Cryptocurrency regulation in Asia: where things stand right now
Cryptocurrency regulation in Asia is a mixed bag to say the least. Here’s where major economies on the continent stand when it comes to is Bitcoin legal.
Cryptocurrency regulation is a hot-button topic. Some countries are unsure how to treat digital assets, burying their heads in the sand. Others have taken a draconian approach – enforcing sweeping bans at short notice and putting exchanges out of business. A few have also been notably light touch with Bitcoin regulation, perhaps positioning themselves as a hub for this burgeoning industry. Here, we’re going to look at the state of crypto regulation in Asia – a snapshot of where Bitcoin is legal or illegal across the continent.
First up, a few fast facts that illustrate why cryptocurrency regulation in Asia matters – even for traders who live on the other side of the world. According to Chainalysis, two-fifths of the world’s top 50 exchanges are based in the Asia-Pacific region, more than any other continent. APAC is also streets ahead when it comes to demand for Bitcoin – receiving 35.1 per cent of all transfers. That’s comfortably ahead of the US, which is in distant second place on 25.3 per cent. This heightened demand naturally means that a higher proportion of crypto and blockchain companies are based here.
Bitcoin regulation in Asia
Is cryptocurrency legal in Asia? Well, this is constantly evolving – and it’s always worth checking local laws before getting involved in trades.
In China Bitcoin regulation arguably causes the most confusion. Although Xi Jinping has frequently expressed support for blockchain, and Beijing is currently pursuing the development of a central bank digital currency, there’s a lot of nuance around the country’s attitudes towards Bitcoin.
A landmark ruling last year saw a court recognise BTC as virtual property – effectively meaning it can be legally owned by the nation’s population of 1.4 billion people. But there’s a twist. Its crypto regulation doesn’t go as far to declare BTC as a legal currency – and using virtual coins in this way could land traders in trouble.
Restrictions are also in place when it comes to exchanges offering trading services to people in China, and regulatory bodies have taken swift action against initial coin offerings. Despite this, Chinese consumers can still access over-the-counter desks if they want to perform a trade, and mining farms are commonplace in the country.
Cryptocurrency regulation in India is equally confusing. The country’s central bank caused controversy when it abruptly announced that banks would be stopped from serving crypto-focused companies – a move that put several exchanges out of business. The government was planning to go one further, drafting proposals that would mean anyone who was caught handling cryptocurrencies risked a jail term of up to 10 years.
In recent weeks, dramatic developments have thrown all of this into disarray. India’s Supreme Court repealed the central bank’s ban – declaring it was “disproportionate and unconstitutional” – and some exchanges quickly seized the opportunity to start trading again. Is Bitcoin legal? Not so fast. That cryptocurrency law we were talking about is effectively on ice in parliament and it could be revisited soon.
In Vietnam Bitcoin regulation has also adopted a hard-line approach, but there’s little hope of respite for the crypto community here. According to a December 2019 report by the Organisation for Economic Co-operation and Development (OECD), cryptocurrencies such as BTC have been banned as a means of legal payment here. Vietnam’s government has stated “fraud and scam activities relating to crypto assets trigger the risk of money laundering, terrorism financing and tax evasion”. Those who fall foul of these rules face a fine of about $9,000.
Some of the prohibitive cryptocurrency regulation measures put into place include a ban on companies, fund managers and investment funds from engaging in activity with this industry. Crypto mining equipment can no longer be imported. However, 2019 did see the government begin to approve a select few exchanges – and it is possible that we may see attitudes soften in the coming months and years.
Thailand’s approach to crypto regulation of late has been to create guidelines and laws that protect consumers while ensuring that the country remains competitive on the global stage. Measures had been in place where crypto firms could get licences to operate in the country, but adoption of this certification programme has been low. Beefed-up measures mean those who pursue unauthorised initial coin offerings risk jail sentences and fines of about $16,000. One of the country’s biggest concerns surrounds money laundering – and for an exchange to be granted a licence, it must agree to share details about trading activity with regulators. Guidance from the Financial Action Task Force, which dozens of members are a part of, indicates that this will become an increasingly common requirement worldwide later in 2020.
As we’ve been learning, crypto regulation in Asia isn’t black and white – and some countries have positioned themselves as world leaders in the industry. Although Japan does regulate the cryptocurrency sector, regulators allow people to pay for goods and services using BTC. Crypto exchanges are licensed and undergo regular audits. All of this has helped Bitcoin become a little more credible and trustworthy in the eyes of the Japanese – accelerating its use.
It’s difficult to know how the regulatory landscape will look this time in six months, let alone in a year. Countries across Asia are constantly reviewing their approach to cryptocurrency regulation – some for better, some for worse. Attempts to reduce the levels of fragmentation in the legalities of Bitcoin, facilitated by countries worldwide coming together to form a unified response, could begin to provide a sense of cohesion.
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