Comparison of Cryptocurrency Regulatory Attitudes and Styles Across Countries

At the beginning of its birth, Bitcoin was just a niche currency within the geek community, but with the development of blockchain technology, the cryptocurrency market has been continuously expanding. Currently, the number of global cryptocurrency holders has exceeded 200 million, and the number of cryptocurrency owners in China has also surpassed 19 million, marking a transition from niche to mainstream. In just a few years, the cryptocurrency market has developed to a level that governments around the world can no longer ignore, and regulation has become a necessary consideration for various countries. However, there is still no consensus globally on cryptocurrencies, and the attitudes of different countries towards encryption remain unclear.

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

United States: Balancing Risk Control and Innovation Support

The United States has always been the most watched country in the global encryption field, but it is not in a leading position globally in terms of encryption regulation. Compared to countries like Japan and Singapore, the cryptocurrency regulatory policies in the United States are more ambiguous and difficult to predict.

Before 2017, cryptocurrency was in a stage of free development, and the regulatory policies in the United States mainly focused on overall risk control, without any signs of strict bans or accelerated legislation.

In 2017, with the rise of the ICO boom, regulatory policies in various countries began to tighten. The U.S. SEC issued its first announcement regarding encryption currencies, bringing ICO activities under the jurisdiction of federal securities laws. This was the first official statement from the U.S. regarding encryption currencies, but the stance remains one of strengthening regulation rather than prohibition.

In early 2019, multiple cryptocurrency exchanges reopened their IEO platforms, but were soon targeted by regulators. Subsequently, a certain trading platform was banned from operating in the United States. Following this, the U.S. began a severe crackdown on cryptocurrencies, regulating them as securities rather than assets or currencies, subjecting them to numerous restrictions under the Securities Act.

In 2021, as the number of encryption enthusiasts increased and institutions continued to call for change, the United States shifted its attitude towards cryptocurrencies. In February, Gary Gensler became the Chairman of the U.S. SEC; he had taught blockchain-related courses at MIT and held a more favorable view of cryptocurrencies and blockchain. Shortly thereafter, the U.S. allowed a certain cryptocurrency exchange to list on NASDAQ, making it the first cryptocurrency exchange to go public in the United States. Since then, the U.S. has begun actively researching encryption-related regulations.

In 2022, with the consecutive collapses of platforms like Luna and FTX, the United States became one of the countries most severely affected by these events, and the regulation of encryption began to intensify.

In September, the United States released the first draft of a regulatory framework for the cryptocurrency industry, but no related laws have been passed to date. Recently, U.S. regulators have initiated lawsuits against several well-known figures in the encryption industry, with an increasing trend in regulatory intensity.

Currently, the encryption regulation in the United States is jointly conducted by federal and state authorities. At the federal level, the SEC and CFTC are mainly responsible, with the SEC holding most of the regulatory power. However, these two agencies have not yet reached an agreement on regulatory responsibilities and standards. At the state level, attitudes and regulatory intensity towards cryptocurrencies vary among states. Reports suggest that the U.S. government is considering establishing a unified regulatory framework to eliminate interstate regulatory differences.

There are differences between the two parties in the United States regarding regulatory legislation, and some local politicians do not regard encryption regulation as an urgent matter, and may even be completely indifferent to cryptocurrencies. Encryption regulatory legislation is entangled in partisan disputes, making it difficult to reach a consensus in the short term.

The President of the United States once signed an executive order titled "Ensuring Responsible Development of Digital Assets," emphasizing that federal agencies should take a unified approach to regulate encryption and collectively address related risks. It also expressed support for innovation in encryption, hoping that the technology in the encryption field in the U.S. can lead globally.

The regulation of the encryption sector in the United States has not been at the forefront of the world, as it seeks innovation-driven growth under manageable risks. It can be said that the U.S. prefers to lead the world in encryption technology rather than regulation. The ambiguity of regulatory policies adds uncertainty for encryption companies, but it also leaves room for technological innovation, which is exactly what the U.S. government emphasizes as "addressing risks while supporting innovation."

