Regulating The Blockchain Space
Cryptocurrency regulation is advancing Asia’s economic growth and global reputation as a financial innovation hub.
A dynamic investor environment and regulatory space in Asia has led to the region emerging as a leader in the blockchain space with a bright future and strong impact on global blockchain adoption. Asia has seen roughly a 50% spike in blockchain and cryptocurrency jobs since 2017, the rise holding steady amidst price volatility. Asia’s determination to lead in blockchain and crypto adoption by providing comprehensive regulation has attracted innovative businesses to the region, paving the way for potential market domination.
The blockchain industry in Asia highlights a number of differing approaches to regulation. One of the most discussed nations in relation to cryptocurrency regulation is China, which was the first to ban all Initial Coin Offerings (ICOs) in September 2017 and subsequently all Security Token Offerings (STOs) in late 2018 before cutting all access to overseas ICO platforms. Prior to the ban on ICOs, the country had accounted for 80% of the world’s crypto-transactions and token financing. The bans have however been seemingly ineffective. The Deputy Governor of the People’s Bank of China, Pan Gongsheng, recently admitted that token financing activities were still widespread in China despite the crackdown.
Singapore, on the other hand, is spearheading Asia’s crypto reputation with a supportive attitude toward regulation. Cryptocurrency trading on legal exchanges are allowed. The Monetary Authority of Singapore (MAS) has released a Guide to Digital Token Offers, outlining precise rules on the application of the securities laws in relation to offers or issues of digital tokens.
Other Asian nations have also used regulation to facilitate a positive environment for cryptocurrencies. Japan for instance had suffered a number of crypto money laundering incidents before its primary financial regulator, Financial Services Agency (FSA) stepped in to approve the formation of the Japan Virtual Currency Exchange Association (JVCEA). The JVCEA currently oversees 16 licensed Japanese cryptocurrency exchanges and will also take on the mantle of self-regulating the industry in the country.
In South Korea, an estimated one in three workers have invested in cryptocurrencies. In November 2018, South Korean exchanges, including Bithumb, Coinone, Korbit, and Upbit, registered a combined US$1.4 billion in average daily trade volume. In terms of regulation, South Korea's Financial Services Commission (FSC) recently announced that crypto exchanges will be allowed to handle banking services as long as there are adequate safeguards to combat money-laundering.
Asia’s Global Influence
Overall, Asia’s drive to regulate cryptocurrencies is mirrored in the industry’s smartest minds. While the crypto space has been compared to the Wild West in the past, those at the forefront of innovation have advocated for regulation to make the industry more legitimate. Asian regulators are displaying an awareness of how regulation will protect the growing number of cryptocurrency users. Nations introducing regulation in reaction to criminal activities, such as Japan, have demonstrated knowledge of how regulation will lessen corruption and increase the industry’s stability and trustworthiness.
The leadership many Asian countries have shown is prominent on an international scale, particularly given that it tends to be smaller, more agile nations such as Gibraltar, Malta, Bermuda, and Liechtenstein that have seen more leeway and freedom in their regulatory regimes. It will be interesting to see how the adoption processes in Asia prompt more large nations to follow suit in their efforts to adapt to the new digital economy.
Spurring Economic Growth
Cryptocurrency regulation is helping investors from Asian countries participate more effectively in the global economy. With increased crypto adoption rates, Asian investors directed some 40% of global venture financing in 2017. Increasing attention is now being paid to Asia by US funds, not only because of the investment opportunities, but also because of the potential market opportunity for portfolio companies. As a result of regulatory developments, Asian cryptocurrency and blockchain funds have a competitive advantage for the first time, along with a massive market that those in international traditional and digital financial industries can no longer ignore.
If governments in Asia act negatively towards crypto, they risk allowing other nations to take over leadership of this space. If they continue implementing regulation and creating a positive, receptive financial sphere for the new digital economy, other countries will likely follow suit.
About The Writer
Frank Wagner is the Co-Founder & CEO of INVAO, the Blockchain Asset Pool for investors. INVAO trades a diversified portfolio of blockchain assets and cryptocurrencies, represented in one single token. Based on automated trading and active portfolio management, INVAO provides a straightforward way to invest in blockchain and digital money. All profits are reinvested in the value of the INVAO token, ensuring sustainable long-term value creation. Frank is passionate about game-changing innovation and disruption of established industries based on data, technology and digital transformation. Frank’s extensive track record includes bootstrapping, profitable growth, and successful exits and turnarounds.