Varied approaches to bitcoin phenomenon in Asia

FROM clampdowns to a warm embrace, the bitcoin phenomenon is finding mixed reception from regulators in Asia.

● In mid-September, China’s central bank, the People’s Bank of China (PBOC), told virtual currency trading platforms based in Beijing and Shanghai to cease market operations.

Authorities also clamped down on ethereum and any other electronic units that are exchanged online without being regulated by any country. The PBOC said it wanted to fight “speculation” around the crypto-currencies, which “seriously disrupted the financial system”.

This came after the National Internet Finance Association of China – an offshoot of the PBOC – drew up a damning report on virtual currencies, saying they were “increasingly used as a tool in criminal activities” such as drug trafficking.

● Hyper-wired South Korea was also a hotbed for virtual currencies such as bitcoin, accounting for some 20% of global transactions, about 10 times its share of the world economy.

But South Korean authorities late last year banned financial institutions from dealing in virtual currencies on fears of a bubble fuelled by retail speculators.

The government has also pledged to strengthen investor protection rules, in an effort to curb speculation and potential fraud.

● Singapore’s central bank has issued a warning over cryptocurrencies, cautioning the public about the risk of jumping in on the “bitcoin bubble”.

The Monetary Authority of Singapore noted they are not backed by any central bank and are unregulated, which means those who lose their investments have no grounds for redress under Singapore law.

Yusho Liu, co-founder of Singaporecrypto currency wallet Coinhako, says demand has been soaring, with transactions up around 10-fold over the past year. However, while regulators have been prepared to offer a cautious free rein to the digital units, “financial institutions and service providers have been rather resistant”, Liu said.

“In fact, I believe that only 3040% of the market potential is fulfilled because of the friction generated by such matters. This is the key missing piece of Singapore being the fintech hub.”

● The high-profile collapse of digital currency exchange platform MtGox failed to douse the enthusiasm for virtual currencies in Japan, which in April became the first country in the world to proclaim it as legal tender. — AFP