Regulators around the world have struggled to provide apt legal frameworks within which crypto assets, and similar applications such as ICOs, can be used.
The situation in Southeast Asia is representative of this reality, but with time, we are witnessing a more coherent approach.
Indeed, some of the Southeast Asia countries are setting themselves up to be as competitive as say the United Arab Emirates or Switzerland in regard to crypto regulations.
It is important to point out, however, that crypto regulation in the region is not uniform, as expected.
Each of the eleven countries that form the block has pursued an independent approach. Nevertheless, the steps they take, to some extent, seem to mirror one another.
The first pronunciations by regulators in Southeast Asia were warnings to the public about the risks involved with trading and holding cryptocurrencies like Bitcoin.
The countries have however remained relatively accommodative to cryptos, and some level ICOs. None has outrightly banned their use or made it illegal to have ownership of them.
What almost all of the countries have done, in one way or another, is to impose limitations on the use of crypto-assets and applications like ICOs. Some of these limitations can be described as punitive and others very reasonable.
For instance, in some of the countries in the region, there is a ban on banks providing services to entities involved in crypto trading.
The Thai central bank, for example, prohibits financial institutions from investing or trading in crypto, exchanging cryptos, creating crypto-related products and facilitating clients to buy and sell cryptos.
It is also a common rule in the region that you cannot use cryptos as a medium of exchange. Some of the countries that have issued legal notices to that effect include Indonesia and Vietnam.
Meanwhile, a few seem to accept the fact that people are going to use cryptos to buy stuff nevertheless. And they have taken steps to accommodate this eventuality. Singapore has issued taxation guidelines to enable taxation of transactions involving Bitcoin and any other crypto.
In April 2019, the Monetary Authority of Singapore (MAS) released a legal document describing Bitcoin, and other cryptos, as a digital payment token. This allows for a structured taxation regime under the Payment Services Act.
But the application of blockchain-the technology on which crypto assets are issued-which has received a lot of attention from the regulators in Southeast Asia in the recent past is initial coin offerings (ICO). This is the sale of tokens created on the blockchain to raise capital.
Like many other parts of the globe, entrepreneur and developers took advantage of raising capital through the sale of tokens on the blockchain.
And like it was the case with the rest of the world, not all ICOs inspired confidence and goodwill. To protect investors from rogue entrepreneurs, regulators in the region have followed what others around the world have done.
They have put in place strict requirements for anyone intending to raise capital using this method.
The Monetary Authority of Singapore (MAS) has, for example, directed that selling digital tokens to raise capital must comply with the existing Securities and Futures markets laws and regulations.
Similar guidelines on ICOs have been issued in Malaysia, the Philippines and Thailand.
There is every sign that Southeast Asia is going to be a priory choice location for testing decentralized applications such as ICOs because of the friendly regulatory environment.
And there is a critical reason why the region could be better than say the United Arab Emirates; it has a massive population and booming industries such as manufacturing and tourism.
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