While Asian countries are following the lead of the new EU crypto rules, the crypto regulation fight continues in the US Congress. South Korea, Japan, and Hong Kong have produced new regulatory frameworks for crypto businesses. Meanwhile Australia, Indonesia and Singapore are actively working on their own crypto rules. A common factor in these new and evolving crypto regulations is an awareness of how badly many were hurt by the fraud and shady business dealings that were uncovered as a result of crypto winter and the collapse of entities like FTX. These issues are being addressed by new Asian crypto regulations while the US falls behind.
Hong Kong Crypto Regulation
Hong Kong recently announced that OSL and the HashKey Exchange had received permits for legal crypto token trading. This comes on the heels of the Asian business center clarifying its crypto regulatory framework. One aspect of the new rules in Hong Kong is that retail investors are restricted to trading Bitcoin, Ether, and other major crypto tokens. Institutional investors have broader latitude in which tokens they may choose to trade. With FTX and other crypto fiascos in mind, the new regulations have specific rules for asset custody and insurance coverage. They will be following Japan with stablecoin rules in the coming year.
Crypto Rules in Japan
We already wrote about how a Japanese bank would be issuing stablecoins. Mitsubishi UFJ Financial Group will use its proprietary platform called Progmat for stable coins tied to foreign currencies including the US dollar. Japan plans to use their new crypto rules to help support the growth of web3 companies. In its new rules Japan is easing the rules for crypto taxation and crypto listing. However, it is firming up regulations aimed at protecting the sorts of investors who were hurt during crypto winter.
New Crypto Rules in South Korea
South Korea was especially mindful of the need for regulatory changes in crypto as tokens created by Korean national Do Kwon were part of the raft of problems as crypto collapsed. New regulations focus on unfair trading practices, market manipulation, and how non-public client information is used. Power over crypto has been handed to the country’s Financial Services Commission along with the Bank of Korea. Crypto businesses will be required to carry sufficient reserves, have adequate insurance coverage, and demonstrate the necessary level of record keeping. Like what seems to be evolving in the US, regulation and who is in charge will be split between those tokens like Bitcoin and those that are considered to be securities.
Singapore, Australia, and Indonesia Advance New Crypto Rules
All three of these nations are working actively toward new crypto rules. Singapore is going to separate out retail investors from institutional investors in terms of who can trade what based on volatility and risk of various tokens. Crypto businesses will be required to keep crypto assets in trust by the end of 2023. Staking and lending in the crypto realm will be banned in Singapore.
Australia is working on new crypto rules while banks gave reduced access to crypto platforms because of the risk of scams. Meanwhile Indonesia is using their rules for their stock market as a guide to regulating crypto. Thus they are contemplating a market backed by the nation in which trading can take place on private sector platforms. An important part of this is that custody of assets, clearing house activities, and trading will be separate functions carried out by separate entities just like in their stock exchange.
Regulators Deal With Crypto by Default in the USA
Because the US Congress has not dealt effectively with the issues revolving around cryptocurrencies, US regulators such as the Commodity Futures Trading Commission and the Securities and Exchange Commission have stepped in and applied their own rules as they see fit. Part of this was initiated by President Biden who directed federal agencies to get organized in regard to digital currencies well over a year ago. Considering the inability of Congress to come together on virtually any matter for the national good, we expect to see the SEC and CFTC continue to set the rules for crypto regulations and fight the issues in court until such issues become settled law. This could take several years while the EU, Dubai, nations across Asia and others move on with clear regulatory systems.
Asian Crypto Regulations While US Falls Behind – SlideShare Version