Cryptocurrencies have been a big topic across the world since the crypto boom in 2017. With Bitcoin’s price surging that year, investors wanted to get involved in the crypto market themselves.
One of the places that has seen a lot of people investing is Asia.
For instance Japan, Thailand, South Korea and India are some of the Asian countries where digital currencies are used by a lot of people.
In this article we’ll examine how Asian people are investing in Bitcoin & other cryptos.
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?
In 2017 Bitcoin, Ethereum, Ripple and NEO all increased in value during the ‘crypto boom‘. Because of this many people invested in these new digital coins.
Due to the Asian market’s interest in emerging technology, cryptocurrencies and ICOs have found the perfect financial environment to be developed. This is one of the reasons why they remain so popular in Asia.
Asian countries such as Japan and South Korea were quick to be part of the cryptocurrency boom. For example, in South Korea 3 out of every 10 salaried workers in were investing in cryptocurrency there, an incredible amount!
Unfortunately, things changed when the value of Bitcoin and other cryptocurrencies sharply dropped at the start of 2018.
Once change was that traders and governments took notice of the price decrease. Talks of crypto regulation were discussed by some countries in a way to monitor the market. This has led to new regulations in some parts of Asia.
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.
Beijing also made it illegal for commercial and office buildings to promote cryptocurrency events.
China has 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.
However, there has been talk that China is planning to launch their own state based cryptocurrency.
Who knows if this is true or not, only time will tell. It shows though that China is taking an interest in it whilst strongly regulating the market.
The Chinese Government has also recognised the potential of using blockchain technology. For example, the PboC (People’s Bank of China) is helping the development of a finance platform that’ll be blockchain based. This will help to streamline bank payments.
It’ll be interesting to follow what happens with these crypto projects in the future and how it affects the Chinese economy.
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 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. Their aim was to crack down on cryptocurrency fraud and illegal activity.
For instance, one of the new rules introduced was to ban Initial Coin Offerings. Another regulation outlawed the use of anonymous accounts in crypto trading.
However, although South Korea has introduced regulations on cryptocurrency, the Government has still supported blockchain project initiatives. This has included tax benefits for blockchain projects and research.
They’ve realised that the support of blockchain technology is needed in order to keep the economy innovative and cryptocurrency legitimised. Let’s see what happens in the future.
Japan Crypto Regulations
In Japan, the country has always been well-known for its interest in new technologies. This is why they were 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) classed cryptocurrencies as a taxable miscellaneous income in 2017. A registration scheme was also introduced by the FSA to monitor and regulate coin 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 includes stricter requirements around both cybersecurity and AML/CFT.
This scheme is designed to 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 new regulations focus on crypto trader protection and the limitation of leverage for crypto market trading. One interesting point is that there’ll be a legal change of name for cryptocurrencies. Instead of cryptocurrencies they 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. Cold wallets not just hot wallets should be used in order to protect against hackers and theft.
There have been incidents of hot wallets getting hacked into and coins stolen. So legislation that supports cold wallet storage is a good idea.
These new rules can be considered a step forward for the Japanese Government as they’re trying to moderately regulate the crypto industry without crushing it.
The fact that it’s very ‘trader protection’ focused is a good sign that Japan is trying to crack down on fraud. Hopefully the regulation will be considered as a benchmark for the rest of the world to follow.
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 studied crypto exchange web traffic. They found 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. They 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 fully understand how important these Asian countries are in the cryptocurrency world, analysis is needed.
First, we need to analyse the price movements related to rumours of possible 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 by thousands of USD Dollars.
When the rumours about the new Japanese regulation increased, the price of Bitcoin plummeted again.
What about Cryptocurrency in Thailand?
In 2018, Thailand set up the Digital Asset Business Decree. This decree 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- if it’s related to one of the above mentioned currencies.
This action of defining cryptocurrency use will probably give some inspiration to western countries. Especially for Europe where crypto regulation is still a grey area.
Cryptocurrencies are already used in many digital platforms and shops. It’s also possible to invest and trade online with cryptocurrency.
Even the gaming industry (Casino Online and Poker Online) has introduced digital currencies 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 and inspire the rest of the world when it comes to introducing crypto regulation.
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