Market watch: Crypto in Asia — a status update
In the past few days the biggest news in crypto has been coming from Asia — more specifically from China and South Korea. Japan also remains an important and valued player in the global crypto market. We did a brief summary of recent news from each of these countries and their current stance on crypto and ICOs.
China — ICOs banned, confusion about crypto
On Monday September 4th, the People’s Bank of China (PBoC) announced that “all ICOs shall cease immediately” and that raising money via ICO is now illegal. Until this weekend, China was responsible for approximately 40% of the ICO industry’s total market revenue, according to CoinTelegraph. Given the harsh news from such an important player, the crypto market reacted accordingly and yesterday most currencies experienced double digit drops, though they’re already recovering today.
However the wording of China’s crackdown on ICOs remains ambiguous — potentially it refers to all cryptocurrency exchange, meaning trading crypto to crypto or crypto or crypto to fiat would also be illegal. But the verdict has yet to be made — Chinese exchanges are telling users that this ban affects ICO tokens only and that crypto such as bitcoin and ether will continue to be traded as usual.
South Korea — attempts to regulate + control
The harsh news from China came alongside an announcement on September 3rd from South Korea, where regulators are reportedly strengthening the regulation and monitoring of digital currencies, including bitcoin and ether. Financial Services Commission (FSC) chairman Kim Yong-beom, who chaired the task force meeting, claimed:
There is a need for the government to cope with the virtual currencies to prevent them from being used as tools for crimes and simple speculative investment.
On the matter of ICOs, the FSC promised to enforce punishments for ICOs that illegally sell tokens as stock (violating the capital market act), stating:
We will clearly state the foundations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission for illegal fund-raising impersonating digital currency investment and strengthen levels of punishment.
The news from South Korea is clearly not an outright ban, but rather emphasizes regulation and consumer/investor protection, similar to the warning for US investors from the SEC last month.
Japan — still a good place for ICOs and crypto
If the news coming from China and South Korea over the past few days has been fairly negative, then the lack of news from Japan should be reassuring. After China, Japan is arguably one of the main nations that has helped contribute to mass adoption and the rising value of cryptocurrencies worldwide.
One of the reasons for the popularity and acceptance of crypto in Japan is that many people there have chosen to invest in crypto vs. the national currency, because at times it was viewed as a more stable asset. Japan has also seen serious institutional acceptance that has helped contribute to increased public trust in digital currencies over all. For example, the three largest banks in Japan — MUFJ, Mizuho, and SMBC — have all backed the country’s largest Bitcoin exchange, bitFlyer. In addition, it was announced earlier this year that many stores across the country will be accepting payments in cryptocurrencies.
In terms of ICOs, Japan presents a relatively friendly environment, both for those who to contribute to ICOs and those who want to run one. The presence of a bank-backed bitcoin exchange, established taxation protocol, and the ability to open bank accounts in BTC make things much easier for the crypto fundraising model to exist and thrive there.
