman Law on lifting of indirect ban: "However, in 2017, The Icelandic Central Bank amended the rules prohibiting the outflow of krónur from the country to allow for cross-border transactions. This effectively lifted the indirect ban that the Central Bank had put on cryptocurrency because cross-border transactions of the nation's currency are now allowed."
Skatturinn (Icelandic Tax Authority) - Implied by general tax rules for income and capital gains, though not a direct crypto quote, other sources confirm crypto taxation: "Capital gains obtained by individuals from cryptocurrency trading are taxed at a rate of 22%, while corporate profits from cryptocurrency are taxed at a corporate tax rate of 20%." (This is from a secondary source summarizing the tax implications). General tax law: "An individual that stays in Iceland for less than six months in a twelve-month period, has limited tax liability in Iceland. This means he has to pay tax on income arising from sources in Iceland..."
Government of Iceland's stance on crypto mining (exclusion from sustainable financing): "The issuer excludes whaling, fossil and nuclear energy generation, weapons and defence, environmentally negative resource extraction, gambling, alcohol/tobacco, crypto-currency mining, livestock and fossil fuel machinery." (This indicates awareness and specific policy decisions related to aspects of the crypto industry, even if it's an exclusion in this particular context).
UEEx Technology on legality of exchanges: "Yes, cryptocurrency exchanges are legal in Iceland. The Icelandic government permits the operation of crypto exchanges within the country. However, these exchanges must adhere to specific regulations to ensure compliance with financial laws. For instance, in 2018, Iceland introduced legislation requiring cryptocurrency exchanges and other digital currency businesses to register with the relevant authorities."

Direct, Accessible URL Links to Sources:

## Retail_Trading_Status: Iceland

**Date:** 2025-06-26

**Status:** Allowed-Regulated

**Detailed Narrative Explanation:**

Retail cryptocurrency trading, encompassing the buying, selling, and holding of cryptocurrencies by individual citizens and residents, is legally permitted in Iceland. However, this activity is subject to specific regulations, primarily focused on Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures. While Iceland does not have a comprehensive, standalone cryptocurrency-specific regulatory framework for all aspects of trading (such as detailed investor protection rules beyond AML/CTF), the existing legal landscape and official actions clearly indicate a regulated environment rather than an unregulated or banned one.

Historically, Iceland's stance on cryptocurrency was influenced by capital controls implemented after the 2008 financial crisis. These controls indirectly impacted cryptocurrency transactions as they could be seen as leading to capital outflows. However, these restrictions were eased in 2017, allowing for cross-border transactions, which effectively lifted the indirect ban.

The key piece of legislation governing cryptocurrency service providers is Act No. 140/2018 on Measures against Money Laundering and Terrorist Financing. This Act brings Virtual Asset Service Providers (VASPs), including exchanges and digital wallet providers, under the supervision of the Central Bank of Iceland for AML/CTF compliance. These entities are required to register with the Financial Supervisory Authority (FSA), which is now part of the Central Bank of Iceland, and implement KYC/AML procedures. This aligns Iceland with international standards, such as the European Union's 4th Anti-Money Laundering Directive (AMLD4) and recommendations from the Financial Action Task Force (FATF).

While the Central Bank of Iceland has stated that cryptocurrencies are not legal tender and are not subject to legislation on payment services or electronic currency in the same way as fiat currency, and that crypto markets don't require a specific license beyond AML/CTF registration, this does not mean the activity is unregulated. The Central Bank's supervision is specifically targeted at mitigating risks associated with financial crime. The authorities have also issued warnings to consumers about the risks associated with cryptocurrency trading due to market volatility and the limited consumer protection beyond AML/CTF measures.

Taxation of cryptocurrency is also in effect. Capital gains from cryptocurrency trading by individuals are subject to taxation. Companies dealing with cryptocurrencies are also subject to corporate tax. Iceland is also a participant in international efforts to increase tax transparency for crypto-assets, such as the OECD's Crypto-Asset Reporting Framework (CARF), with an intention to implement it for exchanges to commence by 2027.

