China's Stricter Bitcoin Regulations Will Strengthen Hong Kong Market
On September 15, the Chinese government and local financial regulators
officially requested Chinese exchanges and trading platforms to shut down by the end of September. OKCoin and Huobi, the two largest exchanges in China, were granted leeway to operate until the end of October. Rather strangely, bitcoin price rebounded from $2,900 to $3,600 as the Chinese government and local exchanges confirmed the nationwide suspension of exchanges. Many analysts explained that traders were looking to purchase the dip, which justifies the abrupt $800 increase in bitcoin price within a 24-hour period. Many investors, traders and analysts still remain optimistic in regard to China’s ban on exchanges because throughout 2017, the Chinese bitcoin exchange market only accounted for approximately 10 to 13 percent of global bitcoin trades.
Regulatory friendly region
More to that, in an interview with the South China Morning Post, Bitcoin Association of Hong Kong Leonhard Weese noted that China’s restrictions on bitcoin trading and usage will drive businesses to Hong Kong and nearby countries like Japan and South Korea.
Weese told South China Morning Post:
“People in China will be more careful about marketing these events, and a lot of that marketing activity will come to Hong Kong in the form of conferences and communities,”.
Since early 2015, Hong Kong has been praised for being a regulatory friendly region for bitcoin and blockchain startups. Still, unlike China, South Korea and Japan, Hong Kong’s bitcoin and cryptocurrency exchange markets have struggled to demonstrate exponential growth. For the past three years, only 1 Hong Kong-based bitcoin exchange Bitfinex was able to evolve into a major global bitcoin trading platform. But, Weese emphasized that if China continues to crackdown on bitcoin and cryptocurrency-related businesses, it will further drive growth to Hong Kong.
It is important to acknowledge that leading bitcoin exchanges like OKCoin, Huobi and BTCC, the three largest exchanges in China, were unfairly punished for their cooperation with the government. Over the past 12 months, the entire Chinese bitcoin industry has closely collaborated with local authorities in order to establish transparent industry standards and to improve the Chinese bitcoin exchange market. Instead, they were ultimately shut down by the powers, despite having allocated massive amounts of capital and resources to comply with the demands of the
Chinese #bitcoin exchanges worked with the government, allocating substantial resources to improve the market & they were punished instead.
— Joseph Young
It is difficult to imagine that startups with limited capital and even large-scale bitcoin companies will be willing to undergo the same path Chinese bitcoin exchanges have taken just to be shut down and terminated by the authorities. In the upcoming months, as BTCC, OKCoin, Huobi and other bitcoin exchanges continue to expand their international services, Hong Kong, South Korea and Japan will likely experience rapid growth in terms of bitcoin users, trading activity and conferences.
Thai Securities and Exchange Commission Supports Creation of ICO Laws
The Securities and Exchange Commission in Thailand (SEC Thailand)
has announced that it is supporting the drafting and implementation of regulations covering initial coin offerings (ICO). The commission claimed that this is necessary as some coin sales may be considered as a securities offering under the country’s laws.
Tokens only facilitate fraud against unwitting investors
According to SEC Thailand, some ICOs may be considered as financial returns, rights and obligations, thus, should be subjected to existing regulations that cover them. The agency also warned that some token sales are only meant to facilitate fraud against unwitting investors. However, the SEC showed that it is willing to support ICOs, as well as the creation of laws to regulate them.
Part of the agency’s statement reads:
"The SEC Thailand encourages access to funding for businesses, including high potential tech startups, and realizes the potential of ICO in answering startups' funding needs. In cases where an ICO constitutes offering of securities, the issuer will need to comply with applicable regulatory requirements under the SEC Thailand's purview."
The statement further adds:
"…to strike a balance between supporting digital innovation and protecting investors from potential ICO scams, the SEC Thailand is considering appropriate approaches on ICO and welcomes comments and suggestions from the private sector.”
Positions of other countries on ICOs
Several securities regulators worldwide have also issued their positions on ICOs in the previous weeks. In Canada, the Canadian Securities Administrators (CSA) claimed that many of the virtual currencies probed by regulators fall under the definition of a security and should be subject to a range of legal requirements.
In Singapore, the Monetary Authority of Singapore (MAS) has issued an advisory, advising prospective investors to investigate and determine the risks when participating in token sales. In the US, the Securities and Exchange Commission (SEC) has claimed that the sale and issuance of digital tokens should be subjected to the country’s federal securities law. Such moves should not be confused with governments having the ability to ban Bitcoin since they are mainly targeting companies looking to raise money from their self-created tokens.