Japan: Stable and Strict Regulatory Environment

Japan has long been active in the encryption field, and Japan's presence is indispensable in the significant transformations of the encryption sector. Since the early development of cryptocurrency, the Japanese government has actively created a sound regulatory environment for the industry. It has now introduced specific laws and regulations for cryptocurrency, legalizing Bitcoin and bringing it under regulation.

In 2014, Japan experienced one of the most serious setbacks in the encryption industry—the collapse of Mt. Gox, the largest Bitcoin exchange at the time. This event was a major disaster in the history of cryptocurrency, triggering investors' attention to encryption regulation. Subsequently, Japan began to implement stricter regulations on the encryption industry, adopting clearer and more defined control policies than countries like the United States.

In 2016, the Japanese National Diet began actively legislating on encryption currencies, adding a "virtual currency" chapter in the "Fund Settlement Act" to define virtual currencies and set relevant regulatory details, aiming to protect investor rights and prevent illegal uses.

In 2017, Japan amended the Payment Services Act to include cryptocurrency exchanges under regulatory oversight by the Financial Services Agency (FSA). This made Japan the first country to legalize Bitcoin. In December of the same year, the Japanese National Tax Agency began taxing income from the encryption sector, with rates higher than those in Singapore.

In 2018, a local exchange suffered a $530 million hack, marking a turning point in Japan's encryption policy. Since then, Japanese encryption exchanges have strengthened self-regulation, and regulatory authorities have also implemented intensive oversight. Japan has maintained a strict regulatory stance towards encryption and actively promoted relevant legislation.

In June 2022, Japan passed an amendment to the "Fund Settlement Act," officially legislating stablecoins and becoming the first country in the world to create a legal framework for stablecoins, aimed at protecting digital currency users and ensuring stable value.

Japan's完善监管环境 allows many encryption companies to develop steadily and has protected investors from losses during the recent collapse of encryption platforms.

Overall, Japan's cryptocurrency regulation is clear and strict, focusing on guiding the industry rather than banning its development, dedicated to protecting retail investors and continuously improving relevant legislation. Japan's attitude towards encryption has always been systematic legislation and regulation, and the clear regulatory stance makes the expectations of cryptocurrency companies in the Japanese market clearer.

South Korea: Strengthening Regulation, Expected to Legalize

As the fourth largest economy in Asia, South Korea is one of the most active countries in the cryptocurrency market, with 20% of young people participating in cryptocurrency trading. Despite the high penetration rate of encryption, South Korea has not yet incorporated it into its legal system like Japan.

Since 2017, various forms of token issuance have been banned in South Korea. The government has also made regulations against the use of virtual currency for illegal activities. To protect encryption investors, South Korea has implemented measures such as real-name verification and prohibiting minors (under 20) and non-South Korean residents from opening accounts. South Korea's encryption regulatory policy is relatively one-size-fits-all, primarily targeting major violations, with a lack of detailed regulations. Most regulatory rules come from government agencies or departments rather than legislative action at the parliamentary level.

In February 2021, South Korea saw the first signs of cryptocurrency legislation, as financial regulators began to consider incorporating encryption into the law.

In June 2022, influenced by the collapse of Terra, South Korea accelerated the legislative process for encryption. The government announced the establishment of a "Digital Asset Committee" aimed at proposing policy recommendations, including new cryptocurrency listing standards, ICO timelines, and implementing investor protection measures before the enactment of the Digital Asset Basic Act (DABA). The Financial Supervisory Service of South Korea also plans to establish a "Virtual Asset Risk Committee."

Since 2022, influenced by multiple collapses of encryption platforms, South Korea has begun to implement more intensive encryption regulatory measures.

In the past, the South Korean government did not regard encryption as legal tender, but with the inauguration of the new president Yoon Suk-yeol, South Korea's attitude towards encryption has begun to change. Yoon Suk-yeol is known as the "crypto-friendly president" and has promised to lift regulations on the encryption industry, stating that legal measures will be taken to confiscate profits from illegally obtained encryption and return them to the victims. According to local media in South Korea, the market is moving towards significant legalization as the new president pledges to relax regulations on encryption.

