What Crypto Regulations Look Like In Asia In 2022?
Despite the potential benefits, cryptocurrency regulation has been slow to move in Asia. Hong Kong's regulatory sandbox framework and Singapore's licensing regime are examples of soft regulatory approaches.
The Conflicting Reactions — Pakistan, India, Singapore, and Thailand
As a country that has gained independence from the British empire, Pakistan faces the challenges of foreign investment. While the economy has not shown signs of significant growth in recent years, it is still one of the top 3 crypto holders globally. However, alongside their Central bank, their government is making moves to ban crypto transactions.
Despite recent developments, India is still one of the leading jurisdictions globally when it comes to regulating crypto. India is actively encouraging the use of blockchain and cryptocurrencies. India's government announced new proposals on Feb. 1, which will likely become official in the coming months. The new proposals include a 30% tax on all crypto gains and a 1% tax deducted at source on all transactions.
While many countries in the region have weak regulations, Singapore and Thailand have relatively lax crypto regulations. Singapore's Payment Services Act, a strict money laundering and terrorist financing law, has largely regulated the crypto industry.
Singapore is taking advantage of the Chinese crackdown on cryptocurrencies and is establishing itself as a regional crypto hub. Consequent to the Monetary Authority of Singapore (MAS)'s recent regulatory efforts, Singapore has regained international interest in its crypto industry. After all, the Chinese government's crackdown on crypto led many high-profile service providers to relocate to Singapore. Hence, this makes it an attractive jurisdiction for new investment and cryptocurrency activity.
Adoption And Rejection – South Korea, China, and Japan
As the global cryptocurrency market booms, South Korea has taken a more active role in adopting crypto. The new president, Yoon Suk-yeol, has pledged to deregulate the crypto industry and implement favorable tax laws for crypto investors. Hence, we expect South Korea to take the lead in cryptocurrency trading soon. They were one of the early adopters of technology-driven transformation.
Cryptocurrency is undergoing regulatory uncertainty in China. The People's Bank of China has recently banned the mining of cryptocurrencies within the country, and it has also outlawed the use of crypto exchanges in September 2021. These moves effectively banned the use of crypto exchanges in the country, and their subsequent selloffs were significant. Currently, there are ways around these regulatory hurdles by using foreign websites and platforms.
Financial regulators in Japan believe in the potential of blockchain technology. Japan's companies are adopting cryptocurrencies. Therefore, many have begun accepting Bitcoin, Ethereum, and a few other cryptocurrencies after the government approved Bitcoin as a payment method. Bithumb, a Japanese crypto exchange, has announced cooperation to make it easier to spend cryptocurrency like fiat money.
Is Regulation Necessary?
The growing interest in NFTs and the potential for their use in the financial system poses risks for the digital asset ecosystem and investors. Concerns about the exploitation of the market by bad actors prompted the Crypto Regulation Asia Summit (2022) to focus on the growing risks associated with this emerging asset class. The panel discussions addressed these issues and the regulatory scenery for crypto markets in Asia, including the risks and benefits of DeFi, the surge in financial crime in the CeFI ecosystem, and governance and market conduct issues.
As the number of digital assets grows, the demand for regulations must too. In Asia, regulators are tightening their grip on crypto transactions. The latest set of regulations in the region covers ICOs and crypto exchange activities.
Meanwhile, Hong Kong, the Philippines, Australia, and Thailand have adopted more moderate regulations. In the Philippines, cash remittances account for more than 9% of GDP, making cryptocurrencies convenient for transferring money within and outside the country.
Conclusion
Despite the recent changes in the global regulatory landscape, the conclusion of crypto regulations in Asia in 2022 is still uncertain. China has already banned all crypto transactions and made all tokens illegal. Other jurisdictions are moving in with similar legislation, but the future is still uncertain. Huong Hauduc, the general counsel of Bequant, a Malta-regulated cryptocurrency exchange, and investment company, is a key figure in determining how regulators will act in the region.