As one of the important engines of global economic growth, Southeast Asia has an increasingly prominent application potential for blockchain technology. None Group’s research team recently released a report on “Key Trends in Blockchain” for the crypto industry in Taiwan and Southeast Asia.

Clarifying regulatory policies is the first step to entering a new market. PANews has selected relevant regulatory content from this report to present the current regulatory status of the cryptocurrency industry in Taiwan, Thailand, Vietnam, Indonesia, Malaysia, Singapore, and the Philippines.

In general, with the continuous development of technology and the ups and downs of market sentiment, the route of blockchain regulation often faces dynamic adjustments. Especially after a major accident, law enforcement agencies in various places must face the still imperfect regulatory framework in the market, so they often accelerate the formulation and implementation of regulations. Although this move may strengthen supervision in the short term, it will not necessarily hinder innovation and development in the long run. For example, after the ICO boom in 2017, countries including Thailand and Singapore quickly introduced corresponding regulations to protect local investors.

Taiwan’s blockchain regulatory trends

As the blockchain industry develops, various application scenarios continue to emerge, from financial services to supply chain management, from digital asset transactions to smart contracts. With the rapid growth of the industry, financial fraud and bankruptcy incidents, compliance and regulatory issues have gradually surfaced.

In Taiwan, the government has gradually taken relevant actions on the regulation of crypto assets in the past few years, and has begun to work with relevant units to develop the best way to regulate virtual assets. The relevant measures can be traced back to June 2021, when the Executive Yuan designated the Taiwan Financial Supervisory Commission (FSC) as the anti-money laundering authority for "virtual currency platforms and trading businesses" in accordance with the Anti-Money Laundering Act. The FSC later issued the "Virtual Currency Platform and Trading Business Anti-Money Laundering and Anti-Terrorism Measures (AML&CFT)" to prevent money laundering and combat terrorism. As of the end of December 2023, 25 companies have passed the review.

Since January 2023, the Legislative Yuan has proposed to the Executive Yuan to formulate a regulatory mechanism for virtual assets and include it in the central government budget. In late March of the same year, the Executive Yuan stated that the virtual asset field will be regulated by the Taiwan Financial Supervisory Commission. At the same time, the regulatory approach will refer to the international mainstream regulatory trends, including the European Union, Singapore, Japan, South Korea, Israel, etc., to strengthen the protection of the rights and interests of customers on Taiwan's virtual asset platforms in a step-by-step manner. Due to the particularity of virtual assets or digital assets, the diversified product applications (including virtual assets, NFTs, payments, stablecoins, etc.) have increased the difficulty of supervision. Therefore, relevant units are still actively formulating the responsible units for various asset applications. In September 2023, the Financial Supervisory Commission announced the long-deliberated "Guiding Principles for Virtual Asset Platforms and Trading Business (VASP)" based on anti-money laundering supervision, and stated that it will strengthen the platform's protection of customers from multiple aspects such as information transparency, asset custody, and company internal control.

The guidelines for virtual asset platform and trading business (VASP) include:

1. Strengthen the management of virtual asset issuance

2. Establish a review mechanism for virtual assets to be listed and removed from shelves

3. Strengthen the separation of platform assets and customer assets

4. Enhance transaction fairness and transparency

5. Strengthen contract making, advertising solicitation and complaint handling

6. Establish operating systems, information security, and cold and hot wallet management mechanisms

7. Information Announcement Disclosure

8. Strengthen internal control and institutional audit mechanisms

9. Clearly stipulate that the supervision of money laundering prevention for individual currency traders is equivalent to that of legal entities

10. Foreign currency traders are strictly prohibited from illegally soliciting business

Thailand’s blockchain regulatory trends

The Thai government enacted the Digital Asset Business Emergency Decree BF 2561 in 2018, which provides comprehensive regulations for the issuance, trading and related businesses of virtual assets. Here are some of the key points:

Definition of virtual assets: Thailand refers to virtual assets as digital assets, including cryptocurrencies and digital tokens, not limited to securities.

Regulatory requirements: Virtual asset service providers, including trading platforms, need to be recommended by The Securities and Commission, Thailand and approved by the Thai Ministry of Finance. The minimum capital requirement is 50 million baht, but if the platform does not hold user assets, the minimum requirement is 10 million baht.

User asset protection: The law stipulates that virtual asset service providers must manage user assets separately and may not use them for other purposes, and it is clear that users still own the assets under their accounts.

Regulatory details: Thailand emphasizes suitability review, best execution and prohibition of trading platforms from investing on their own from the perspective of securities regulation to ensure the rights and interests of users and prevent conflicts of interest.

