Development of Cryptocurrency Regulations in Asia: Hong Kong and Singapore Preferred by Cryptocurrency Companies? Attention on Taiwan's Draft Cryptocurrency Special Law

Foreign media outlet The Block today, on the 26th, explored the topic of "cryptocurrency regulatory changes in Asia," delving into the current state of cryptocurrency regulation in countries like Hong Kong and Singapore. It stated that both countries are in a leading position in the industry, with the former particularly striving to become the Web3 innovation hub in Asia. Additionally, the recently proposed "Crypto Special Act" in Taiwan has also garnered attention.

Hong Kong

As a highly anticipated new center for the cryptocurrency industry, Hong Kong has implemented a regulatory framework for cryptocurrencies starting in June this year. Only those granted licenses are allowed to operate virtual asset trading platforms, with strict restrictions and regulations on investment products and stablecoins.

Hong Kong's crypto regulation took effect on 6/1: Exchanges bear heavy responsibility to protect retail investors, no trading of stablecoins for now

In November, Hong Kong also initiated discussions on tokenized securities implementation and tax exemptions for investors.

Recently, Hong Kong announced its readiness to allow the listing of virtual asset spot ETF products, potentially making Hong Kong the first Asian market to permit the listing of virtual asset spot ETFs, thus reinforcing its position as a leading digital asset center in Asia.

Donald Day, CEO of Hong Kong cryptocurrency platform VDX, commented:

Hong Kong's stable and reliable regulatory system is a competitive advantage in establishing and operating compliant digital asset businesses.

Singapore

Despite facing significant crises such as the bankruptcy of Triple Capital, Singapore continues to attract global companies in the cryptocurrency and web3 sectors to establish their headquarters in the country.

Moreover, the country has recently focused on regulatory aspects, issuing the final version of the stablecoin regulatory framework in August and subsequently granting digital token primary payment institution licenses MPI to U.S. exchange Coinbase, South Korean exchange Upbit, and Taiwanese exchange XREX last month.

Singapore's MAS bans retail leveraged and margin trading, credit card crypto payments

Recently, the Southeast Asian super app "Grab" introduced an in-app blockchain wallet with digital asset management capabilities, which stemmed from the Monetary Authority of Singapore's MAS 2021 project called Project Orchid.

Reportedly, the project mainly explores the use of central bank digital currencies, asset tokenization RWA, and stablecoins.

Japan and South Korea

In addition to the spotlight on Hong Kong and Singapore, Japan and South Korea, which actively legislate and have vibrant trading, are also key contributors to driving cryptocurrency development in Asia.

Regarding Japan, investor protection has always been one of the reasons for its efforts in cryptocurrency legislation and pilot projects, including ongoing legislative amendments to relax heavy tax regulations and multiple attempts at stablecoin and cross-network digital asset trading pilots.

Furthermore, in the past six months, Japanese financial giant SBI Holdings has been cooperating with cryptocurrency companies worldwide, ranging from payment network Ripple, Standard Chartered Bank's venture capital arm SC Ventures, to stablecoin issuer Circle, focusing on exploring the application of digital assets.

In South Korea, the Busan Metropolitan Government announced last month that two companies will jointly launch and operate the "Busan Digital Asset Exchange," expected to debut in the first half of next year.

Further data indicates that South Korea's enthusiasm for cryptocurrencies has far exceeded expectations.

In fact, the monthly trading volume of the largest local exchange Upbit often surpasses that of Coinbase. Statistics show that Coinbase's spot trading volume so far this month is $55.2 billion, while Upbit's is a staggering $71.8 billion.

Taiwan

Notably, Taiwan's "Cryptocurrency Special Law Draft," passed in October this year, has also attracted attention from The Block.

However, at the 2023 Taiwan Virtual Economic Forum, legislator Tseng Ming-tsung poured cold water on the bill, indicating a tendency not to pass the law, emphasizing that consumer protection, financial investment, and payment definitions are still unclear.

It is understood that the bill has many concerns and loopholes, including misunderstandings in the process of referencing international regulatory frameworks, lack of registration mechanisms, and lenient penalties.

"Cryptocurrency Special Law" for business or consumer protection? Professor Yang Yue-ping interprets Taiwan's regulatory path

However, the Financial Supervisory Commission of Taiwan announced the "Guidelines for Virtual Asset Service Providers VASP" in September this year, officially supervising domestic and foreign currency dealers; at the same time, addressing concerns about exchange user accounts by incorporating them into the legal scope of the new anti-money laundering bill.

Is Asia the Future of the Cryptocurrency Industry?

In September this year, during the Token2049 event, in an interview with MakerDAO founder Rune Christense, he expressed his positive views on the development of the cryptocurrency industry in Asia.

Rune not only praised the recent friendliness and openness of the Japanese government towards the cryptocurrency industry but also noted the strong contrast between Asian and Western regulations, emphasizing that developers can go to Japan, South Korea, or Singapore at any time without worrying about regulatory uncertainty:

People have been saying for many years that Asia will be the future of the cryptocurrency industry, and now it may finally be happening.

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