How Countries in Asia Are Regulating Cryptocurrencies and Blockchain
Although cryptocurrency and blockchain technology has taken off all over the world, there are still nations whose governments are wary of the growing industry.
In Asia, the reception to cryptocurrency varies. Some countries warmly welcome the industry, while others are wary or ban them outright.
Here are four Asian countries that are approaching crypto regulation differently from one another.
In Japan, the Financial Services Agency (FSA) has granted the country’s cryptocurrency industry a self-regulatory status.
The 16 different domestic crypto exchanges are now known as the Japan Virtual Currency Exchange Association (JVCEA). The association applied for acknowledgement and recognition in August of this year. It was approved after months of investigation and confirmation that it would be able to regulate the country’s crypto industry.
The JVCEA has drafted regulation guidelines to ensure finance crimes such as money laundering are prevented. The hundred-page draft includes banning privacy coins and insider trading. It's also proposing to limit margin trading with cryptocurrencies.
Most importantly, the JCVEA is also responsible for having security measures in place to protect customers’ assets. This is pressing, as Japan has had its share of hacked exchanges.
In September, Japan’s crypto exchange Zaif was hacked. The hackers got away with almost $60 million in Monacoin, Bitcoin, and Bitcoin Cash.
Also, Tokyo’s Coincheck was hacked in January of this year. An estimated $530 million in cryptocurrency was stolen.
The Coincheck hack is actually the biggest crypto exchange hack to date.
In Taiwan, additional cryptocurrency regulation is actively being prepared.
Wellington Koo, chairman of Taiwan’s Financial Supervisory Commission, has announced plans to better regulate initial coin offerings (ICOs) within the country. The regulations are poised to be in effect by June 2019.
When asked at a finance meeting by William Tseng, a Taiwanese legislator, about Taiwan’s plan for regulating ICOs, Koo announced his plan.
Koo and the Taiwanese government have no intention of regulating utility tokens, the reason being that regulating them could lead to laws that hinder industry innovation.
Rather, they want to regulate ICOs used for security purposes. According to a report by Satis Group, 81% of ICOs turn out to be scams.
That’s why Koo plans to regulate ICOs directly. Koo figures that if ICOs are watched and regulated, the scams can be weeded out, leaving better coins to invest in and diminishing fraud at the same time.
Koo plans on adding a review process that will qualify a proper ICO. He’s also setting up qualifying definitions to help regulate.
Koo and the Taiwanese government are hoping this regulation will simplify the ICO process for investors. They also wish for the cryptocurrencies to be liquid and secure like stocks.
Keep in mind that Taiwan has already put regulations in place for cryptocurrencies. It is now simply delving into ICO regulation.
South Korea’s position on cryptocurrency is quite different from Japan or Taiwan’s stances. The country is much more skeptical of cryptocurrency.
The country’s Financial Services Commission (FSC) has actually advised citizens to be cautious when investing in crypto. The reasoning for this is because the FSC is worried citizens will mistake cryptocurrencies for being included in the country’s Capital Markets Act.
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They aren’t. So the crypto funds run the risk of violating the act.
South Korea is also setting up a government department dedicated to cryptocurrency and blockchain. The Financial Innovation Bureau will develop policy and regulation for the industry.
Although crypto and blockchain technology worries the government, South Korea is loosening its opinion of the industry. It’s shown in the FSC’s apparent mulling of lifting the country’s ban on ICOs. The ban was put in place last year.
The South Korean government may announce its intention of lifting the ban as early as this month.
Lastly, there's China. The Red Dragon country is infamous for censoring its citizens. It’s also no ally to cryptocurrencies, banning ICOs last year.
With blockchain technology, China is putting its spin on things. Understanding blockchain’s value and the fact that Bitcoin mining is rampant in the country, China is looking to better adopt the technology.
But there’s a catch.
The Cyberspace Administration of China is preparing to put regulations on blockchain users.
How, you might ask? China plans to put in a regulation that blockchain users must provide their personal information to a government system.
In other parts of the globe, blockchain users benefit from being anonymous while using the technology. In China, that would not be possible. The communist government in China takes censoring its citizens seriously.
The Chinese government is already unhappy with the amount of uncensored information blockchain has made accessible to citizens. Perhaps by making users register, the government has some sort of lead on who is releasing information on the blockchain.
Japan and Taiwan are welcoming the crypto industry with open arms, understanding its economic potential.
On the other hand, South Korea sees the industry as a bane but is slowly warming up to it. Then there’s China, who’d rather adopt, but also document users to limit unauthorized leaks.
With future, hopefully positive, results coming from Taiwan, Japan, and other crypto-friendly countries, perhaps South Korea and China will change their tunes.
John Butler, Jr.
Contributing Editor, The Token Authority