Welcome to the weekly Asia Crypto Insights that touch on the latest news on digital assets developments and policy updates from across the Asia Pacific region.
Here are key events from last week:
Personal income tax will now include foreign crypto trading in Thailand
Tokenization of authorized investment products now a possibility in Hong Kong
Taiwan’s regulator outlines new key measures for crypto firms
In Taiwan, the regulator is taking a “prevention is better than cure” approach, and outlines new key measures for the crypto industry. The Financial Supervisory Commission (FSC) has issued guidelines for domestic crypto exchanges while placing restrictions on offshore exchanges unless they comply with regulations. These new guidelines focus on enhancing customer protection and oversight in the cryptocurrency industry.
Domestic crypto platforms in Taiwan must ensure the separation and custody of assets, establish review standards for virtual asset listing and delisting, and strengthen information disclosure. Offshore exchanges seeking to operate in Taiwan must register with the FSC and comply with anti-money laundering regulations. Unregistered foreign virtual asset platform operators (VATP) are prohibited from soliciting business in Taiwan or targeting Taiwanese nationals. Crypto platforms are also not allowed to engage in derivative financial product transactions involving virtual assets or virtual asset businesses resembling securities.
Taiwan’s crypto exchanges are expected to form an industry association and develop self-regulatory rules based on the FSC’s guidelines. Currently, nine exchanges have established a working group for this purpose. The country’s Ministry of Economic Affairs is also planning to incorporate a crypto business category in its commercial group classification. The FSC has said that these guidelines aim to provide legitimacy, oversight, and a clear growth path for the crypto industry, ensuring compliance and public trust in Taiwan.
Personal income tax will now include foreign crypto trading in Thailand
Thailand’s Revenue Department is planning to impose personal income tax on foreign revenues, including income from cryptocurrency trading, for individuals residing in the country for more than 180 days. The new rule will take effect on January 1, 2024, and requires individuals to declare any income earned overseas, regardless of whether it was intended for use in the local economy. Previously, only foreign income remitted to Thailand in the year of earning was taxed.
The policy targets residents trading in foreign stock markets through foreign brokerages, cryptocurrency traders, and those with offshore accounts.
On the regulation front, there is a possibility of a shift in the tight scrutiny of the crypto industry with the recent election of a new prime minister who has shown support for crypto-friendly investment initiatives. Whether this will impact digital asset regulations by the country’s Securities and Exchange Commission remains to be seen, as the regulator has recently implemented guidelines that warn about the risks associated with cryptocurrency trading and has prohibited crypto lending services.
Tokenization of authorized investment products now a possibility in Hong Kong
At the recent Bloomberg Buy-Side Forum in Hong Kong, the city’s Securities and Futures Commission (SFC) announced the plan to release guidance on the tokenization of authorized investment products in the near future. Christina Choi, the executive director of investment products at the SFC, mentioned that the regulator is working on detailed guidance for tokenization.
The SFC’s current approach is to prioritize primary dealing of tokenized SFC-authorized products due to the early stage of development of virtual asset services platforms (VATPs) in Hong Kong. In June, Hong Kong introduced a crypto licensing regime for VATPs, allowing licensed exchanges to offer retail trading services.
Choi also highlighted the potential risks and challenges associated with tokenization, stating that secondary trading of tokenized SFC-authorized products on VATPs requires cautious consideration. Secondary trading amplifies certain risks that may be more manageable in primary dealing but become more complex in a 24/7 trading environment. Choi compared tokenised products in secondary trading to exchange-traded products, with the key difference being that they are represented as tokens instead of traditional stocks.
This continues to signal the city’s push into the asset tokenisation space, as evident by the government’s issuance of 800M HKD of tokenised green bonds earlier this year, and the tokenisation of debt securities from Bank of China in Hong Kong with UBS underwriting the issuance and placing with clients in Asia.
That’s all for the week ending September 29th. Stay tuned for next week’s Crypto Market Insights!
