Digital asset markets have been lifted this week as Bitcoin climbed back into five figures. The longterm outlook remains uncertain however, as the king of crypto continues to bounce between support and resistance around the $10,000 level. Most of the alternative crypto assets remained weak as Bitcoin market dominance hit a two-year high and now sits at over 70%.
This week also marked the two-year anniversary of China’s heavy crackdown on cryptocurrencies. On September 4, 2017, the People’s Bank of China shut down local crypto exchanges over escalating concerns that unregulated assets such as Bitcoin and Ethereum allowed residents to bypass strict capital controls.
The ban caused an exodus of mainland Chinese crypto and blockchain startups to less restrictive climes such as Hong Kong and Singapore. Many, such as Binance – now based in Malta – have become global monoliths in the industry, with millions of users across the globe. With this in mind, it is possible the Beijing bureaucrats did the crypto sector a favor with their autocratic approach to the fledgling industry.
In South Korea, internet conglomerate Kakao appears unperturbed over China’s disdain for digital assets as it plans to list its own offering on a mainland exchange.
South Korea followed China with an initial coin offering (ICO) ban following the trading frenzy of 2017/18 and South Korean crypto exchanges are now facing renewed regulatory pressures, with firms looking overseas for token listings, according to local media reports.
Kakao, with almost $9 billion worth of assets and a sprawling digital empire that spans finance and entertainment to instant messaging – with its app reportedly having over 400 million users – is reputedly considered too large an entity to be ignored by Korean crypto regulators.
Fearing domestic restrictions on its upcoming token launch sales, Kakao is reportedly considering two exchanges for its Klay token. One will be in Korea and one, rather boldly, will be in China.
In Thailand, the largest crypto exchange, BX Thailand, this week unexpectedly announced that it will be closing its digital doors to crypto traders. The Thai SEC-registered company had been providing digital asset services for five years and was the most popular outlet in the kingdom. The announcement shocked traders, who, in a rush to remove funds from the platform, crashed the local price of Bitcoin to 10% lower than the global market average.
There has been no obvious movement from Thailand’s military-dominated government to restrict crypto trading and the company cited a move into other businesses as the reason for its decision. The closure comes as a big blow to the industry in Thailand, as there are now few reliable alternatives.
Japan has long been the leader in global crypto trading with the yen second only to the dollar for fiat currencies used to buy digital assets. Recent reports suggest that the fever could be waning though, as the country’s financial regulator, the Financial Services Agency (FSA), is receiving fewer inquiries.
Statistics released this week claim that the regulatory body received only 494 inquiries about crypto assets in the quarter ending June 30, compared to 574 in the previous quarter, and 788 in the December 2018 quarter. The figures are down sharply from 2018, despite the markets looking much better this year.
Recent FSA crackdowns on crypto exchanges could be behind the decline. Earlier this year Japanese regulators targeted exchanges that fail to adequately confirm client identities, or offer anonymous transactions, as part of a sweeping program to stem money laundering.
And in India, the Ministry of Finance announced that its Fintech Committee has submitted a final report which includes a large section on cryptocurrencies. In a shift from its previously negative sentiment, the report paints digital assets in a more positive light.
“The mechanisms surrounding cryptocurrencies,” says the report, “particularly the blockchain and initial coin offerings (ICOs), are revolutionizing the global fintech landscape.”
The latest development adds to the confusion surrounding India’s uncertainty regarding the nascent industry. It remains clear that the Reserve Bank of India wants nothing to do with them, but as has been widely reported, any efforts to quash crypto could be doomed to fail.