A glimpse at the situation with cryptocurrencies in the Asian markets, where novel crypto hubs are popping up even with confusing regulation.
What pops into your mind when someone mentions purchasing Bitcoins or similar cryptos? Probably the biggest exchanges, some of them situated in Asia. Now, there are nations like China and South Korea that became hotspots for blockchain improvements. Yet, in many places there, one can’t tell cryptos are allowed or not. And if they are, what’s their standing exactly?
We give you the newest scoop on the situation with digital coins in Asian markets and where they are heading, especially policymakers-wise.
China Digitizes the Yuan
These days, China is the headquarter of lots of crypto ventures and exchanges, yet still, digital coin is prohibited for some time now. In 2017, the People’s Bank of China, which acts as a central financial institution, prohibited ICOs and crypto-exchanges. After that, the Shanghai entity of the central bank said it would work on rooting out the cryptocurrency movement in China, calling token selling as an illegal form of securities and pooling of funds. Then, the largest cryptocurrency exchanges there, Huobi and OKCoin, said they had ceased local trade opportunities.
The breaking point happened in July 2019 when a court in China decided that BTC is a digital asset. That set a big movement in adopting digital coins, and a few months later, the president himself said that there were now ideas for implementing more blockchain in China. Moreover, the central bank was adamant about the priority of releasing a digital currency stemming from the institution itself. But, the policymakers are slow to deal with digital properties and their own cryptocurrency, so regulations are still not in place.
Konstantin Anissimov, Executive Director of Exchange CEX.IO, thinks that the newest developments around the globe, like the Covid-19 onset and the crisis that followed, made China move to adopt cryptos. In his mind, Chinese policymakers wanted to keep their position at the forefront of technology and in the economical marketplaces, so even though they were very limiting only a couple of years before, they are now moving faster in making a legal space for regulating these coins and are thinking of releasing China’s cryptocurrency.
No such thing has happened still, though. This is in part because of the effort of not just introducing a digital cash replacement but also due to the wish to make a universal system for paying that resembles Alipay. The idea is that this system will be utilized over the globe. As of now, the central bank has some pilot ventures in the sector of digital coins in some parts of the nation and has registered a number of crypto-connected patents.
It was also reported at the beginning of August that a number of China’s commercial banks were performing checks with digital yuan wallets. At the ending of August, the Chinese Communist Party said once more that it is placing its bets on blockchain as a crucial feature for the innovation of national social services.
Another important aspect is that, after the ending of July last year, the country’s project named the Blockchain Service Network or BSN had begun in order to provide support for medium enterprises which wanted to develop distributed ledger ventures. This was done by making public distributed ledgers that followed China’s laws and were operating across the border, too. It was made public that BSN wanted to provide support for stablecoins, yet not before 2021, and it will be in the position to become the basis for the digital national currency.
Even though there are these positive signals for adopting distributed ledgers, there are some enterprises in China that are suspicious of the policymakers actually saying ‘yes’ to cryptos since digital cash doesn’t behave like a currency. Yifan He, chief executive officer of Red Date Technology – a technology firm dealing with BSN, believes the adoption of cryptos in China isn’t coming anytime soon. For him, digital coins are still a type of investment. He went on to explain that when real currencies are exchanged, a lot of the time, they are used for buying services or products. On the other hand, the majority of cryptos are exchanged for investment reasons. Thus, there is no way they will come in place of traditional currencies still since that’s just not how they work.
Singapore Pushes the Envelope With Regulations
Singapore’s city-state handles cryptocurrencies favorably and does not neglect them, and its policymakers were some of the pioneers this year when it came to passing applicable regulations within the country and space where the digital coin enterprises work.
At the onset of the year, the Monetary Authority of Singapore, the country’s central bank, released the Payment Services Act, setting the crypto-circulation in order, as well as the dwellings of connected firms, which had to follow Anti-Money Laundering and Combating the Financing of Terrorism rules. The idea is that cryptocurrency firms first have to sign up and, after that, fill in an application for a license for operating in Singapore. To make the process easier, the Association of Cryptocurrency Enterprises and Startups Singapore made public a guide for this issue that can help firms fill in their forms.
Policymakers didn’t stop at laws – they started making nationwide distributed ledger ventures. At the start of summer, the Monetary Authority of Singapore said it would begin testing the Ubin venture, which is a multicurrency distributed ledger payment venture made for commercial usage and has the aim to conduct better payments across the border. Also, at the start of summer, the Monetary Authority of Singapore said it is ready to work with China on creating a CBDC.
For now, Singapore has a clear regulation when it comes to digital coins, and there is nothing stopping an individual from having them, using them, or exchanging them for a fiat currency. Registering a crypto firm in the country is also a regulated move.
This nation also possesses a strong vision of digital coins, but laws regarding digital possessions are dealt with strictly since these possessions are seen as legal tender. Local exchanges are under the watchful eye of policy-making institutions, such as the Financial Services Commission. Moreover, the Ministry of Economy and Finance was overseeing BTC exchanges, too. Initial coin offerings and margin trades were prohibited since September 2017.
In March, the country put through law for regulating crypto-exchanges. The National Assembly approved of a revision bill for reporting and conducting some forms of financial transfers, counting in digital coins. The policymakers have until March next year to put the law into motion. When this happens, distributed ledger startups will have half a year of a grace period to set their actions in line with the newest guidelines.
The new rule will have an impact on digital coin exchanges, on funds and cryptocurrency wallets, those ventures dealing with initial coin offerings, and the rest of the marketplace players. They will have to follow every finance report requirement, utilize just bank accounts with real names, perform user verification like Know Your Customer and certify their info security handling procedures. In July, the government proposed an income tax stemming from cryptocurrency trades and put up a level of twenty percent, yet this wasn’t adopted.
When it comes to usage of distributed leverage in private ventures, the policymakers contribute to the growth of this branch in lots of shapes – from the usage of a distributed-ledger-founded system for paying in Seongnam and cryptocurrency storing via 4 of the country’s biggest financial institutions.
India is Uncertain
India’s love story with cryptos is kinda hard to get. The Reserve Bank of India banned accounting organizations serving companies that dealt with cryptocurrencies, and this led to some of them going bankrupt. Policymakers wanted to take another step, so in July last year, they introduced a proposal of a draft bill that could punish those who dealt with digital coins – the fine was hefty, and the prison sentence was around a decade long!
When the end of March came along, the Supreme Court of India all of the sudden heeded petitions from cryptocurrency companies and turned back on the ban from the central financial institution, calling it unconstitutional. There were exchanges that jumped at the chance to begin trades. Yet, the whole thing stayed uncertain, and we’re still not sure if India will create a lawful environment for the crypto-sector.
For now, it looks like the government wants to push for regulations, yet they are slow to move; thus, a new ban may be looming. For instance, following the lifting of the first ban, the country backtracked and said it might once more ban crypto-trades via legislative changes.
Sumit Gupta, chief executive officer and co-founder of CoinDCX, believes that a lot of time will pass for companies to adjust to novel financial instruments since India was not as fast in this field as Singapore or South Korea. During this year, there were blanket bans, more measured approaches for the protection of the investor, and moves to deal with fraud in this sector. What he is sure of is that some conventional players in the finance industry are warming up to cryptos, so there will definitely be a spike in utilizing and adopting digital coins.