When most people hear about buying bitcoin (BTC) or other cryptocurrencies, they immediately think of the largest stock exchanges, most of which are located in Asia. Today, countries such as China and South Korea have become the epicenter of blockchain innovation. However, it is still unclear in many countries whether cryptocurrencies are allowed, and if so, what their status is.
So here’s how the regulation of the cryptocurrency market in Asia is shaped and what you can expect from governments in the near future.
China goes digital in yuan
Today, China is home to many cryptocurrency projects, but cryptocurrency has already been banned for several years. In 2017, the People’s Bank of China, the country’s central bank, banned the first foreign exchange offer and cryptocurrency exchange. Then the Shanghai branch of the People’s Bank of China (PBoC) announced that they intended to eradicate the cryptocurrency industry in the country, and equate the sale of tokens with an illegal supply of securities or fundraising. Shortly afterwards, the country’s largest crypto exchange, Huobi and OKCoin, announced the end of internal trading.
The turning point came in July 2019 when a Chinese court ruled that Bitcoin is digital property. The court’s ruling marks a shift in the adoption of cryptocurrency, and in October 2019, Chinese President Xi Jinping called for more efforts for blockchain development. In addition, the People’s Bank of China (PBoC) said it was prioritizing the launch of the central bank’s digital currency. However, the Chinese government is still very cautious about both cryptocurrencies and digital assets in general, and has not yet issued rules.
Konstantin Anisimov, CEO of CEX.IO, believes that recent events in the world, such as the coronavirus pandemic and the subsequent economic downturn, could push the Chinese government against the legal adoption of cryptocurrencies:
To maintain its position as a leader in technology and financial markets, China, which was far too restrictive just a few years ago, is stepping up efforts to create a legal framework to regulate cryptocurrency trading and is even considering creating its own digital currency. . … ”
But so far the government has not introduced a national digital currency, apparently due to the fact that they not only want to offer an alternative to digital money, but also create a global payment system like Alipay that will be used everywhere. World. PBoC is currently conducting pilot projects on cryptocurrency in several regions of the country and has registered at least several patents for digital currency.
In early August, it also became known that some commercial banks in the country are conducting tests with digital wallets with yuan. At the end of the month, the Chinese Communist Party again announced that it is tapping blockchain as the primary tool for nationwide innovation in social services.
It is also worth noting that in late July 2019, a national project known as the Blockchain Service Network or BSN was launched to support medium-sized companies in the development of blockchain projects by creating public blockchains that comply with Chinese law and operate internationally. It was also announced that BSN will include support for stack coins, albeit not earlier than 2021, and may become the infrastructure for the digital yuan.
Despite all these positive signs of “adoption” of the blockchain, some Chinese companies still do not believe that the government will legalize cryptocurrencies because digital money does not function as a currency. Ewan Hee, CEO of Red Date Technology, a technology company operating at BSN, told Cointelegraph:
“As far as China is concerned, it is clear that cryptocurrencies will not be legalized in China in the foreseeable future. Even today, I see cryptocurrencies as a form of investment and not as a currency. When trading real currency, most of the time is spent buying goods or services. When most digital currencies are in circulation today, 99% of the volume is used for investment purposes. Therefore, of course, they will not replace paper money, because they do not act as currency. ”
Singapore is leading the way
The city-state of Singapore has a positive attitude towards cryptocurrencies and does not ignore them, and its financial regulators were among the first in 2020 to adopt relevant laws within the framework according to which cryptocurrency companies operate in the country.
In January, the Monetary Authority of Singapore, the country’s central bank, passed the Payment Services Act, which regulates cryptocurrency trading and related business activities that must be AML / CFT compliant. Cryptocompanies must first register and then apply for a license to operate in Singapore.