Why Asia-Pacific Countries Are Preparing To Tighten The Noose On Cryptocurrencies
Over the past few weeks, many have heard prominent analysts and corporate bosses predicting a rather gloomy future for cryptocurrencies. Most of them have openly expressed their reservations against the so-called bitcoin “bubble” which caused unprecedented growth in the virtual currency’s dollar-valuation in 2017.
Spillover into Traditional Markets
Despite all the looming skepticism, the popularity of bitcoin and other crypto coins haven’t dwindled at all. If anything, they are growing increasingly popular by the day. But this favor has come under federal scrutiny.
This increasing popularity of digital currencies along with their volatility has also made many world governments and regulatory bodies nervous. Officials fear that a crash in the bitcoin market could have a severe spillover effect on the broader economy.
To make matters even worse, many regulators, such as India’s Reserve Bank of India (RBI), are wary of the possibility of cryptocurrencies being used to fund terrorism, launder money, evade taxes, and other unlawful acts.
Moreover, regulators in the Asia Pacific region in general seem particularly uneasy about the rise of digital currencies. Countries like China and Vietnam have already tightened the noose on virtual currency exchanges and investors. And judging by some of the recent statements made by some influential regulators in the region, it looks like more countries are going to follow suit sooner than later.
Japan worried, Despite Legalization
For example, the Bank of Japan (BOJ) Governor Haruhiko Kuroda was the latest to join the “bitcoin boogeyman” bandwagon after he (rightly) advised investors to be cautious when trading different altcoins and bitcoin. Speaking at a media conference, Kuroda called the surge in bitcoin prices “abnormal.”
Kuroda’s comments echoed earlier statements issued by regulators in countries like Australia, Singapore, and South Korea. Unsurprisingly, given that Asia-Pacific accounts for the vast majority of trading in bitcoin, the highest-valued cryptocurrency lies in this region.
This popularity was evident from a recent study by CryptoCompare that claimed Japan, Vietnam, and South Korea alone contributed to 80 percent of bitcoin trading activities worldwide.
Here’s a brief rundown of what some of the major economies in the region are currently saying about crypto coins and their future.
Despite the BOJ head’s skepticism about the ongoing bitcoin surge, the country has remained supportive of virtual currencies.
In April 2017, Japan’s lawmakers allowed the use of bitcoin to make payments (along with several other cryptocurrencies). However, the Japanese government doesn’t seem to have any plan on rolling out its virtual currency anytime soon.
India Finds Risks
The Reserve Bank of India is not principally opposed to the use of virtual currencies, but the Central Bank’s worry seems to have stemmed from specific practical implications.
For example, the statutory body is worried that bitcoins and cryptocurrencies could be used by the corrupt to conduct illegal activities such as money laundering and terror funding.
Moreover, the RBI has also issued multiple statements advising investors to exercise caution while trading in bitcoin.
China Still Seeking Full Control
The Chinese government also understands the benefits of switching to digital currencies. However, the country has cracked down on bitcoin trading and ICOs citing that unregulated markets pose a threat to the world’s second-largest economy.
Meanwhile, the government in China is reportedly preparing to introduce its sovereign virtual currency suitable for domestic use.
South Korea Exercises Extreme Caution
The South Korean government has banned all financial institutions from dealing in digital currencies like bitcoin. This ban essentially means that the law of the land prohibits buying, selling, or even holding on to one’s existing bitcoin stash.
According to AFP, South Korea accounts for as much as 20 percent of bitcoin trading globally.
Australia calls it a “speculative mania”
Philip Lowe, the government of Reserve Bank of Australia, has called the growing popularity of virtual currencies a “speculative mania.” He went on saying that bitcoin probably looks more enticing to the stakeholders of the illegal economy rather than the average consumer.
He also ruled out the possibility of the government rolling out a digital variant of the local currency anytime soon.