TOP CRYPTO AND BLOCKCHAIN FRIENDLY ASIAN COUNTRIES (Part 2)
The previous article was published about top friendly digital currencies and blockchain European countries. This article will be dedicated to several Asian countries, which is one of the promising areas in the future in terms of cryptocurrency and blockchain technology implementation.
Today we will talk about Japanese legalization process, discuss Singapore’s established monitor committee’s which named this country as a hub for cryptocurrency and blockchain innovations, last but not least we will also be analyzing the policies of Hong Kong.
We will try to find answers to the several questions about the current regulation of the government? How do they adopt innovations? What are the benefits for startups and crypto investors?
CONTENTS:
1. CRYPTO LEGALIZED IN JAPAN
2. SINGAPORE IS AN ASIAN HARBOR FOR BLOCKCHAIN START-UPS
3. BLOCKCHAIN IS THE MAIN PRIORITY IN HONG KONG
- CRYPTO LEGALIZED IN JAPAN
Japan is no laggard when it comes to bitcoin. The world’s first major bitcoin exchange, Mt. Gox, was based in Tokyo. The inventor of Bitcoin, Satoshi Nakamoto, even had a Japanese pseudonym. Japan is certainly one of the nations at the forefront of Bitcoin adoption, legalization, and integration.
For example,
- Japan was one of the first countries in the world to approve bitcoin as legal tender.
- First to pass broad regulation of 32+ cryptocurrency exchanges, aimed to improve security.
- Japan is (Q1 2018) the world leader in crypto trading volumes
-Many exchanges offer zero fee trading, which greatly inflates volumes.
Essentially, anyone earning above 20m JPY (roughly $184k USD) annually or making a profit more than 200k JPY ($1,840 USD) will be eligible for tax. Such profits are classed as miscellaneous income. Holders are not taxed, only those taking profits from selling coins or using them for the purchase of goods and services.
-Japan has a 7-tiered system of taxation.
- Tax rates range between 5–45%, based on annual earnings.
- Residential tax on all income of 10%, up to 55%.
- Business losses may not be used to offset crypto profits, nor may crypto losses be used to offset other gains.
- Bitcoin is legal in Japan, regulation is simple to Bitcoin’s growth.
- Governs the capital requirements and security processes of exchanges.
BANKS INPUT IN CRYPTO BUSINESS
The Nomura Research Institute issued a report on blockchain tech in May 2016. It suggests that further changes to the country’s banking laws are required to properly deal with cryptocurrencies, specifically the Banking Act and the Financial Instruments and Exchange Act. The Accounting Standards Board of Japan is reportedly (Q1 2017) working on a framework for the treatment of cryptocurrency. How Japan’s Banking Sector views Bitcoin The largest bank in Japan, MUFG (Mitsubishi UFJ), is planning to launch its own cryptocurrency exchange, its own coin and segregated Bitcoin accounts for clients of other Japanese exchanges. This is according to news coverage from January 2018. Japan’s largest crypto exchange, bitFlyer, received investment capital in early 2017 or late 2016 from all three of Japan’s largest banking corporations; Mitsubishi UFJ, Sumitomo Mitsui and Mizuho Banking Corporation.
l Cryptocurrency trading allowed;
l Eligible for tax starting from 1,840$;
l Startup friendly
l Government secure citizens investment
l Legalized more than 30 exchanges
2. SINGAPORE IS AN ASIAN HARBOR FOR BLOCKCHAIN START-UPS
Singapore has been developing as a hub for blockchain innovation. Monetary Authority of Singapore announced to tokenize the currency of the country on the Ethereum Network. Funds over the US $225 million has been allocated by the government on integrating blockchain technology in various financial and government services. Singapore supports cryptocurrencies and blockchain projects, therefore it is a popular jurisdiction for cryptocurrency companies.
Innovation activity is more than welcomed by the state and regulators. In Singapore, a special regulatory sandbox for FinTech Regulatory Sandbox was created, which allows you to operate for six months without any special licenses. There is a high probability that soon regulators will establish clear requirements for the implementation of cryptocurrency activities.
LEGAL REGULATION OF CRYPTOCURRENCY
- Cryptocurrencies are the provisions of the legislation in the field of combating money laundering and countering the financing of terrorism.
- Cryptocurrencies are still in the “gray zone”.
- November 2017, special regulation for cryptocurrency intermediaries (stock exchanges), investment mechanisms for digital currencies was done.
LEGAL REGULATION OF TOKENS AND ICO, AUGUST 2017
According to the Monetary Authority of Singapore, the primary issues of tokens will be regulated by MAS if the digital assets issued fall within the definition of financial products contained in the Securities and Futures Act.
In particular, regarding ICO and digital tokens, such products include digital tokens, which are property rights, as well as other property rights to certain assets. Based on this, tokens of this kind are subject to SFA and can be regarded by regulators as an offer of shares or investment shares used by joint investment institutions. In addition, in some cases, digital tokens can be regarded as debt obligations, also subject to SFA.
By the same explanation, MAS delimited digital tokens and virtual currencies. In accordance with the definition of a regulator, a digital token is a cryptographically protected representation of the rights of the holder of a token to receive future benefits or perform certain functions. A virtual currency is a specific type of digital token that performs the functions of a medium of exchange, accounting units or means of preserving value.
The MAS manual provides several examples of different types of tokens. In particular, platform tokens for sharing computing power are not securities, while tokens of an investment fund or any other business model with profit distribution, on the contrary, are such. In addition, the document states that any tokens, regardless of their nature, are subject to legislation in the area of combating money laundering and the financing of terrorism.
