Crypto Compliance and Taxation Outlook of the Asia - Espay Exchange
                     
Introduction
● The dramatic increase of retail and institutional investor interest in the crypto 
markets has resulted in an unavoidable need to reposition the current financial 
regulatory platforms to integrate regulation of digital asset markets. Since the 
existing Bitcoin surge is above $10,000 per bitcoin, it quite obvious that crypto 
markets have become easily accessible and significant to the public for 
supervisions to not intrude. 
● Currently, crypto markets are facing many crucial operational challenges, 
resulting in undermined investor confidence. Most recently, many significantly Asia
serious cybersecurity breaches, hackers infiltrating crypto markets and 
exchanges, have been widely reported on. Millions of dollars’ of virtual currency 
have also been stolen in recent years. Moreover, many crypto exchanges are 
reported to be involved in voracious and unreliable practices, insider abuses, and 
market manipulations. 
● According to recent research conducted by TIE, 75% of crypto exchanges are 
reporting doubtful volumes. Hong Kong and Singapore have introduced new 
licensing compliance with a requirement to acquire approval from regulatory 
before trading is permitted. The assessment covers an evaluation of an exchange 
monitoring system – which further includes market supervision for the 
identification of market abuse behavior, along with KYC (Know Your Customer), 
AML (Anti-Money Laundering), and CFT (Combating the Financing of Terrorism).
Introduction
● In Hong Kong, the Securities and Future Commission classifies ICOs as security, 
subject to the securities laws of the country. Cryptocurrency assets are treated 
no differently than any other regulated security assets. In Singapore, the 
Monetary Authority of Singapore (MAS) has issued several guidelines. These 
guidelines explain the ICO resembles capital market products’ regulation under 
the Securities and Future Act. Crypto platforms are subjected to a licensing 
acquiring regime and are limited to serve only accredited investors. 
● Similarly, other regions like China, South Korea, Taiwan, and the Philippines have Asia
issued different regulatory laws and guidelines for crypto exchanges and 
platforms. Some of them are comprehensively discussed in the following section
 China
● All the activities concerning Cryptocurrency have received a little amount of 
tolerance from the government of China. ICOs were banned in China in 
September 2017. Exchange platforms trading cryptocurrencies were not 
allowed to continue with the ICOs. Many exchange platforms decided to 
relocate to jurisdictions that are permitting cryptocurrencies than China. 
● In China, it is legitimate to hold Bitcoins and other types of cryptocurrencies. 
Moreover, buying and selling are also legal in China. Here, the government also 
supports the applications and development of blockchain technology. They 
have also made it quite clear that this technology must service the actual 
economy of China. China
  
● In September 2017, government agencies of China issued the Notice related to 
the Prevention of Token offering and financing risks. The notice banned ICOs 
and ordered that any firm or individual who had previously conducted or 
completed an ICO for making arrangements including the return of token 
assets to the investors to guide investor rights.
● According to the Article-6 of PRC Criminal Law in China, if any illegal activities 
or consequences of such activities happen to occur in China, the crime is 
deemed to have occurred in China’s territory.  
Policies For Exchange
● The issued by Government agencies of China ordered that any fundraising and 
traditional platforms must not provide exchange services between tokens, fiat 
currency, and virtual currencies. They are also not allowed to buy or sell tokens 
and virtual currencies, or buy or sell virtual currencies as a CCP (the central 
counterparty) or provide information intermediary or price determination 
services for virtual currencies or tokens. 
● As a result of this notice, many crypto exchanges shut down their platforms in 
China. Moreover, they made some significant adjustments to their business 
models. However, these improved business models are not completely safe 
from the criminal law perspective of China. Exchanges also continued their 
exchange business via platforms that were registered in foreign jurisdictions 
and were more biased to exchange business than China. 
Policies For Exchange
● According to the law of China, no individual willing to invest in 
white label crypto exchange software is allowed to use the internet to check 
the information that violates Chinese laws and regulations. Therefore, Chinese 
investors cannot buy or trade cryptocurrencies on overseas exchanges. 
 Trading Ban – Yes
 Banking Ban – yes
 Best Place for License – No
 Tax Haven Region – No
 Japan
● Japan’s Financial Services Agency (FSA) has set up a few guidelines to divide ICOs and 
denote investment limits to guard investors, having initially permitted its crypto 
market to operate on a self-regulatory basis. In 2018, a cybersecurity breach stole 
around $530 million of Coincheck – one of the biggest crypto exchanges of Japan. As 
a result, Japan’s Financial Services Agency has tightened regulations on crypto 
exchanges. This agency also introduced new screening requirements, along with a 
new licensing obligation. 
