Cryptocurrency Regulations Across Asia: Status in 2022
Asia has always remained a critical driving force for all the emerging technologies, including blockchain and cryptocurrency. Asian countries like India, China, Japan, South Korea, and Singapore count among the early investors in BitCoin and Ethereum and play an enormous role in the crypto market. However, they are divided into for and against cryptocurrency trading and investing. While countries like China and Thailand are adamant about enforcing a blanket ban on cryptocurrencies, Japan, South Korea, and the Philippines are hopeful about the future of blockchain-based virtual currencies.
India, which is yet to clear its stand concerning crypto regulation, impacts mainly on the emerging asset class.
The Mixed Response – India, Pakistan, and Thailand
India and Pakistan, two Asian countries, count among the top 3 crypto holders globally. Pakistan Government and its central bank are gearing up for a complete ban on all cryptocurrency transactions.
The cryptocurrency sector in India has experienced rapid growth in the last few years. The country's young, substantial percentage of citizens are exceptionally enthusiastic and vocal about the crypto market for its high returns in a shorter period. As reverberations, crypto exchanges and funds have mushroomed all around the country. Indian crypto exchange WazirX has over 100 million investors and recorded a business volume of $45 billion in 2021.
The country doesn't have any policy on virtual digital assets (VDA), including cryptocurrencies, so people are allowed to buy and trade cryptocurrencies, including other digital assets.
Indian Finance minister Nirmala Sitharaman in her Union Budget speech for the year 2022-23, has exerted a 30% flat tax on the income of all virtual digital assets, including cryptocurrency and NFT, alongside a 1% tax deduction at source (TDS). The TDS will be applicable on virtual currency payments over INR 10,000 in a financial year. The 30% flat income tax plus cess surcharges and TDS deduction will be applicable from April 1, 2022.
She has also hinted at the launch of an indigenous CBDC in 2023. If India manages to unveil its central bank digital currency (CBDC), it might count among the first large economy to do so.
However, the Indian government is in a dilemma concerning the regulation of VDA. In earlier instances, the Indian government representatives had hinted that the government was not heading for a blanket ban but to treat it as an asset. Even though the Reserve Bank of India (RBI) is vocal about a complete ban on VDA, the Indian government is optimistic about regulating the sector instead of an outright ban.
Besides RBI, the Indian government discusses the issue with several stakeholders, including the IMF, the World Bank, and India's Securities and Exchange Board (SEBI).
The finance ministry of India has drafted a consultation paper on cryptocurrency with inputs from the IMF, World Bank, and SEBI to deal with its risks.
The IMF mission chief for India, Nada Choueiri, has asserted that crypto-assets require strict regulations to refrain from cyberattacks, money laundering, terrorist financing, and other forms of illegal activities and consumer protection challenges.
Besides India, IMF is reportedly having a conversation with other nations to design an effective policy.
Another Asian country, Thailand, is heading to ban cryptocurrencies as a payment method for goods and services starting April 1, 2022, to ensure the country's financial integrity.
Adoption and Rejection – China, Japan, and South Korea
Recently, the Chinese government and regulators imposed stern actions against cryptocurrency trading and mining activities. However, globally, the former largest cryptocurrency market has an opposite opinion about non-fungible tokens (NFT). Chinese tech giants such as Alibaba group's Fintech affiliate Ant Group, Tencent Holding, Baidu, Jd.com, and others have already launched NFTs as 'digital collectibles.' Chinese state-owned Blockchain Service Network (BSN) has also launched infrastructure support to NFTs with its digital currency yuan.
Japan's financial regulators trust in the virtues of blockchain technology.
The businesses of Japan are also embracing cryptocurrencies, and many of them have started accepting Bitcoin, Ethereum, and a few other cryptocurrencies after the government accepted Bitcoin as a payment standard.
Japanese crypto exchanges such as Bithumb have announced a partnership to ease spending cryptocurrency just like fiat money.
Earlier South Korean government also intended to impose a ban on crypto trading and close down the homegrown exchanges. Still, the effort went in vain due to a petition. However, with time the country's perception of cryptocurrencies turned around. South Korean government and regulators have intense trust in the potential of blockchain, and they believe it could help boost their economy by minimizing the transaction cost, thus increasing the volume.
Why regulation is necessary
By now, most governments are aware of the requirement of necessary regulation for crypto taxes, exchanges, and funding. And soon, most of them are supposed to unveil separate laws for blockchain and cryptocurrencies to meet the general requirements of the digital economy. So soon, we might see a global regulation for cryptocurrency transactions and a unified standard for ICOs, altcoins, and NFTs.