Comparison of Cryptocurrency Regulatory Attitudes and Styles Among Countries

At its inception, Bitcoin was merely a niche digital currency, but with the development of blockchain technology, the cryptocurrency market has continuously expanded. Currently, there are over 200 million cryptocurrency holders worldwide, with more than 19 million users in China, truly achieving a transition from niche to mainstream. In just a few short years, the cryptocurrency market has developed to a level that governments around the world can no longer ignore, and regulation has become an issue that must be considered. However, there is still no global consensus on cryptocurrency, and the attitudes of various countries vary.

This article will provide a detailed introduction to the evolution of regulatory styles in five countries and regions that are widely关注 in the encryption field, as well as their current regulatory attitudes towards encryption.

USA: Control Risks and Promote Innovation

The United States has always been the most watched country in the global encryption field, but its regulatory policies are not leading. Compared to countries like Japan and Singapore, the cryptocurrency regulatory policies in the United States are more ambiguous and unpredictable.

Before 2017, encryption currencies were in a stage of free development, and US regulation only focused on overall risks, without signs of a ban or accelerated legislation. The ICO boom emerged in 2017, and regulations tightened in various countries. The US SEC issued its first announcement on encryption currencies, clarifying that ICO activities fall under the jurisdiction of federal securities laws. This was the first official statement from the US, though the attitude remained one of strengthening regulation rather than prohibition.

In early 2019, several cryptocurrency exchanges restarted their IEO platforms, but they were soon targeted by regulators. Subsequently, a certain trading platform was banned from operating in the US. Since then, the US has begun to crack down on cryptocurrencies, viewing them as securities rather than assets or currencies, facing numerous restrictions under the Securities Act.

In 2021, as the number of encryption enthusiasts increased and institutions continued to lobby, the attitude of the United States changed. In February, Gary Gensler became the chairman of the SEC; he had taught blockchain courses and was more friendly towards encryption, accelerating the shift in the U.S. attitude. Soon after, the U.S. allowed a certain exchange to be listed on Nasdaq, making it the first encryption exchange to be listed in the U.S. After that, the U.S. began actively researching encryption regulation.

In 2022, multiple encryption projects collapsed, causing severe losses in the United States and increased regulatory scrutiny. In September, the first draft of the regulatory framework for the encryption industry was released, but no laws have been passed to date. Recently, U.S. regulators have initiated lawsuits against several individuals in the encryption space, indicating a tightening of regulation.

Currently, regulation in the United States is jointly conducted by federal and state authorities. At the federal level, the SEC and CFTC share oversight, with the SEC holding most of the power. However, the two agencies have not reached an agreement on their roles and standards. At the state level, attitudes and enforcement vary from state to state. There are reports that the U.S. government is considering establishing a unified framework to eliminate interstate differences.

On regulatory legislation, the two parties in the United States hold their own views, and local politicians do not see it as an urgent matter, even showing little concern for encryption currencies. Encryption regulatory legislation is mixed with partisan disputes, making it difficult to reach a consensus in the short term.

The U.S. President once signed an executive order emphasizing that federal agencies adopt a unified approach to regulate encryption, jointly addressing risks. At the same time, it expressed support for innovation, hoping that the U.S. would lead the world in encryption technology.

The U.S. encryption regulation is not at the forefront of the world, as it pursues risk control and uses innovation to drive development. The U.S. prefers to lead in encryption technology rather than regulation. The ambiguity of policies increases market uncertainty but also leaves room for technological innovation, in line with the President's emphasis on "addressing risks and supporting innovation."

Japan: Stability and Sustainability Lack Appeal

Japan has been actively involved in the encryption field for a long time, and any transformation is inseparable from Japan's presence. The Japanese government has actively created a sound regulatory environment for the encryption industry early on, and has specifically enacted regulations to legalize Bitcoin and bring it under regulation.

In 2014, countries around the world expressed their positions, some banning it while others took a wait-and-see approach. Japan, on the other hand, experienced a major setback in the industry — the then-largest Bitcoin exchange, Mt. Gox, collapsed. This was a significant disaster in the history of encryption, as the exchange accounted for over 80% of Bitcoin transactions and was the largest encryption exchange in the world. The incident sparked investor concerns over regulation, highlighting the urgent need for a stable and safe investment environment. Subsequently, Japan began to impose strict regulations on the encryption industry, adopting clearer policies than those in countries like the United States.

In 2016, the Japanese National Diet actively legislated to add a "virtual currency" chapter to the "Fund Settlement Act," defining and setting regulatory details. The aim is to protect investor rights and prevent illegal use.

In 2017, Japan amended the Payment Services Act to bring encryption exchanges under the regulation of the Financial Services Agency. Not only did it include Bitcoin in its regulation, recognizing it as a normal payment method, but it also made Japan the first country to legalize Bitcoin. In December of the same year, Japan imposed taxes on encryption income, with rates higher than those in Singapore.

In 2018, local exchanges were attacked by hackers for $530 million, marking a turning point in Japan's encryption policy. Subsequently, Japanese exchanges strengthened self-regulation, and institutions carried out intensive regulation. Japan has always strictly regulated encryption, viewing it as an emerging field, and actively promoted legislation.

In June 2022, Japan passed an amendment to the "Funds Settlement Law", officially legislating the regulation of stablecoins, becoming the first country in the world to create a legal framework for stablecoins. This move links stablecoins to the yen or other fiat currencies, ensuring stable value and protecting users.

