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Witnessing the digital breakthrough

Asian Crypto Triangle: The Birthplace of New Economy

05 September 2018 12:13, UTC
Asian Crypto Triangle: The Birthplace of New Economy
By Oleg Koldayev

“It is not a real currency like Laotian kip or Thai baht, because one cannot pay debts with this currency”, - the top staffer of the Central Bank of Laos said in the interview with the Vientiane Times newspaper. – “It is a digital record of a transaction. The law does not regulate it either. People involved in the cryptocurrency are at risk if the digital system crashes”. Not as if the cryptocurrencies story had finished in the country after these words. However, the regulator’s hint is clear: it is extremely discouraged to invest in the virtual assets now.

Unlike China or Vietnam, Laos did not follow the road of a total ban of virtual assets turnover. However, the country's authorities engage in the same course of conduct. "The current legislation on payment systems does not provide the existence of cryptocurrencies and does not regulate them in any way," stated the local Central Bank. Although it is rather strange, as the latest amendments to the regulatory framework were introduced by the Parliament in 2017. That is when digital tokens not only existed but also were actively taking over digital wallets owned by residents of different parts of the world. Moreover, the financial authorities urgently asked businessmen to study virtual assets, but in no case to use them as payment instruments. Nothing is said about the sanctions for the disobedience yet, but it is quite possible that they will appear if someone persists in his commitment to the new economy.

In general, the situation in the crypto market of South-East Asia is developing in a puzzling way. The countries economies of the region have turned out to be inside a triangle, the tops of which are the states-technological giants: China, Japan, and South Korea. Moreover, these powers represent two opposing global trends. China - the second economy in the world in terms of GDP (over $12 trillion) - is focused on a conditional ban on the turnover of virtual assets. The authorities of the Celestial Empire refuse to recognize the legitimacy of the digital currency circulation on their territory, ban the activity of crypto exchanges and block private traders. Japan ($4.5 trillion of GDP) and South Korea ($1.4 trillion of GDP), on the contrary, legalized the circulation of virtual tokens, recognized the legitimacy of the ICO and tried to create a regulatory framework that monitors the activities of crypto companies.

The aggregate financial power of Japan and South Korea is about half that of China. However, in technological development and the impact on global trends, they are undoubtedly equal to their neighbor. Perhaps, therefore, the Japan-Korea way of development of the digital financial industry is supported by most countries in South-East Asia. Here are the examples.

The first one. The Philippines authorities allowed the work of crypto and blockchain companies in the special economic zone of the Cagayan Economic Zone Authority (CEZA). "We intend to grant licenses to ten platforms for crypto-exchange. From Japan, Hong Kong, Malaysia, Korea", - CEO of CEZA Raul LAMBINO said. "They will be able to deal with cryptocurrency mining, primary placement of coins or exchange". However, with one proviso that all cryptocurrency transactions should be conducted outside the country border. The legislation does not allow the use of any payment means, except for the state currency.

The second one. Malaysia, the first country in the Islamic world, which was sanctioned by theologians for the release of a halal cryptocurrency. In order to comply with all the norms of the Sharia, the company, registered by the way, in Singapore, had to provide tokens with a gold reserve.

The third one. Cambodia - one of the first ASEAN countries - announced the plans to issue a national cryptocurrency KHCoin. The Central Bank of the country confirmed its commitment to the ideas of progress and digital economy development, having disclosed the information about the creation of a national blockchain system for conducting transactions. According to the regulator, this "will significantly enhance the ability of the Central Bank to control interbank lending and transactions”.

The fourth example. The king of Thailand signed the law on the regulation of the cryptocurrencies turnover. Entrepreneurs and organizations that conduct transactions with virtual assets must be registered in the national SEC within 90 days and pay 7% of the VAT and 15% of the profits tax to the state budget. If these norms are not met, the offender faces 2 years of prison or a fine of $15,000. At the same time, the circulation of digital tokens in the country is encouraged, and in Thai cities, there are hundreds of outlets that accept crypto as payment.

The last but not least example of the positive development track. The circulation of the cryptocurrency is not banned in Myanmar either, but only limited by technical aspects. There are very few cardholders in the country and the Internet payments are not common. However, cheap state-subsidized electricity makes this country very attractive for mining.

Several countries follow another way – the Chinese.

The Central Bank of Indonesia, the most extensive on the territory state of South-East Asia, said that the cryptocurrency could not be a legal means of payment. Moreover, the regulator recalled the danger of using virtual assets in everyday life because of their volatility. "Virtual currencies are subject to risks of creating "bubbles" and can be used for money laundering and terrorism financing, so they can potentially affect the stability of the financial system and cause financial damage to society," the regulator said. Now, the Central Bank is developing the normative documentation, which will severely restrict the circulation of digital coins in the country.

Vietnam imposed responsibility on the import of mining equipment. Operations with cryptocurrencies are also banned and punishable by a fine of $9,000. "According to the provisions of the law, bitcoin and other virtual currencies are not legal means of payment in Vietnam," the Vietnamese Central Bank's information letter said. - "Issue [mining], supply, and use of bitcoin and other similar virtual currencies as payment instruments in Vietnam are banned".

And now Laos…

What is happening in South-East Asia could be easily treated as the struggle for the influence on the market, but for the geo-economical factor. According to the progressivism, technological and social leaps occur at the points of the highest straining of human resources. Today, this region is a single giant human workshop. People work 12-16 hours daily there producing material values for the civilization: cars, TV-sets, and smartphones. The higher the workload is, the higher the chance for a quantum human leap to occur.

The economy structure and development of these countries has led to the fact that now they have no choice, except a technological leap. Even the tough attitude of the regulators is beneficial, believe it or not. And the Silicon Valley is the past of high tech. The future is originating in the tropical jungle of the Euro-Asiatic continent.





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