Comparison of cryptocurrency regulatory attitudes and styles in different countries

Bitcoin has moved from niche circles to the mainstream market, with global Crypto Assets holders exceeding 200 million, and Chinese users reaching 19 million. In just a few years, the Crypto Assets market has rapidly developed, and governments around the world have had to pay attention to regulatory issues. However, there is still no consensus globally on Crypto Assets, and the attitudes of various countries are also quite different.

This article will provide a detailed introduction to the regulatory evolution and current attitudes of five notable countries and regions in the field of Crypto Assets.

USA: Balancing Risk with Innovation

The U.S. is in the spotlight in the crypto space, but its regulatory policies are vague. Prior to 2017, the U.S. focused on overall risk control, with no draconian bans or accelerated legislation. In 2017, the SEC made its first announcement regarding ICOs, bringing them under the jurisdiction of the federal securities laws.

In 2019, the United States began to crack down on Crypto Assets, regulating them as securities rather than assets or currency. In 2021, after Gary Gensler took office as the SEC chairman, the U.S. attitude shifted somewhat, allowing a certain exchange to be listed on Nasdaq.

In 2022, Luna and a certain trading platform collapsed one after another, making the United States one of the countries most severely affected, leading to increased regulatory pressure. In September of the same year, the United States released the first draft of a regulatory framework for the Crypto Assets industry, but no laws have been passed to date.

Currently, the United States is jointly regulated by the federal government and individual states. At the federal level, the SEC and CFTC are primarily responsible, but they have not reached an agreement on their responsibilities and standards. The attitudes of the states are also inconsistent, with some enacting favorable regulations while others prohibit the government from accepting Crypto Assets payments.

The President of the United States once signed an executive order emphasizing the adoption of a unified approach to regulate Crypto Assets while supporting innovation. The U.S. pursues risk control and leverages innovation to promote the development of the Crypto Assets sector. The ambiguity of regulatory policies increases market uncertainty but also leaves room for technological innovation.

Japan: Stable regulation but not attractive enough

Japan has been actively creating a sound regulatory environment for the Crypto Assets industry, having specifically enacted laws and regulations to legalize Bitcoin and bring it under supervision.

In 2014, the bankruptcy of a certain exchange triggered investor concern over regulation. Subsequently, Japan began to implement stricter regulations and adopted clearer policies than other countries.

In 2016, the Japanese National Diet began legislation, adding a chapter on "virtual currency" to the "Fund Settlement Act." In 2017, the "Payment Services Act" was amended to include Crypto Assets exchanges under regulation, overseen by the Financial Services Agency (FSA). The same year, taxes were imposed on income from the encryption sector.

In 2018, after an exchange was hacked, Japan strengthened self-regulation and institutional supervision. In June 2022, Japan passed amendments to the Fund Settlement Law, becoming the first country in the world to create a legal framework for stablecoins.

Japan's regulatory environment is well-established, allowing many crypto enterprises to develop stably and protecting investors during the collapse of a certain trading platform. Japan's regulations are clear and strict, focusing on industry guidance rather than prohibition, aiming to protect retail investors, and continuously improving related legislation.

South Korea: Tighter regulation, expected legalization

South Korea is one of the most active countries in the Crypto Assets market, with 20% of young people being traders. However, South Korea has not yet incorporated Crypto Assets into law like Japan.

Since 2017, South Korea has banned various forms of token issuance and stipulated penalties for engaging in illegal activities using virtual currency. Regulations to protect investors include real-name systems, prohibiting minors and non-Korean residents from opening accounts, etc.

In February 2021, South Korea began considering cryptocurrency legislation for the first time. In June 2022, after the collapse of a project, South Korea accelerated the legislative process, establishing a "Digital Asset Committee" and a "Virtual Asset Risk Committee".

The new president is referred to as the "crypto-friendly president," promising to lift regulations on the crypto industry and take measures to seize profits obtained illegally from crypto assets. The market expects South Korea to move towards legalization.

Singapore: Expected but not accommodative

Singapore has always maintained a friendly and open attitude towards encryption, recognizing Crypto Assets as legal, just like Japan. In 2014, the Monetary Authority of Singapore (MAS) was the first to regulate virtual currency.

In 2019, Singapore legislated for regulation for the first time with the passage of the Payment Services Act. In January 2021, the law was revised and improved. Singapore's regulatory environment is more relaxed than Japan's, attracting a large number of crypto businesses.

In 2022, Singapore continued to improve its regulatory environment and began focusing on retail investor protection. In 2023, Singapore provided tax incentives for individuals holding digital assets.

Overall, Singapore's policies are stable and predictable, but to control financial risks, it is gradually tightening regulatory policies.

Hong Kong: Actively catching up and speeding up legislation

Hong Kong originally held an opposing stance towards Crypto Assets, but the attitude changed after the new SAR government took office. In November 2018, Hong Kong first brought virtual assets under regulation.

In October 2022, the Hong Kong government officially issued a policy statement to actively embrace virtual assets. Since 2023, Hong Kong has continuously released legislative signals that it plans to include stablecoins in the scope of regulation, and expects to implement regulatory arrangements in 2023 or 2024.

Hong Kong has the opportunity to leverage Web3 for development and is expected to regain its leading position in the Crypto Assets field, but the specific outcome still depends on the implementation of relevant regulations.

Conclusion

Strengthening the regulation of cryptocurrencies is the trend of the future. Strict regulation can affect incipient innovation, but when the industry grows to a certain point, a lack of regulation can cause harm. The growing focus on crypto regulatory legislation shows that the industry as a whole is moving in a positive direction.