Thailand's virtual asset regulatory system emphasizes user protection and is more similar to securities market regulation. It not only focuses on anti-fraud and information disclosure, but is significantly different from the payment regulatory models in New York State, the United States, and Japan.

It is worth noting that the Securities and Futures Commission of Thailand recently issued a decree prohibiting exchanges from providing the following services to users: ・It is not allowed to use the digital assets deposited by users for lending, investment, pledge, and pay income to users. ・It is not allowed to provide income to users based on the digital assets deposited by users through the company's marketing expenses and other budgets. ・It is not allowed to provide related services or advertisements through third parties.

In addition, in order to avoid risks to the overall financial and economic system, the Securities and Futures Commission of Thailand prohibits citizens from using virtual assets for payment, and exchanges must also restrict users' transfer functions.

Vietnam’s blockchain regulatory trends

Vietnam’s regulation of virtual assets is not clear, mainly including the following points:

•The State Bank of Vietnam (SBV) stated that virtual assets are not considered legal tender and are prohibited from being used as a form of payment. •The State Securities Commission of Vietnam (SSCV) prohibits listed companies, securities companies, fund management companies and securities investment funds from participating in any issuance, trading or brokerage activities related to virtual assets and strictly abides by AML regulations. •The Ministry of Industry and Trade (MOIT) of Vietnam believes that Bitcoin is not a commodity or service under the Vietnamese legal framework and warns everyone not to operate virtual assets.

In addition to the above three points, Vietnam has no other regulations on regulating virtual assets. Although the government restricts virtual assets as a means of payment, there are no relevant laws and regulations for other uses such as investment and trading. At the same time, the government has not strongly restricted overseas virtual asset companies from operating in Vietnam. Many well-known centralized exchanges such as Binance also value the local market and have been deeply involved in the Vietnamese market for many years.

It is worth noting that after learning that virtual asset transactions were quite active in the local area, Vietnamese Prime Minister Phạm Minh Chính ordered the SBV and relevant units to study the policies and mechanisms for virtual asset management in 2020. With the support of the Vietnamese government, the Vietnam Blockchain Association was officially established in 2022 to help build a more complete regulatory framework, but as of the end of 2023, no formal opinions or decrees have been put forward.

Indonesian blockchain regulatory trends

Indonesia's virtual asset market is developing rapidly, and the government is actively promoting regulatory measures. Crypto asset trading in Indonesia falls under the jurisdiction of the Commodity Futures Trading Regulatory Authority (Bappebti/CoFTRA), which treats it as a commodity. In terms of trading, the regulatory framework for trading is mainly governed by CoFTRA Regulation No. 13 of 2022 and CoFTRA Regulation No. 8 of 2021. In addition, the overall market currently has the following important developments and trends:

•National Exchange: Indonesia officially established the National Exchange (the Indonesian Virtual Asset Futures Exchange) in July 2023, aiming to provide legal certainty and protect users from risks.

•Expand trading varieties: The government expanded the types of tradable virtual assets to 501 in June 2023 to promote the wider use of virtual assets.

• Changes in regulations and regulators: Indonesia is reforming its virtual asset regulations, transferring regulatory authority from Bappebti to the Financial Services Authority (OJK) with a transition period of 2 years. Virtual assets are currently considered commodities, but are expected to be considered securities after the transition period.

•Regulation type: According to Bappebti’s regulations, regulated virtual asset businesses include futures exchanges, crypto futures clearing houses, virtual asset custodians, and virtual asset exchanges. Initial coin offerings (ICOs) are not currently regulated.

• Licensing requirements: Different licenses are required depending on the type of business, including paid-in capital requirements, organizational structure and technical requirements, and compliance with anti-money laundering and anti-terrorist financing regulations.

Malaysia’s blockchain regulatory trends

Virtual assets are legal in Malaysia, and the government has enacted regulations to ensure the stability and transparency of the virtual asset market.

However, the Securities Commission Malaysia (SCM) is still working hard to understand and track the development of virtual assets and take measures to protect investors from possible risks. Malaysia's regulation of virtual assets includes the following points:

•Regulatory approach: In 2019, Malaysia passed the Capital Markets and Services (Definition of Securities) (Digital Currency and Digital Tokens) Directive, which brought all virtual assets within the scope of securities law, regardless of whether they are considered securities.

•Trading platform regulation: Virtual asset trading platforms are called "Digital Asset Exchanges" (DAX) in Malaysia and are regulated by Chapter 15: Digital Asset Exchange in the "Guidelines on Approved Markets". They must obtain permission from the Securities Commission of Malaysia and wait for approval of specific virtual assets before trading. The minimum capital requirement is RM5 million.

• User asset protection: Malaysia’s regulation is similar to Japan’s, distinguishing between money custody and virtual asset custody. Money custody requires the platform to open a trust account in a qualified financial institution to store customer money, while virtual asset custody requires the platform to set up sufficiently secure storage media to keep virtual assets.