The Icelandic government has shown a generally supportive stance towards the crypto economy, particularly in the area of crypto mining, due to its abundance of renewable energy. However, this is coupled with the requirement for VASPs to adhere to AML/CTF regulations. There are plans to implement the EU's Markets in Crypto-Assets Regulation (MiCA) in Iceland, which will bring a more comprehensive regulatory framework for crypto-assets.

In summary, individuals in Iceland can legally trade and hold cryptocurrencies. Service providers facilitating these activities are subject to mandatory AML/CTF registration and supervision by the Central Bank of Iceland. Profits from these activities are taxable. While a fully comprehensive crypto-specific regulatory regime covering all aspects of investor protection is still evolving (with MiCA implementation on the horizon), the current framework clearly falls under "Allowed-Regulated" due to the existing AML/CTF laws and supervision.

**Specific, Relevant Text Excerpts:**

*   **Central Bank of Iceland on VASP supervision:** "The Central Bank supervises to ensure that the activities of crypto-asset service providers, which are considered as obliged entities, comply with Act no. 140/2018 on Measures against Money Laundering and Terrorist Financing, cf. Chapter X of the Act."
*   **Central Bank of Iceland on scope of rules:** "No rules or laws apply to crypto-assets. Crypto-asset service providers must comply with Act no. 140/2018 on Measures against Money Laundering and Terrorist Financing. There are plans to implement the EU Markets in Crypto-Assets Regulation in Iceland." (Note: The first sentence here refers to specific comprehensive rules for the assets themselves, not the absence of all regulation, as the following sentence clarifies the AML/CTF obligations for service providers).
*   **Coincub on AML and VASP registration:** "While adopting a light-touch regulation regarding crypto, Iceland does, however, have strong AML laws and adheres to the European Union's 4th Anti-Money Laundering Directive whereby Virtual Asset Service Providers (VASPs) exchanges and wallets require registration to be able to operate."
*   **IcoHolder on 2018 Law:** "In 2018, the Icelandic government introduced a new law that requires cryptocurrency exchanges and other digital currency businesses to register with the country's financial regulator. The law also mandates that these businesses comply with anti-money laundering (AML) and know-your-customer (KYC) regulations."
*   **Freeman Law on lifting of indirect ban:** "However, in 2017, The Icelandic Central Bank amended the rules prohibiting the outflow of krónur from the country to allow for cross-border transactions. This effectively lifted the indirect ban that the Central Bank had put on cryptocurrency because cross-border transactions of the nation's currency are now allowed."
*   **Skatturinn (Icelandic Tax Authority) - Implied by general tax rules for income and capital gains, though not a direct crypto quote, other sources confirm crypto taxation:** "Capital gains obtained by individuals from cryptocurrency trading are taxed at a rate of 22%, while corporate profits from cryptocurrency are taxed at a corporate tax rate of 20%." (This is from a secondary source summarizing the tax implications). General tax law: "An individual that stays in Iceland for less than six months in a twelve-month period, has limited tax liability in Iceland. This means he has to pay tax on income arising from sources in Iceland..."
*   **Government of Iceland's stance on crypto mining (exclusion from sustainable financing):** "The issuer excludes whaling, fossil and nuclear energy generation, weapons and defence, environmentally negative resource extraction, gambling, alcohol/tobacco, crypto-currency mining, livestock and fossil fuel machinery." (This indicates awareness and specific policy decisions related to aspects of the crypto industry, even if it's an exclusion in this particular context).
*   **UEEx Technology on legality of exchanges:** "Yes, cryptocurrency exchanges are legal in Iceland. The Icelandic government permits the operation of crypto exchanges within the country. However, these exchanges must adhere to specific regulations to ensure compliance with financial laws. For instance, in 2018, Iceland introduced legislation requiring cryptocurrency exchanges and other digital currency businesses to register with the relevant authorities."

