As the cryptocurrency market grows worldwide, increased traffic calls for regulations that ensure the security of both users and operators.
As a decentralised network, cryptocurrency, and especially bitcoin, is highly unregulated. For example, when China cracked down on crypto, the price of bitcoin dropped significantly, demonstrating that regulation can play a significant role in market volatility.
Countries take different measures to regulate popular cryptocurrency assets, but they do not fall within country borders or under government agencies by their nature. The technology that enables cryptocurrency, blockchain‘s nature, makes approaching regulation a bit more challenging for governments worldwide.
However, countries within the Asia-Pacific (APAC) region are leading the way in regulating the ever-changing, volatile crypto market. Below, we will explore the different types of cryptocurrency market regulations that exist within APAC.
There are a few reasons why the APAC region is regulating cryptocurrency. A rising number of serious cybersecurity breaches is one of the main reasons for this.
Investors feel less confident overall because the crypto market faces significant operational challenges. Still, regulation may provide them more peace of mind when they begin trading. The APAC region is a hotbed for cryptocurrency trading, especially in Singapore and Hong Kong.
Both countries introduced licensing laws and a prerequisite to obtaining regulatory approval before any trading. Some of the requirements set out by these two regions include: evaluation of exchange monitoring technology that is used for trading, know your client (KYC), anti-money laundering (AML), and combatting the financing of terrorism (CFT) screening solutions that are used for onboarding of institutional clients.
For crypto trading to occur, there needs to be a robust control system that can detect and prevent market abuse behaviour and can report any suspicious trading activity.
How Are APAC Countries Regulating Crypto?
Most APAC countries are looking into regulating crypto, or already have some implemented in order to strengthen and fortify the market. As there is a strong appetite for cryptocurrency investments in the APAC region, these market regulations will help to reinforce the industry.
Research shows that the APAC region is poised for economic growth in the coming years. In a recent survey, 93% of polled senior finance executives plan to expand their operations to new countries to fuel long-term growth.
In the APAC region, Hong Kong is leading the way in crypto regulation. For example, the Securities and Futures Commission (SFC) categorises initial coin offerings (ICOs) as a security, which makes them subject to the country’s specific security requirements and laws. Under Hong Kong’s recent regulations, crypto will essentially be treated like any other security asset.
The Monetary Authority of Singapore (MAS) recently issued guidelines that state ICOs that resemble market products will be subject to the Securities and Futures Act. Under this move, crypto platforms will be limited to allowing accredited investors to participate in crypto transactions.
Japan has also set up new crypto regulations, its Financial Services Agency (FSA) has new guidelines that classify ICOs and establish investment limits to protect crypto investors. The recent FSA move comes after a large, serious security breach of a record US$530 million in 2018 at Coincheck, one of Japan’s most well-known crypto exchange platforms.
And in Malaysia, all crypto tokens were placed under securities regulation. Any instances of non-compliance are sanctioned with fines and could even lead to up to 10 years of imprisonment.
Future Regulations to Expect
Lately, there has been a heightened interest in the cryptocurrency market, and investors should pay attention to emerging rules and regulations. Crypto exchange platforms will also have to consider these new regulations, especially if they want to remain compliant and continue their operations. And there is much to be gained from other countries worldwide and how they will work to regulate the crypto market themselves.