Arhimed (OP)
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June 06, 2018, 02:55:44 AM |
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The acceptance of the new technologies in the Far East had always been high. Undoubtedly, the Asian financial markets are decidedly perspective when it comes to the currently popular and widely used fundraising ICO model.
It is time to have a proper look at the current situation regarding the government official position regarding ICO’s in the leading countries of this vast, lucrative and perspective region.
1)Japan
The Land of the Rising Sun represents one of the world's largest crypto markets as it constantly holds the substantial volumes of Bitcoin trading. There are a lot of factors – the loyalty of the government of the country to new technologies and Bitcoin as well as the lack of a legislative framework for the direct ICO regulation.
Moreover, it is known that Japan has always been one of the leading countries regarding technological advancement and development, and crypto assets are surely is no exception as the state government had made a step to legalize cryptocurrencies back in on April 1, 2017.
However, there are specific hardships which make ICO launch in Japan overcomplicated. Anyway, to conduct the business, the company must pay a license and to keep a reserve of funds of at least $100,000 and be ready for regular audits. Any incomes from cryptocurrency operations are taxed the same as Fiat profit.
At the moment, there is no legislative framework for the direct regulation of ICO in Japan, but the “law on virtual currencies” has been adopted. This law defines the legal status of how to attract investments in Japan – in particular, according to this collection of regulations, any company that is going to conduct Initial Coin Offering and issues its digital currency, must be officially registered.
In 2017 the Japanese finance regulator issued 15 rights totally – 11 at the end of September for the following exchanges: Money Partners, Quoine, Bitflyer, Bit Bank, SBI Virtual Currencies, GMO Coin, Bittrade, Btcbox, Bitpoint, Fisco Virtual Currency, и Zaif., and another 4 – in December 2017:Tokyo Bitcoin exchange, a bit of Arg stock Exchange, Tokyo, FTT corporations and Xtheta Corporation.
Another interesting point- it is curious that until recently, the FSA has never disclosed the names of companies that provided a legality application and are under review. The financial published a list of 32 exchanges on February 1, which are currently the object of attention of this organization, and it also includes 16 crypto exchanges that have not yet obtained the license.
The Japanese government is not likely going to ban the ICO in the nearest future. Nevertheless, it is planned to create a legislative framework for regulation, the main priorities of which will be the fight against fraudulent projects and the protection of investors ’ funds, the inability to launder money during the ICO, as well as the creation of a set of rules for processing cryptocurrency transactions.
Moreover, JFSA also stated the risks of investing in the ICO for the citizens of the country back in 2017. In a statement, the Japanese FSA warns the citizens of the country about the possible risks of a sharp decline in token prices, as well as the risks of potential fraud conducted by the ICO companies: the opportunities of the token described in the White Paper projects may not be planned for implementation at all, and goods and services may not be intended to be provided for the platform tokens.
The financial regulator also reported that the ICO could fall under the law on payment services on securities market and stock exchange legislation depending on the legal registration of the ICO. In this case, the organizing companies of the ICO must comply with the requirements of a specific law, including mandatory registration.
Besides, the regular provision of services related to the exchange of cryptocurrencies will require separate registration with the local financial Bureau. JFSA also pointedly noted that carrying out these activities without registration is a crime in Japan.
To sum up, on the one hand, the JFSA and the authorities of the country encourage the production and use of cryptocurrencies, including through the adoption of a particular law that enshrines the regime of virtual currencies as a monetary value used in the performance of obligations.
On the other hand, not all the tokens are cryptocurrency at large, and not all the token functions are limited to the means of exchange. That’s why the JFSA position is rather guided on the elimination of uncertainty than tightening the ICO regulation at large.
No doubt, that the unpleasant events in Japan show that this country will not become a new Mecca for the ICO campaigns in a short run as the latest trends, including a tightening of the rules JFSA hacking exchange Coincheck, an additional review of the exchanges does not improve the investment climate of the country. Anyway, the situation may be brighter at large.
2)China
The last year's pressure on world ICO market tightening as many government regulators all over the world including China had decided to take steps regarding the use of this economic model finally.
In this case, there had undoubtedly been the ground behind such actions as the numerous checking’s had shown the increasing fraudulent nature of the most digital start-ups.
People’s Bank of China had issued an official statement that indicated that the 90% of start-ups being present as a scam. As a result, the
the decision was to ban all the ICOs from China region - no matter, either targeting domestic or an international market.
That lead to the fact that the world’s largest token sale market had literally been taken out of the picture at all. And it hadn't ended there - the particular directive statement had ordered all the Chinese companies not only to stop any ongoing and future projects but also to return funds to their investors fully. These events led to Bitcoin and Ethereum market crash on 11 and 16 percent respectively, as the announcement went worldwide back at the time.
3)Hong-Kong
Despite being the neighbor to China, the regulators in this autonomy, presented by the Securities and Futures Commission (SFC), had been less straightforward. Instead of total and straightforward ICO ban, a particular set of careful rules for the companies launching ICOs had been issued.
