India to China and Beyond: FSB Reports on Asian Cryptocurrency Regulators
The Financial Stability Board (FSB) is gearing up into a Japanese led G20 presidency. The FSB has already done some work with regards to cryptocurrencies, the most recent of which was the report it released on the 5th of April. So let's take this opportunity to discuss how each of the 5 largest Asian economies is handling cryptocurrency regulation.
Japan: Legalization Paying Dues
Japan has legalized cryptocurrency completely under the Amended Payments Services Act of 2017. The Financial Services Agency (FSA) is the Japanese authority that is responsible for maintaining oversight of cryptocurrency exchanges and other services providers.
All cryptocurrency exchanges have to be registered with the FSA, with 19 currently on their books. There are over 140 companies that are looking to enter the Japanese market according to the regulator. The FSA cooperates with a self-regulatory body that was formed recently in the cryptocurrency industry to maintain greater oversight. The agency is also a major player in policy discussions on the international stage. Many think that the Japanese led G20 presidency will bring much needed regulatory stability to an otherwise volatile market. The FSA is currently in discussions with various stakeholders on rules governing ICOs.
There are two additional government organizations that deal with cryptocurrency in Japan. The Bank of Japan and the Ministry of Finance. The central bank's Payment and Settlement Systems Department created a fintech center in 2016. This center is responsible for research on how new technologies can impact the financial system. They have been pushing papers on cryptocurrency and distributed ledger technology since they were started.
The Ministry of Finance is responsible for taxation and laws. It is also responsible for the forex aspect of cryptocurrency. The law giving it power over cryptocurrency within the realm of forex is the Foreign Exchange and Foreign Trade Act.
India: Head In The Sand
India on the other hand, has buried its head in the sand. The central bank has put a prohibition on any financial institutions using bitcoin and cryptocurrency in any way whatsoever. There are court proceedings that are ongoing to resolve the issues with regulation. However, they were again broken up and will only continue in July.
India is leaving the law for far too late while surrounding countries are embracing cryptocurrencies and blockchain along with it. They could suffer in the long run as Pakistan, Japan and China all manage to get far better infrastructure and competences during this crucial moment.
South Korea: No ICOs Locally, But Regulations Are Strong
South Korea has three regulators. The first two were responsible for creating the country's first cryptocurrency framework at the end of 2017. They are the Financial Supervisory Service (FSS) and the Financial Services Commission (FSC). They published additional guidelines in January of 2018 but have been quiet since then. Many in the industry are hoping that the recent hack of Bithumb will wake up the authorities and force them to enforce more stringent measures on players in the field.
Singapore: Early Adopter, Single Regulator
Singapore was an early entrant into the cryptocurrency game. However, the only regulator listed by the FSB is the central bank. The Monetary Authority of Singapore (MAS) performs a wide variety of regulatory functions, including oversight of cryptocurrency.
The first function it performs is that of monitoring exposures. According to the report, it watches the prudential exposures of banks, asset managers and insurance companies. It also regulates any companies that market crypto assets as capital market products. The Securities and Futures Act gives MAS the power to regulate this segment of the cryptocurrency market.
There is a new law coming soon that will increase the reach of MAS to payment systems as well. The soon-to-be law called the Payment Services Act will give MAS extra power when it comes to digital token payment services. It has also, as per FATF guidelines, set forth Anti Money-Laundering (AML) and Countering Financing of Terrorism (CFT) regulations.
China: The behemoth Tries To Ban And Begin Anew
China banned crypto exchanges completely starting in 2017. The country has 5 regulatory bodies that have control of cryptocurrency. The Ministry of Public Security monitors crypto for “illegal activities.” These illegal activities can be pyramid schemes or other fraud, illegal fund-raising and many other things. Other regulatory bodies deal with shutting down crypto websites and make sure that crypto does not do any lasting damage to the banking sector.