Cryptocurrency-Friendly Legislation in Japan, South Korea, and Malta
Jul 06, 2018 11:07 AM
Are we seeing the beginnings of a business-attraction competition?
The Financial Services Agency of Japan is considering a revision of its law governing cryptocurrency exchanges, according to local news source Sankei.
Time to buy the dip?
The regulator wants to extend an existing law, the Financial Instruments and Exchange Act, to cover these businesses. According to the report, it was decided that the current legislation does not sufficiently protect customer money in the event of a business collapsing.
The FIEA, amongst other things, requires businesses to store and manage customer money separately from corporate assets. If cryptocurrency exchanges are made to conform to laws governing securities, cryptocurrency will be treated like any other financial product and customers will gain the usual protection.
Japan has recognised Bitcoin as legal tender since the passing of the Virtual Currency Act in April of 2017. The law required cryptocurrency exchanges to get FSA licences – in September, eleven were awarded. Thus Japan has gained a reputation of being quite forward-thinking in this regard, and reportedly, approximately 3.5 million people in the country hold at least one cryptocurrency.
However, it has had problems – most notably when hundred of millions of dollars’ worth of cryptocurrency was stolen from a popular exchange. In response, the FSA began cracking down on the sector, carrying out inspections, handing out warning notices, and forbidding the sale of anonymous coins like Monero and Dash.
The South Korean government has announced a new classification system for cryptocurrency-related businesses, according to local news source thebchain.co.kr. This marks the first time that the government has accepted the industry as a legitimate business concern.
Under the new system, the blockchain industry will be divided into three sections and subdivided into a further ten.
The three sections are (translated from Korean):
1. ‘Software development and supply business’
2. ‘Computer programming, system integration and management’
3. ‘Blockchain technology-related hosting service industry’
The first section includes gaming decentralised application platforms like Ethereum (‘blockchain-based system software development and supply businesses’), the second includes mining-related activities (‘other information technology and computer operation service industry related to blockchain technology’), and the third includes cryptocurrency exchanges (‘encryption asset brokerage and brokerages’).
The decision was reached after consulting with 160 different institutions, including government ministries, regional municipalities, financial institutions, and corporations, according to the report. The final draft is expected to be released at the end of July.
Cryptocurrency is very popular in South Korea, and South Korean exchanges were amongst the biggest in the world. However, the industry has suffered somewhat from a suspicious government. ICOs were made illegal in September 2017, and it allowed exchanges to operate only under strict conditions.
This development indicates a change in attitude on the part of the government.
Malta has already succeeded in attracting the two biggest cryptocurrency exchanges in the world to its shores, which means that more cryptocurrency trading passes through the Mediterranean island than anywhere else in the world.
Souce : financemagnates.com