The legal and regulatory environment of the cryptocurrency market significantly impacts investment decisions. Strict regulations, like China’s ban on crypto trading, introduce legal risks, deterring participation. In contrast, clearer frameworks, such as the U.S. SEC’s oversight, offer stability but raise compliance costs. AML and KYC rules enhance transparency while limiting privacy, potentially freezing suspicious accounts. Consumer protection laws, where robust, reduce fraud by mandating disclosures, though lax oversight elsewhere heightens scam risks. Financial stability concerns, like scrutiny of stablecoins, can trigger volatility, prompting strategic adjustments. Taxation also varies—capital gains taxes in some regions cut returns, while tax havens offer relief. Investors must weigh legality, costs, privacy, project credibility, market swings, and tax burdens against their risk tolerance and goals to navigate this dynamic landscape effectively.