When most people hear about buying Bitcoin (BTC) or other cryptocurrencies, they immediately think of the largest exchanges, most of which are located in Asia. Today, countries such as China and South Korea have become epicenters of blockchain innovation. However, in many countries, it’s still unclear whether cryptocurrencies are allowed, and if they are, what their status is.
So, here’s how the regulation of the cryptocurrency market in Asia is shaping up and what should be expected from governments in the near future.
China goes digital with the yuan
Today, China is home to many cryptocurrency projects and exchanges, and yet, crypto has actually been banned for several years now. In 2017, the People’s Bank of China, the nation’s central bank, banned initial coin offerings and cryptocurrency exchanges. Then the Shanghai branch of the PBoC announced its intention to root out the crypto industry in the country, equating the token sales to the illegal placement of securities or fundraising. Soon, the biggest crypto exchanges in the country, Huobi and OKCoin, announced they had stopped local trading.
The turning point came in July 2019 when a Chinese court ruled that Bitcoin was digital property. The court’s decision marked a shift in cryptocurrency adoption, and in October 2019, Chinese President Xi Jinping called for an increase in blockchain development efforts. Furthermore, the PBoC has said it’s prioritizing the launch of a central bank digital currency. However, the Chinese government is still quite cautious in its approach to both its own cryptocurrency and digital assets in general and has yet to issue regulations.
Konstantin Anissimov, executive director of exchange CEX.IO, believes that recent events in the world, such as the coronavirus pandemic and subsequent economic downturn, could push the Chinese government toward the legal adoption of cryptocurrencies:
“To maintain its status as leader in the tech and finance markets, China, which after being overly restrictive just a few years ago, now accelerates the efforts to create a legal framework to regulate cryptocurrency circulation and even considers the possibility of its own digital currency.”
But so far the government has not introduced a national digital currency, apparently due to the fact that it wants not only to introduce a digital cash replacement but also to create a universal payment system, such as Alipay, that will be used all over the world. At the moment, the PBoC is conducting pilot projects in the field of cryptocurrencies in several regions of the country and has registered at least a few patents related to digital currency.
In early August, it also became known that some of the country’s commercial banks are conducting tests with digital yuan wallets. At the end of the month, China’s Communist Party once again announced that it is betting on blockchain as a key tool for innovating nationwide social services.
Also noteworthy is that at the end of July 2019, a national project known as the Blockchain Service Network, or BSN, was launched to support medium-sized businesses in the development of blockchain projects by creating public blockchains that will comply with Chinese law and operate internationally. It was also announced that the BSN will integrate support for stablecoins, albeit no earlier than 2021, and will be able to become the infrastructure for the digital yuan.
Despite all of these positive signs of blockchain “acceptance,” some Chinese businesses still don’t believe that the government will legalize cryptocurrencies because digital money does not act as currency. Yifan He, CEO of Red Date Technology — a tech company involved in the BSN — told Cointelegraph:
“For China, it is for sure that in the foreseeable future, cryptocurrencies definitely won’t be legalized in China. Until today, I see cryptocurrencies as a form of investment, not really currencies. When some real currencies change hands, most of the time they are for purchasing merchandise or services. When most cryptocurrencies change hands today, 99% of the volume is for investment purposes. Therefore, of course they won’t replace fiat money because they are not functioning as currencies.”
Singapore regulates the way forward
The city-state of Singapore treats cryptocurrencies positively and doesn’t ignore them, and its financial regulators were among the first in 2020 to issue relevant laws within the framework under which the country’s crypto businesses operate.
In January, the Monetary Authority of Singapore, the nation’s central bank, issued the Payment Services Act, regulating the circulation of cryptocurrencies and the activities of related companies, which must comply with Anti-Money Laundering and Combating the Financing of…
Read More: The latest on crypto regulation in Asia