Singapore: Predictable but tightening regulatory environment

Globally, Singapore has consistently maintained a friendly and open attitude towards encryption. Similar to Japan, cryptocurrencies are also recognized as legal in Singapore.

In 2014, the Monetary Authority of Singapore (MAS) issued a statement on the money laundering and terrorist financing risks of virtual currencies, becoming one of the first countries in the world to regulate virtual currencies.

Between 2016 and 2017, when many countries began to impose strict regulations on cryptocurrencies, the Monetary Authority of Singapore (MAS) adopted an attitude of warning about risks but did not deem them illegal.

In 2019, the Singapore Parliament passed the Payment Services Act, marking the first legislative regulation. Due to Singapore's reputation for being "friendly and open" and its lower taxes compared to Japan, it attracted numerous encryption companies in the subsequent two years, becoming a hotbed for encryption. In January 2021, Singapore further amended and improved the Payment Services Act, continuously expanding the scope of regulated cryptocurrency services. Compared to Japan, Singapore's regulatory environment is more relaxed.

In 2022, the Singapore authorities continued to improve the regulatory environment, hoping to maintain financial market stability while being open. The regulatory focus shifted to retail investors, working on relevant legislation to further restrict retail investment. The Singapore government has also been guiding retail investors to face investment risks and does not encourage participation in encryption investments.

In 2023, Singapore continues to maintain an encryption-friendly image, providing tax incentives for individuals holding digital assets.

Overall, cryptocurrency trading in Singapore is relatively free, but in the wake of the FTX collapse, Singapore has begun to tighten its cryptocurrency policies. Singapore's attitude towards crypto assets has always been friendly but not lenient, opposing fraud, speculation, money laundering, and irresponsible promotion. Singapore's policies are stable and predictable, but to control financial risks, they are gradually tightening regulations.

Hong Kong: Actively Transforming, Accelerating Legislation

Hong Kong, which originally held a negative attitude towards cryptocurrencies, has undergone changes after the new special administrative region government took office. After a few years of observation, Hong Kong seems to have found a regulatory path that suits itself from the experiences of other countries.

Before 2018, Hong Kong had a very cautious attitude towards encryption currencies, and regulation was in an exploratory phase. In November 2018, Hong Kong first included virtual assets in its regulation. Since then, Hong Kong has regarded encryption currencies as "securities" and included them in the existing legal regulatory framework, but does not regulate non-securities encryption currencies.

This regulatory situation continued until 2021, when Hong Kong released a consultation summary on the "Public Consultation on Legislative Proposals to Enhance the Regulation of Money Laundering and Terrorist Financing" and signs of encryption regulatory legislation began to emerge.

In October 2022, the Financial Secretary of Hong Kong issued the "Policy Declaration on the Development of Virtual Assets in Hong Kong", marking a shift in government attitude towards actively embracing encryption and other virtual assets, with the prospect of legalizing encryption assets in the future.

In 2023, Hong Kong has been continuously signaling legislative intentions. On January 31, the Hong Kong Monetary Authority announced plans to bring stablecoins under regulatory oversight. On April 14, the Monetary Authority released a consultation summary on the discussion document regarding encryption assets and stablecoins, aiming to implement regulatory arrangements in 2023 or 2024. These initiatives indicate that Hong Kong is actively joining the ranks of encryption regulatory legislation.

In recent years, Hong Kong has been in a wait-and-see state, losing its leading position. However, drawing lessons from the experiences of other countries, Hong Kong is seizing the opportunity to develop through web3, showcasing its ambition to return to the encryption field and hoping to become a leader in the cryptocurrency market. However, the final outcome will need to be determined after the relevant regulations are implemented.

Summary

Despite the lack of consensus among countries around the world regarding cryptocurrencies, strengthening regulation remains a future trend. In the early stages of industry development, strict regulation may hinder innovation. However, once the industry reaches a certain level of development, a lack of regulation can actually harm the entire industry. The issue of encryption regulatory legislation is gradually gaining attention, which also proves that the entire industry is moving in a positive direction.