Micronesia (Federated States of)

The regulatory status of cryptocurrency in the Federated States of Micronesia (FSM) is best characterized as a 'Gray-Zone'. While there is no penal code criminalizing the individual ownership or trade of cryptocurrencies, the government has taken a restrictive stance regarding the integration of virtual assets into the formal financial system. The primary regulator, the FSM Banking Board, has explicitly stated in its Annual Reports (notably 2022 and 2023) that the country is 'not ready to entertain digital currencies and virtual assets' due to the absence of a legal framework. This position effectively acts as a regulatory barrier, preventing local banks from offering crypto services or facilitating payments to crypto exchanges.

In 2021, the Ministry of Finance reportedly clarified that financial institutions are not permitted to use or transact in crypto-assets. This directive aligns with the Banking Board's conservative approach, which prioritizes the stability of the banking sector and the US Dollar's status as the sole legal tender. Consequently, the two commercial banks operating in the country—Bank of Guam and Bank of the FSM—do not service crypto businesses. Both banks are FDIC-insured and subject to US banking standards under the Compact of Free Association, which adds another layer of compliance pressure against dealing with unregulated entities.

For retail investors, this means that while they are not breaking the law by holding Bitcoin or other assets, they face significant operational hurdles. There are no domestic exchanges, and funding international exchange accounts via local bank transfers is likely to be blocked or scrutinized. The regulatory environment is stagnant; despite acknowledging the global rise of crypto, the Banking Board has not moved to create a licensing regime, leaving the sector in a state of indefinite restriction without a total ban.