Cryptocurrencies have been a big financial topic in the United States and Europe since the crypto boom in 2017. But this doesn’t mean they aren’t also popular in other continents like Africa or Asia.
The East Continent counts important countries such as Japan, China, South Korea and India where cryptocurrencies are used by a lot of people.
Let’s see in this article where they are used the most, and how are Asian countries are dealing with this new virtual era.
What Happens Next for Cryptocurrency in Asia?
Last year in 2017 Bitcoin, Ethereum, Ripple and NEO all increased in value during the ‘crypto boom’. A lot of people around the world bought or invested in these new digital coins.
Due to the Asian market’s cutting edge interest in emerging technology, cryptocurrencies and ICOs have found the perfect financial environment to grow and be developed. Which is one of the reasons why they remain so popular.
Asian markets such as Japan and South Korea were quick to be part of the cryptocurrency boom. In South Korea an incredible amount of 3 out of 10 salaried workers in South Korea were investing in cryptocurrency
Unfortunately when the value of Bitcoin and other cryptocurrencies sharply decreased at the start of 2018, traders and governments took notice. Talks of crypto regulation were discussed by some countries, and in some parts of Asia new rulings have been put into place.
How are cryptocurrencies regulated and used in Asia?
One of the first big regulations was made by China. In 2018 China officially banned all crypto related commercial activities, and Beijing made it illegal for commercial and office buildings to promote cryptocurrency events.
China has also banned sales of new cryptocurrencies through ICOs, and has more or less banned domestic Bitcoin trading. This included the shutting down of domestic virtual currency exchanges.
Yet such harsh regulations have not made it to the rest of Asia yet. Whilst regulations have been introduced in South Korea and Japan, they remain key countries for cryptocurrency use.
South Korea and Japan Crypto Regulations
South Korea is known as one of the key Asian countries for crypto use, however in 2018 the South Korean government started to introduce regulations with the main aim of cracking down on cryptocurrency fraud and illegal activity. Two of the main rules introduced were the banning of Initial Coin Offerings and the outlawing of anonymous accounts in crypto trading.
However, although South Korea has introduced regulations on cryptocurrency, the Government has realised that further discussions on regulation and the lifting of the ban on ICOs are needed in order to keep the economy innovative and cryptocurrency legitimised. Let’s see what happens.
In Japan, the country has always been well-known for its interest in new technologies so has always been an early adopter of crypto technology. In fact the mysterious founder of Bitcoin known as Satoshi Nakamoto is also rumoured to be a Japanese man.
Although considered to be reasonably progressive with regulations, Japan’s Financial Services Agency (FSA) in 2017 classed cryptocurrencies as a taxable miscellaneous income. A registration scheme was also introduced by the FSA to monitor and regulate trading and exchanges.
Amendments to the Payment Services Act now require cryptocurrency exchanges to be registered with the FSA in order to operate. This is a process which can take up to six months, and which imposes stricter requirements around both cybersecurity and AML/CFT. Hopefully this scheme will protect traders from fraud and crypto theft.
2019 Update: Japanese Regulations
In May 2019, the Japanese government passed a bill that features further regulations for the cryptocurrency market. The bill was prepared by the FSA and the new regulations are expected to come into force in 2020.
The focus of the new regulation is the continuation of crypto trader protection and the limitation of leverage for crypto market trading. One interesting point is that there will be a legal change of name for cryptocurrencies, cryptocurrencies will be known as ‘crypto assets’ instead.
As well as the name change the FSA has also argued that crypto assets should be held in cold wallets, not just hot wallets, in order to protect against hackers and thefts. There have been incidents of hot wallets getting hacked into and coins stolen, so legislation positive for cold wallet storage is a good idea.
This new ruling of regulation can be considered a step forward for the Japanese government as it is trying to moderately regulate the crypto industry without crushing it.
The fact that it is very ‘trader protection’ focused as well is a good sign that Japan is trying to crack down on fraud and dubious crypto traders. Hopefully the regulation will be considered as a benchmark to follow for the rest of the world.
After the Regulations
Although regulations have been introduced to South Korea and Japan, that hasn’t put off traders from investing in cryptocurrency.
A 2019 report compiled by The Block based on a study looking at crypto exchange web traffic, showed that the USA remains the top country for crypto trading. But Japan and South Korea come in at 2nd and 3rd place respectively.
This result shows that crypto traders and owners in South Korea and Japan still have interest in digital currency, and have not been put off by market volatility or regulations.
Cryptocurrency regulation has been the big 2018 topic around the world and not just in Asia.
The only difference is about how each individual country will react to the issue of regulation.
How Important is Asia for Cryptocurrencies?
In order to understand better how important these Asian countries are in the cryptocurrency world, we need to analyse the price movements related to rumours of potential Asian regulations.
The 2 big drops in Bitcoin price in 2018 are related to:
- Chinese regulation
- Japanese potential regulation
For instance, when China banned Bitcoin from their market, the price of Bitcoin dropped in many thousand Dollars.
When the rumours about the new Japanese regulation increased, the price of Bitcoin plummeted again.
What about Cryptocurrency in Thailand?
This year, Thailand set up the Digital Asset Business Decree which identifies digital currencies as a “medium of exchange as well as defining tokens as rights to participate in a digital environment.”
This means that the use and investment of Bitcoin, Bitcoin Cash, Ethereum, Ethereum Cash, Ripple, Litecoin and Stellar is allowed. Plus investing in new ICOs is permitted too if it falls into one of the above mentioned currencies.
This action of defining cryptocurrency use will probably give some inspiration to western countries, mainly in Europe where crypto regulation is still a grey area.
Cryptocurrencies are already used in many digital platforms and shops. It is also possible to invest and trade online with cryptocurrency.
Even the gaming industry (Casino Online and Poker Online) has introduced cryptocurrencies as a payment method. For many poker players in Asia, receiving winnings in cryptocurrency has become very popular.
For the future of crypto regulation and crypto adoption, the focus on Asia for developments is key. Asia could really lead the rest of the world and introduce elements of crypto regulation to other nations.
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