**Direct, Accessible URL Links to Sources:**

*   [Central Bank of Iceland - Crypto-assets and crowdfunding](https://www.sedlabanki.is/eignir-og-fjarmognun/hoptjalfjarmognun-og-rafmyntir/)
*   [Central Bank of Iceland - Crypto-asset service providers](https://www.sedlabanki.is/fjarmalaeftirlit/eftirlitsskyldir-adilar/veitendur-thjonustu-med-sjonraenar-eignir/)
*   [Coincub - Best Crypto Exchange Iceland](https://coincub.com/country/iceland-crypto-guide/)
*   [IcoHolder - Cryptocurrency Regulation in Iceland](https://icoholder.com/blog/cryptocurrency-regulation-in-iceland/)
*   [Freeman Law - Iceland and Cryptocurrency](https://freemanlaw.com/iceland-cryptocurrency-laws/)
*   [Proelium Law LLP - Cryptocurrency Regulation Tracker (Iceland section)](https://www.proeliumlaw.com/crypto-regulation-tracker/)
*   [SimpleSwap - Crypto In Iceland](https://simpleswap.io/blog/crypto-in-iceland-how-it-works)
*   [Iceland Review - Cryptocurrency Not Supervised By Financial Supervisory Authority (Feb 2021)](https://www.icelandreview.com/news/cryptocurrency-not-supervised-by-financial-supervisory-authority/) (Provides context on the limits of supervision beyond AML/CTF at that time)
*   [The Reykjavik Grapevine - Central Bank Warns Against Use Of Cryptocurrencies (Feb 2021)](https://grapevine.is/news/2021/02/11/central-bank-warns-against-use-of-cryptocurrencies/)
*   [Swapp Agency - Understanding Cryptocurrency in Iceland](https://swappagency.com/blog/understanding-cryptocurrency-in-iceland-key-insights-and-considerations/)
*   [UEEx Technology - Best Crypto Exchanges in Iceland (2025)](https://ueex.com/en/best-crypto-exchanges-iceland/)
*   [FinTax - Global Miners’ Hub? Exploring Iceland’s Crypto Tax and Regulation Landscape (June 2024)](https://www.fintax.lu/blog/global-miners-hub-exploring-icelands-crypto-tax-and-regulation-landscape)
*   [動區 BlockTempo on Binance Square - The Dream Country for Miners? Exploring Iceland's Cryptocurrency Taxation and Regulatory Landscape (May 2024)](https://www.binance.com/en/square/post/7159188090395)
*   [GOV.UK - Collective engagement to implement the Crypto-Asset Reporting Framework (Nov 2023)](https://www.gov.uk/government/publications/collective-engagement-to-implement-the-crypto-asset-reporting-framework/joint-statement-by-the-united-kingdom-and-other-signatories-to-the-collective-engagement-to-implement-the-crypto-asset-reporting-framework)
*   [Sanction Scanner - Anti Money Laundering in Iceland (May 2024)](https://sanctionscanner.com/blog/anti-money-laundering-in-iceland-1505)
*   [crypto.news - Demystifying EU crypto legislation, insights from former Icelandic Central Bank chairman (March 2024)](https://crypto.news/demystifying-eu-crypto-legislation-insights-from-former-icelandic-central-bank-chairman/)
*   [Skatturinn - Tax liability](https://www.skatturinn.is/english/individuals/tax-liability/)
*   [Government of Iceland - Sustainable Financing Framework Second Opinion (April 2023)](https://www.government.is/library/01-Ministries/Ministry-of-Finance-and-Economic-Affairs/Sustainable%20Financing/Second%20Opinion%20-%20Iceland%20Sustainable%20Financing%20Framework%20April%202023.pdf)

Web Sources (19)

Sources discovered via web search grounding

Search queries used (9)

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