 Trading Ban – No
 Banking Ban – No
 Best Place for License – Yes 
 Tax Haven Region – No
Japan
 Malaysia
● In this country, the government has positioned all the token assets under securities 
regulation and non-compliance is sanctioned with fines and up to 10 years of 
imprisonment. In the year 2019, the Securities Commission Malaysia permitted three 
organizations to set up and operate a digital asset exchange. 
 Trading Ban – No
 Banking Ban – No
Malaysia
● Best Place for License – yes, easy process for licensing in Malaysia. Exchanger have to Malaysia
submit his investment documentation, provide evidence of sufficient investors’ 
protection, confirm the exchange has the capability to conduct due diligence of its 
clients, their activities, and meet the conditions within the framework of the 
disclosure mode of information of transactions participants.
 Tax Haven Region – No
 South Korea
● South Korea is one of the World’s most famous markets for companies that are 
dealing with blockchain technology. In 2018, the KRW (Korean Won) was the 
extensively used currency for digital currency trading excluding the US dollar. And in 
2017, more than 10% of Bitcoin trades across the entire world were conducted in 
KRW. 
● However, South Korea has still struggled to employ relevant regulatory and taxation 
measures for trading these currencies. The authorities of South Korea have altered 
their regulatory posture on several occasions, and the judiciary of Korea and financial 
regulatory agencies stay skewed in terms of setting up a cohesive regulatory stance.
South Korea
● Despite the outbreak of regulatory events from distinctive agencies and the judiciary 
of South Korea, market participants are still expecting clear guidelines from the 
National Assembly in the form of a statue that will offer an inclusive regulatory 
outline. On 19th June 2018, the FSC stated that it would seek to place digital 
currency exchanges under an all-inclusive regulatory system. 
 South Korea
● Under this system, digital currency exchanges will need to register with a Financial 
Intelligence Unit of South Korea. It is a sub-organization of the FSC that has the job of 
monitoring transactional flows to reduce the risks related to money laundering or 
other sorts of attempts to dodge capital control measures. The centralized exchange 
solutions would require complying with KYC and anti-money laundering laws and 
regulations at levels similar to banks. The planned legislation is awaited before the 
National Assembly. In South Korea, there are also other pending bills related to digital 
currency trades and taxation measures. 
 Trading Ban – No
South Korea
 Banking Ban – No
 Best Place for License – yes, since it is world’s most popular market for companies 
dealing in Blockchain technology
 Tax Haven Region – No
 Crypto Taxation Outlook in Asia
● In the year 2019, a lot of Asian countries have issued regulations and laws on 
crypto taxation, as regulators were starting to understand the significance of 
digital assets. Many investors also taken an interest in the project based on 
Cryptocurrency.
● In 2019, there was a major move for regulators of China – when a Chinese 
court officially documented Bitcoin as a virtual property in July. Though China 
has yet to proclaim any precise rules or regulations for crypto taxation, many 
have that this regulating can urge the nation’s tax authorities to make a 
decision on a crypto taxation policy in the future. 
● The Inland Revenue Authority of Singapore (IRAS) also permitted a draft e-tax 
guide which recommended that cryptocurrencies that are proposed to operate 
as a medium of exchange are excused from the nation’s Goods and Service Tax 
from January 2020 and onwards.
● In addition to this, the Inland Revenue Authority of Singapore also discovered 
the stablecoins will be exempt from GST, or the value-added tax of the country, 
as well.
 Crypto Taxation Outlook in Asia
● The Excise Department of Thailand has discovered that it will give its tax return 
practices a makeover by introducing a Blockchain-enabled tax return scheme 
by mid-2020.
● According to a representative from the department, oil exporters will be 
capable of paying excise tax and requesting tax returns once the fuel has been 
delivered, with Blockchain technology to help the branch with evaluating tax 
payments with the higher levels of effectiveness. 
● Nowadays, while oil exporters have definite documents for submission to 
waive their taxes, the superiority of examination for each case could be 
enhanced.
● Beyond Asian countries that are exempting or trying to put taxes on 
cryptocurrency, some of the most important crypto tax moves in 2020 possibly 
the Philippines, Iran, and the United Arab Emirates amongst the others.
Final Thoughts
● Whether you are looking for a white label crypto exchange 
software development company or a centralized trading platform 
in Asia, you must know about compliance and taxation outlook. 
And we hope, this article will help you acquire a better 
understanding of compliance and taxation outlook in Asia. 
Thank You
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