Japan's well-developed regulatory environment has allowed many encryption companies to grow steadily and sustainably, protecting investors from losses in recent events.

Overall, Japan's encryption regulation is clear and strict, focusing on guidance rather than prohibition, dedicated to protecting retail investors, and continuously filling legislative gaps. Japan has been conducting systematic legislative regulation, and its clear attitude makes the expectations of encryption enterprises in the Japanese market clearer.

South Korea: Tightening Regulations, Prospects for Legalization

As the fourth largest economy in Asia, South Korea is one of the most active countries in the encryption market, with 20% of young people being traders. Even with such a high penetration rate, South Korea has not yet incorporated it into law like Japan.

Since 2017, South Korea has banned various token issuances and established penalties for engaging in illegal activities with virtual currency. Regulations to protect investors include real-name systems, prohibiting minors and non-Korean residents from opening accounts, and more. South Korea's policies are more rigid, only specifying major violations, with a lack of detailed rules. Most regulations are issued by government agencies, not through legislative action by the National Assembly.

In February 2021, South Korea first showed signs of encryption legislation, as regulatory authorities began to consider legislation.

In June 2022, the collapse of Terra accelerated legislation in South Korea. On June 1, the South Korean government announced the establishment of a "Digital Asset Committee" to propose policy recommendations, including new encryption listing standards, an ICO timeline, and implementing investor protection measures before the enactment of the basic law on digital assets. The Financial Supervisory Service also plans to establish a "Virtual Asset Risk Committee."

Since 2022, South Korea has adopted more intensive regulatory measures due to multiple incidents.

In the past, South Korea did not regard encryption as legal tender, but with the new president taking office, the attitude has changed. The new president is referred to as "crypto-friendly" and has promised to deregulate, stating that he will "take legal measures to confiscate illegally obtained encryption profits and return them to the victims." South Korean media reports that with the new president's promise to ease regulation, the market is developing significantly towards legalization.

Singapore: Predictable but not Loose

If there is a country that has always been friendly and open to encryption, it must be Singapore. Like Japan, encryption is also recognized as legal in Singapore.

In 2014, the Monetary Authority of Singapore issued a statement on the risks of virtual currency, becoming one of the first countries to regulate it.

During the active period of ICOs from 2016 to 2017, Singapore's attitude towards encryption was to highlight risks, but it did not recognize it as legal.

In 2019, Singapore passed the Payment Services Act, marking the first legislative regulation. Singapore has always been friendly and open, with taxes lower than Japan, attracting numerous encryption companies and becoming a hot spot. In January 2021, the law was revised and improved, continuously expanding the scope of regulation. Compared to Japan, Singapore's regulation is more lenient.

In 2022, Singapore continued to refine its regulations, maintaining financial stability while being open. It began to focus on retail investors and took steps to legislate further restrictions on retail investment. The government encouraged retail investors to recognize risks and did not promote participation in encryption investments.

In 2023, Singapore maintains a friendly image and offers tax incentives for personal digital assets.

In summary, trading in Singapore is free, but affected by FTX. Before the incident, regulatory focus was on money laundering and terrorism financing risks, and afterwards policies were tightened to protect investors.

Singapore scholars indicate that Singapore has always been friendly towards encryption but not lax, opposing fraud, speculation, money laundering, and irresponsible promotion. The policy is stable and continuous, adapting flexibly according to the market. Similar to Japan, Singapore's system is stable and predictable, but it is gradually tightening to control risks.

Hong Kong: Striving to Catch Up with Proactive Legislation

Hong Kong, which originally held an opposing stance on encryption, has undergone changes after the new government took office. After observing, it seems that Hong Kong has found a regulatory path suitable for itself from the mistakes of other countries.

Before 2018, Hong Kong was very cautious about encryption, and regulation was in an exploratory phase. In November 2018, virtual assets were first included in regulation. Since then, encryption has been regarded as "securities" and incorporated into existing legal regulation, but non-securities type cryptocurrencies are not regulated.

This situation continued until 2021, when Hong Kong intensified its efforts to combat money laundering and other regulations by publishing a consultation summary, marking the first signs of legislation.

In October 2022, the Hong Kong Financial Secretary issued a policy declaration for the development of virtual assets, marking a shift in government attitude towards positively embracing encryption, with the expectation of legalization in the future.

At the beginning of 2023, Hong Kong continuously released legislative signals. On January 31, the Monetary Authority planned to bring stablecoins under regulation. On April 14, a consultation summary was released regarding the discussion document on encryption assets and stablecoins, with the expectation of implementing regulatory arrangements in 2023 or 2024. This indicates that Hong Kong will actively join the ranks of encryption regulatory legislation.

Some media reports indicate that the United States has stricter regulations on encryption, while Hong Kong is more lenient. In recent years, Hong Kong has been observing and has lost its leading position. However, learning from the lessons of other countries, Hong Kong hopes to seize the opportunity of Web3 development to return to the encryption field and become a market leader, but the outcome still depends on the implementation of regulations.

Conclusion

Although there is still no consensus globally on cryptocurrencies, strengthening regulation is generally the trend for the future. In the early stages of the industry, strict regulation may hinder innovation. However, as the industry develops to a certain extent, the lack of regulation can be harmful. The increasing attention to encryption regulatory legislation also proves that the entire industry is developing positively.