The approach taken by the SFC had been the following: ICO start-ups tokens could be considered as securities and had to comply with the Hong-Kong securities law. As a result, the ICOs are viewed as the activities regulated by the law and the teams launching them hold full legal responsibility. No matter which location these start-ups are registered in, the companies that are participating in such ventures must obtain specific licenses and register in the SFC.
The legal statement indicated that tokens as investment instruments should be considered depending on liability options, which are: the debt instrument use; corporate rights and property provision, collective investment scheme for token shares.
Summing that up, the current ICO market state in Hong-Kong could be considered quite liberal.
4)South Korea
The country regulator called the Financial Supervisory Service (FSS) had taken the cardinal approach to the ICO emerging market. While nearly two million people were trading digital assets, South Korea is considered the world’s third-largest cryptocurrency market with a huge daily global trade volume. Many analysts believe the unprecedented popularity of cryptocurrency in South Korea may be attributable to a unique mixture of geopolitical and cultural factors.
The digital currency meeting in Seoul had seen the declaration of the full ban of all forms of virtual currencies fundraising. The reasons behind this had been clarified quite simple – the investors' safety as the proper examination had revealed the unprecedented number SCAM projects. This event had put many in despair as before the controversial decision; the South Korean market had been viewed alongside Japan as one of the most favorable for an overall crypto industry development and ICO start-ups launch.
5)Singapore
Speaking about the best directions for ICO market development, this city-state is definitely aimed to become the most attractive one.
Specific factors could explain this phenomenon, though the main things is a government attitude as it results in convenient taxation rules and the government funding of the best digital start-ups.
Back In August 2017, the Monetary Authority of Singapore (MAS) issued its first guidance note on ICOs that stated “the function of digital tokens has evolved beyond just being a virtual currency” to the point that some coins “may represent ownership or a security interest over an issuer’s assets or property.”
In result, sellers of tokens with these characteristics are required to register a prospectus with MAS before their ICO. Along with secondary market operators set to trade the tokens, these sellers are also subject to Singaporean licensing requirements for securities vendors and need regulatory approval from MAS. This closely follows the line adopted by the US Securities & Exchange Commission.
Regarding ICOs, the Authority wishes to hold the Singapore reputation as a financial center and at the same to prevent money laundering. Already in August MAS claimed that tokens of certain ICO projects might be subject to the Securities and Futures Authority regulations. The stance was shared right after the similar announcement by the US SEC: tokens will be considered as securities depending on the context of their issue.
After revealing its position on tokens, together with the Consumer Advisory on Investment Schemes of Singapore Police Force, MAC has stated potential risks of digital token and virtual currency-related investment schemes. Among the factors to consider are the incorporation within Singapore territory, credible and reliable information on the issuer and token sales, and token liquidity
guarantees on the secondary markets. Moreover, investors should be worried in case the rocketing returns are promised, or there are grounds to suspect criminal money laundering.
The authority is sure that not the restrictions but the right regulations will be a magic pill that will cure the ICO market. With relevant regulations investors will be protected by law and more people will be able to participate in ICO projects. MAS advised investors to mitigate risks when possible and in case of questions, do not hesitate to turn to MAS for assistance and clarifications. The authority promised to provide full information on the ICO projects, which have a presence in Singapore.
6)Malaysia
Speaking about this country, the beginning of September 2017, the Securities Commission Malaysia has also published the press release warning ICO investors. The commission warned the companies that potentially the initial coin offerings could be a subject to securities regulations. Like many others, the Malaysian regulator also warned the investors “to be mindful of the potential risks involved in ICO schemes,” resulted, in particular, from the secondary market high price volatility and lack of legal protection for investors. The statement concludes “as the terms and features of ICO schemes may differ in each case, investors who wish to engage or invest in ICO schemes are reminded to seek legal or other professional
advice if there are doubts on the legitimacy of these schemes.”
It is worth noticing that in its statement the Malaysian regulator remains neutral towards ICO itself. There are no directions in regards to fees or any other methods for crime suppression.
7)Taiwan
At the beginning of October 2017, Taiwan’s Financial Supervisory Commission chairman Wellington Koo has told during a joint session that Taiwan government intended to support the development and adoption of initial coin offerings and acknowledge blockchain technology and cryptocurrencies as lawful. Koo stated that Taiwan government is not planning to ban the blockchain and crypto-related activities. Moreover, the innovative startups were promised comprehensive government support.
The legislator Jason HSU, a congressman from Taiwan’s Nationalist party, which has long adopted a deregulatory pro-FinTech stance, stated during the session:
“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities.”
8)Thailand
Thailand Securities and Exchange Commission (SEC) has issued its stance on ICO in the middle of September. With the development and growing popularity of ICO, the Thailand SEC has developed a concern that “in some cases, ICO may be deliberately used as a tool for fraud and scam.”The statement wording suggests that Thai regulator is striving to find the balance between protecting the investors and supporting digital innovations. The commission viewpoint is in many ways similar to Hong-Kong, Japan, and the US SEC stances:
“Since the digital tokens can diverge widely in design and representation, some may resemble financial returns, rights, and obligations in similar ways to securities under the Securities and Exchange Act.”
However, to sum up, there is no doubt that Asian Market overall is still attractive to investors an will try to remain technology advanced in future.
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