July 12, 2023
y Anjali Kochhar
In a stark contrast to the regulatory battles taking place in the United States, several Asian countries have begun rolling out new rules for cryptocurrency exchanges, focusing on clarity rather than resorting to legal action. South Korea, Singapore, and Thailand have all recently clarified their regulatory frameworks, aimed at protecting investors and fostering innovation in the crypto industry.
While the US remains embroiled in political and regulatory warfare over cryptocurrency management, Asian nations are attracting crypto companies by providing clear guidelines and demonstrating adaptability to technological advancements. According to industry experts, the lack of clear regulations in the US has led many firms to focus on overseas markets instead.
In Asia, South Korea has taken a significant step towards building a digital asset legal framework with the approval of the Virtual Asset User Protection Act. Although the law will not come into effect for another year, it focuses on investor protection and imposes penalties, including fines and jail time, for rule violations. This move comes over a year after the collapse of the Terra-Luna cryptocurrency and stablecoin, which originated in South Korea and caused substantial losses to numerous investors.
Singapore and Thailand have also introduced new rules for crypto exchanges. While both countries have expressed concerns about certain products offered by exchanges, their approach has been to clarify regulations rather than engage in court battles. Notably, both jurisdictions have forbidden crypto staking services, although Singapore authorities have stated that they are still studying the product.
Hong Kong, too, has implemented stricter regulations for crypto trading, signalling its ambition to become a leading digital asset centre in Asia. These tougher rules, accompanied by penalties for violations, require some restructuring by crypto businesses. However, industry professionals have welcomed the regulations, stating that they enhance investor protection and inspire confidence from corporate and institutional sectors.
Meanwhile, in the US, Congress has engaged in extensive discussions regarding digital assets. However, progress has been hindered by legislative gridlock, with over 30 proposed bills related to cryptocurrencies failing to advance. As a result, the nation’s courts have taken on the task of interpreting digital assets within the existing legal framework. This situation has delayed progress, as courts are inundated with arguments about whether digital assets should be considered securities.
Despite the ongoing regulatory challenges in the US, not everyone in the digital asset world disagrees with the Securities and Exchange Commission (SEC) actions. Blockstation, a blockchain-driven platform, had previously predicted that regulators would react with enforcement measures when the crypto market reached a trillion-dollar market cap. According to Blockstation CEO Jai Waterman, regulators are fulfilling their fiduciary responsibility to protect investors, as many cryptocurrencies can be classified as securities. Waterman emphasised the need for established brokerages to receive appropriate guidance from regulators and to develop the necessary technology and training in blockchain.
Industry insiders believe that the recent lawsuits filed by the SEC were long-expected actions. They view them as a catalyst for Congress to seriously consider stablecoin and digital asset market regulation. Circle, the issuer of the USDC stablecoin, has noted that the three branches of the US government are signaling their desire to see legislation in this area.
As the crypto industry continues to evolve, Asian countries are taking proactive steps to provide regulatory clarity and investor protection. By doing so, they are positioning themselves as attractive destinations for crypto companies and fostering innovation in the sector, in contrast to the regulatory uncertainty currently faced in the United States.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.