Cryptocurrency Regulations In Asia: A Run-Through of the Basics

Despite the tremendous growth, Asia remains one of the regions with reduced cryptocurrency adoption. That does not however take away the fact that over $500 billion worth of crypto transactions took place across Asia between 2020 and 2021. This figure was well over 12% of all transactions worldwide. While there have been some bans in some parts, other Asian countries have chosen the adoption option to regulate the highly- decentralised ecosystem.  In recent times, crypto platforms like Immediate Edge have secured digital assets licences to legitimately operate in some of these countries.

While you may think that regulation does not align with the fundamentals behind cryptos like Bitcoin, making compromises crypto investors have considered necessary to win some of these governments. So, in this article, you will learn about crypto regulations on the Asian continent. Read on!

Before we go on, it will interest you to know the countries in the region that have banned cryptocurrencies despite Bitcoin hitting $69,000 in November. These countries have cited reasons such as money laundering, and scams for their actions. For some, the talk about cryptocurrencies serving as a “hedge against inflation” does not sit right. So, here are five Asian countries that have partially or completely banned crypto operations.

Away from these countries mentioned above, some have laid down friendly regulations. On the other hand, becoming hostile was the way to go. Whichever way it was, let’s look at six regulations that would interest you.

Pakistan

The usage of cryptocurrencies in Pakistan is regulated by the country’s Securities and Exchange Commission (SEC). While Pakistan does not completely frown on crypto activities, it ensures that transactions do not pass through traditional financial institutions. In 2018, the country's central bank issued a statement advising banks to exclude themselves from processing these blockchain-based transactions.

Interestingly, the Chambers of Commerce and Industry had some say in the regulatory framework. According to the body’s president, crypto assets were worth as much as $20 billion. This information propelled the SEC  to create the policies guiding crypto investing in the country. Fast forward to November 2020, the SEC publicly made valuable the regulatory framework. While the regulations are not entirely strict, Pakistan ensures that individuals and organisations involved comply with the help of the financial task force. An overview of the regulations showed that Pakistan was open to innovative ideas. Still, the country remained firm in monitoring the misuse of the opportunity it provided.

However, it may not be all easy for crypto organisations in Pakistan. Considering the increasing incident of exploits and rugpulls in the sector, Pakistan may consider laying down stricter rules for operations in the country.  Despite some considerations, crypto activities remain relatively active in the country.

China

When you hear China and crypto in the same statement, it is possible that it sends shivers down your spine. However, it may not be surprising, especially with the rules and penalties for participating in crypto-related activities in the top Asian country. To sum it all up, China has the strictest of rules when it comes to cryptocurrencies. It should interest you to know that crypto traders and investors are not the only ones affected. Before now, China had a soft spot for crypto miners and mining activities in the country were a well-to-do venture. Now, there is a massive crackdown on crypto miners. So, what exactly are the regulations regarding cryptocurrencies in China?

The first time China attempted to regulate cryptocurrencies was in 2013. After the rise of two exchanges, the government restricted banks from dealing in cryptocurrency transactions. Four years later, there was a ban on Initial Coin Offerings (ICOs)in the country. The Chinese government and the People's Bank of China consider cryptocurrencies completely illegal in the country. The reasons for the ban are not far-fetched, The government pointed out that mining activities had a negative impact on the country's environment, and power generation. In June 2021, the government laid siege on crypto miners and effected severe penalties on defaulters found wanting. In September 2021, the country went further to put a stop to asset adoption by its citizens and residents. In spite of the ban, China plans on releasing its own Central Bank Digital Currency (CBDC). According to its regulatory body, releasing the CBDC would put a final stop to crypto transactions in the country, and “hiding investors” would not be able to be involved.

Singapore

In all of Asia, Singapore seems to be one of the most-accommodating countries. Recently, Crypto.com secured a digital asset licence to operate in the country. In general, you can say that owning cryptocurrencies is legal. For the country, moderately regulating something as innovative as cryptocurrencies was a good decision will be a good decision in the long term.

However, it seems that some users may have misused the freedom offered on a platter of gold. The Monetary Authority of Singapore (MAS) which oversees the use of the asset found out that some companies had not been compliant with the rules. In addition, some have offered unattainable investment opportunities to unsuspecting investors. With the volatility of cryptocurrencies, MAS maintains that cryptocurrencies are still high-risk and such ROIs should never be out in public. So, what exactly did Singapore do to address these concerns?

In tackling this, the MAS made strict guidelines with Anti-Money Laundering (AML) laws in 2020. In 2021, it went further by making it necessary for operators to obtain licences before beginning to acquire users. The county did this by launching the Digital Payment Token (DPT) provider licence. Obtaining the licence ensures that crypto service providers are open about the tokens available on their platforms and do not mislead investors.  In addition, it ensures that there is less occurrence of anti-money laundering acts. Besides that, Singapore ensures that these crypto platforms have a physical location in their country, This is to ensure that any flouting of the rules does not go unpunished.

Malaysia

In Malaysia, cryptocurrencies are legal. Despite the legitimacy of the venture, digital assets are still regulated. However, you need to know that being legal does not mean the cryptocurrency is legal tender. The Malaysian Security Commission (SC), in 2019, referred to cryptocurrencies and exchange tokens as securities.

The commission went further by creating rules for organisations that wanted to offer initial Exchange Offerings (IEO) in 2020. The law noted that IEOs must only be offered to investors through approved cryptocurrencies in the county. As such, there are procedures that help the SC in ensuring that these rules are duly followed. Malaysia also ensures that decentralisation is not an excuse for crypto platforms not to pay tax. However, two exchanges, Binance and eToro, have been restricted from operating in the country. Malaysia noted that these two platforms do not act in accordance with their regulatory policies.

Thailand

For Thailand’s regulatory commission, too many people are involving themselves with cryptocurrency without proper education. The incredible rise of the sector in the country has led to many cases of exploitation, fraud and identity theft. To control these risks, the Thailand government considered it necessary to have solid regulations in place.

In curbing these, the Bank of Thailand and the country’s Securities and Exchange Commission agreed to stop businesses from accepting cryptocurrencies as payment options.  In addition, the county did not completely ban crypto, it placed a huge percentage of tax on crypto gains. This was a recent move as Thailand placed a 15% tax on crypto trading gains. However, Thailand notes that this tax rule was only for large organisations and not retail investors.

Japan

Well, you call this saving the best for last. This assertion is because Japan houses one of the best crypto regulations on the continent. According to the Japanese government, cryptocurrencies are legal. Despite the recognition, the country does well to regulate them. What Japan does is to make sure that the Financial Services Agency (FSA) oversees happenings in the ecosystem.  This agency then uses the Payment Services Act as the regulatory act for crypto traders and investors.

However, Japan notes that it is aware of cryptocurrencies being sued for money laundering.

It also mentions some terrorist-related acts are perpetrated using cryptocurrencies. So, it integrates it Anti-Money Laundering (AML) laws and counter-terrorism policies into the payment act. This was made law in February 2021. Still, it has nor deterred Japan from allowing the freedom to use cryptocurrencies.

Conclusion

Finally, you should note that there are some exceptions and additions to these regulations. So, if you reside or plan to move to any of these Asian countries, it may be in your best interest to learn more about the regulations. Also, know that cryptocurrencies are still in their early stages. So, it may be normal to expect restrictions. However, there is no guarantee that the ones who banned them will turn back on their decisions.