The Asian region has held leading positions in digital technologies for several years in a row, and the cryptocurrency market is no exception. However, approaches to licensing and regulation vary greatly from one Asian country to another. Some prefer to integrate innovations as flexibly as possible, establishing transparent rules for market participants, while others restrict the activities of cryptocurrency exchanges and miners, focusing on state-owned digital currencies and strict supervision.
Singapore, for example, has earned a reputation as one of the most attractive places for crypto-businesses thanks to the Payment Services Act. It requires companies that provide services for exchanging, storing or otherwise dealing in digital assets to obtain a license. But despite being innovation-friendly, the local regulator (MAS) is gradually introducing additional restrictions, particularly in the areas of marketing and retail investors' access to certain high-risk assets. Such measures are aimed at improving user safety, although they make it more difficult for some startups.
Equally interesting is the situation in Hong Kong, which, despite being part of China, maintains autonomy in financial matters. The local Securities and Futures Commission (SFC) is implementing mandatory licensing for crypto exchanges and virtual asset operators. As a result, the city is trying to position itself as a regional hub for major players: stricter regulation makes the market more reliable in the eyes of investors and users, but also cuts off projects that cannot meet the increased transparency and control requirements.
Japan was one of the first countries in the world to legalize cryptocurrency activity back in 2017, when it decided to license cryptocurrency exchanges in accordance with amendments to the Payment Services Law. This early integration allowed for a well-established monitoring system and increased citizen confidence: compliance with KYC/AML rules is monitored particularly closely here. However, Japanese regulators are not resting on their laurels, continuing to adjust requirements as new challenges in DeFi and NFT emerge.
In South Korea, cryptocurrencies are required to operate under the supervision of the Financial Services Commission (FSC) and register with the Financial Intelligence Unit (FIU). Exchanges that failed to secure funds in local banks and obtain the necessary certification were forced to shut down. This made the market more concentrated and largely protected users, but it also raised the “entry threshold” for new players.
At the other pole is mainland China, where direct exchange of cryptocurrencies and fiat money is actually prohibited. The authorities continue to encourage the development of the digital yuan, but at the same time they curtail traditional crypto-business, considering it a source of speculation and a threat to the stability of the financial system. This policy forces many Chinese projects to emigrate to neighboring jurisdictions or work through offshore structures.
As a result, a kind of “regulatory mosaic” is forming in Asia: some states seek to attract global investment funds and technology startups through clear and relatively flexible regulation, while others strictly control cryptocurrency exchanges or completely restrict their activities. For companies looking to expand into Asian markets, it is especially important to scrutinize each country's legal requirements and assess whether these conditions fit their business model. And end users benefit in the sense that the most reliable platforms - whether in Singapore, Hong Kong, Japan or South Korea - offer a high level of protection and services vetted by government authorities.
Looking ahead, experts predict that in the coming years, many Asian countries will continue to tighten their policies on cryptoassets, but at the same time try not to stifle innovation. Great hopes are also pinned on the gradual unification of rules within the framework of regional agreements, which could equalize the level of regulation and simplify interaction between jurisdictions. In the meantime, investors and entrepreneurs are choosing where to go: for example, Singapore, with its elaborate but rigid licensing system, or Hong Kong, where exchanges can gain direct access to the vast Asian market.