In most cases, projects registered in Singapore limit the access of citizens and residents of Singapore to participate in the token sale (as well as restrict access to participation by citizens and residents of the United States) in order to avoid problems with MAS, as well as not to pay tax on goods and services (analogous to VAT), and to avoid violation of the law in the field of securities and stock market, however, there are still many questions about this point.
LEGAL REGULATION OF CRYPTOCURRENCY ACTIVITIES
If tokens are financial products in accordance with the SFA and are offered to Singapore residents, the token issuer will have to register the issue prospectus with MAS and obtain the appropriate license for a certain type of activity (for example, a license for running a business by creating tokens and giving the right to be the owner of the company and receive dividends).
In addition, platforms providing trading opportunities for digital tokens, which are securities in the secondary market, that is, cryptocurrency exchanges, are also subject to licensing of this kind. Such registration will not be compulsory if the issuer of tokens falls under certain legal exceptions, such as “digital issue of securities”, “private placement of securities” (the so-called “private placement”) and others.
TAXATION OF OPERATIONS WITH CRYPTOCURRENCY
Corporate income tax — 17%. In Singapore, income taxed on all incomes, regardless of their source of origin. Although today, there is no clear position of the local tax service as to whether the tax base is fixed at the time of receiving cryptocurrency, or at the time of entering Fiat.
Companies that trade (i.e. buy and sell) cryptocurrency as their main activity will be taxed on income derived from such trading. Income received by companies that mine or trade cryptocurrency in exchange for fiat money or remuneration is also subject to income tax.
Singapore is an excellent choice for hosting a cryptocurrency business due to clear and favorable cryptocurrency legislation and related activities.
l Very friendly for crypto investors
l Up to 6 months startups can work without license
l Small taxes for startups
l Easy regulations to create startups
l Adopted regulations on coins and altcoins
l Regulated exchanges
l Supports cryptocurrency and blockchain projects (Hub of Innovation)
l Coins categorized as a virtual commodity and currency depend on process.
3. BLOCKCHAIN IS THE MAIN PRIORITY IN HONG KONG
HONG KONG REGULATION OF BITCOIN
Hong Kong’s Taxes on Bitcoin is exempt from both VAT and capital gains taxes in Hong Kong. However, income tax will still apply whether a business is receiving HKD or BTC. Reporting may be conducted in either currency.
Bitcoin is categorized as a virtual commodity rather than a currency. According to the Bitcoin Association of Hong Kong, this means it’s unregulated by existing financial watchdogs. The Association says that Bitcoin trading is not regulated by any of the organizations which oversee commodities trading either.
- Hong Kong’s legal status known as a “free port”.
- Crypto had no “visible impact” in these areas.
CHINESE INFLUENCE ON HONG KONG POLICY
Chinese influence leading to stricter regulation, the South China Morning Post reported in February 2018 that lawmakers and brokers have called on Hong Kong’s government to pass stricter regulations on Bitcoin. This comes in the wake of China’s bans on cryptocurrency exchanges and ICO activity, as well as tightening restrictions in Germany and the USA.
Hang Seng Bank closed the account of large crypto exchange, Gatecoin, in September of 2017 without warning. Gatecoin claims to have made every effort at anti-money laundering (AML) compliance. Several other crypto startups also had their accounts frozen. HSBC (Hong Kong and Shanghai Bank), one of the world’s largest banks which was founded in Hong Kong but is now headquartered in London, stated that it has “limited appetite” for crypto exchanges but welcomes start-ups.
The central bank of Hong Kong, known as the Monetary Authority, said that the rejection rate for new business accounts is only 5%.
l They call themselves as “Free port”
l Very friendly for startups -only 5% was rejected
l Taxing eligible only during sale
l Holding different policy from China
l ICO and purchase & sell the tokens are legal
l The Bitcoin Association of Hong Kong assures that Hong Kong policy is predictable, and regulations are easy and simple.
In conclusion, this article tried to answer several questions, such as which country is more beneficial for crypto investors and startup holders. As we can see all of them have pros and cons, but in my opinion, it is related to security issues. If the government takes responsibility on securities trading and investment, so then regulations for financial institutions will be well structured and strictly investigate the startup's offerings.
In other hands, all three countries represent themselves as very friendly and open to new innovations. They are encouraging local citizens to be involved in new technologies, by very open for foreign projects and investments.
REFERENCE:
1. Global Ledger: Mapping Bitcoin & Blockchain Startups Around The World. https://www.cbinsights.com/research/bitcoin-blockchain-startup-global-map/?utm_content=50661929&utm_medium=social&utm_source=twitter
2. Meredith Denbow. 8 Blockchain-Friendly Countries Around The World. https://www.investinblockchain.com/blockchain-friendly-countries/
3. Isuamfon Offiong. Top Countries That Will Soon Ban Cryptocurrencies Forever! / 6 Blockchain Friendly Countries. https://bit.ly/2APQPf4
4.Annie. Top 5 Countries where Blockchain and Cryptocurrency is Growing. https://bit.ly/2yVk4Mu
5. Andrew Hendersonthe. World’s Most Crypto-friendly Countries For Bitcoin Users. Http://Nomadcapitalist.Com/2018/08/19/Most-crypto-friendly-countries/
6. Darryn Pollock. Which Countries Are Best to Start Blockchain Projects? https://cointelegraph.com/news/which-countries-are-best-to-start-blockchain-projects
7. Steven Hay. Complete List of Bitcoin Friendly Countries for Cryptocurrency Businesses in 2018. https://99bitcoins.com/bitcoin-friendly-countries
8. Сингапур: азиатская гавань для блокчейн-стартапов. https://forklog.com/singapur-aziatskaya-gavan-dlya-blokchejn-startapov/