• Market integrity obligations: Malaysia has comprehensive regulations in place, including real-time market monitoring, measures to deal with volatile market fluctuations, and ways to respond to erroneous transactions and system failures.

In addition to trading platforms, SCM also requires relevant licenses for companies in the IEO operator, digital asset custodian (DAC), fund and other tracks. Currently, there are six centralized exchanges (DAX) in Malaysia that have been approved by SCM, and users can trade virtual assets approved by SCM, including BTC, ETH, AVAX, etc. on the platform. In addition, DAX also needs to assist in disclosing information such as the market structure and the types of orders on the platform. In summary, Malaysia is actively studying a complete legal framework to protect the interests of investors while promoting industrial development.

Blockchain regulation trends in Singapore

Singapore is one of the countries with relatively complete and friendly regulations on cryptocurrency or digital assets, so its approach is worthy of reference by many countries. It has adopted a so-called "coin-chain separation" regulatory attitude, that is, vigorously trying to use the application of blockchain technology, while it has a relatively conservative policy for cryptocurrencies that are prone to speculation. Especially in 2022, many large lending institutions collapsed and the well-known exchange FTX went bankrupt. From the perspective of protecting local investors, the government introduced a series of regulations to strengthen protection measures in 2023 after listening to the opinions of many parties. Overall, Singapore’s stable, open and transparent regulatory framework is still favored by many companies. The following is an introduction to local regulatory guidelines:

•Regulatory approach: The Singapore government believes that virtual assets are not legal tender, but can be used as an alternative payment tool. Digital Payment Tokens (DPT) service providers in Singapore are regulated by the Payment Services Act.

•Regulatory type: According to local laws, DPT service providers are defined as: a. Any service that facilitates the exchange of digital payment tokens, that is, establishing or operating a DPT exchange b. Any service involving digital payment tokens, that is, buying or selling DPT in exchange for money or any other DPT (same or different type) c. Transferring DPT for clients d. Providing a custodial wallet for clients or on behalf of clients e. Acting as a broker and providing DPT transactions for clients

•License type: Licenses can be divided into three types based on business content, including currency exchange licenses, Standard Payment Institution licenses, and Major Payment Institutions licenses. The Monetary Authority of Singapore (MAS, Monetary Authority of Singapore) will review the applicant company’s soundness, security measures, compliance procedures, etc.

•Stablecoin regulation: MAS issued digital currency rules for stablecoins in August 2023. The rules require that the reserves of stablecoins must be low-risk and highly liquid assets. The rules stipulate that they must always equal or exceed the value of stablecoins in circulation.

MAS's supervision of domestic exchanges is to clarify the government's regulatory requirements by issuing administrative notices or guidelines. For example, MAS announced in mid-2023 that it will require operators to keep customer assets in legal trusts before the end of the year and separate customer funds from company assets. ; Or require industry players to discourage speculative trading by mass users.

Blockchain regulatory trends in the Philippines

The Bangko Sentral ng Pilipinas (BSP) is actively shaping the country's monetary landscape to embrace the digital economy. Although virtual assets are not legal payment currencies in the Philippines, the central bank recognized the legality of virtual assets in February 2017 with Decrees No. 944 and No. 942.

•Regulatory approach: The BSP further launched the Guidelines for Virtual Asset Service Providers (VASP) in 2021 to establish a comprehensive regulatory framework for virtual asset transactions in the Philippines.

• Licensing system: VASPs should obtain a license from the BSP before operating and comply with effective KYC and AML measures. This includes collecting customer identification information and actively monitoring transactions to detect and report suspicious transactions. For additional services, other licenses are required, including electronic money issuers (EMIs) and remittance and transfer companies (RTCs).

• Unique KYC environment: The Philippines does not have a unified national ID card, so practitioners’ KYC systems need to be able to recognize valid IDs across the Philippines (there are 82 different provinces).

•Audit norms: During quarterly audits, operators should disclose information about their balance sheets and disclose the status of their assets in hot and cold wallets.

The Philippines has a clear regulatory framework for virtual assets, and the government has also achieved substantive regulation of VASPs. In September 2022, the BSP closed the regular application window for new virtual asset service provider licenses for three years. Since the end of 2023, the Securities and Exchange Commission of the Philippines (SEC Philippines) has issued warnings against exchanges that do not hold local compliance licenses. Regarding Binance, it has asked the National Telecommunications Commission and the Department of Communications Technology to help prevent people from accessing Binance. It also asked Google and Meta to prohibit users from placing Binance online advertisements on social media in the Philippines, and strongly demanded that Binance withdraw from the Philippine market within three months.