While the cryptocurrency market continues to expand at an unprecedented rate, a massive volume of exchanges are electing to uproot from Asia in favour of greener pastures.
Japan was one of the earlier states to attempt to regulate cryptocurrencies, but has experienced continual problems notwithstanding the coming into effect of its Virtual Currency Act on April 1st 2017. Between a series of hacks, scams, and thefts, it appears that Japan's Financial Services Agency has intense difficulty regulating and enforcing this dynamic field. Severe blows such as the theft at Coincheck of $530 million have even prompted a group of exchanges to go so far as to form a self governing authority to oversee activities.
The country has attempted to increase the stringency of its regulation in response, but the situation of negative relations and regulatory uncertainty has caused companies such as Nikkei, Tokyo GateWay, and Mr. Exchange to withdraw their applications to register as exchange operators. In addition, key players such as Kraken, currently the largest bitcoin exchange in euro volume and liquidity, to step away from the Japanese market entirely.
Binance, the world's largest exchange, also departed Japan earlier this year when it was to be met with an order to cease operation. The exchange had originally been operating in Hong Kong, which has also become an area viewed as unfriendly to exchanges. Binance, among six other exchanges, received a warning letter earlier this year from the Hong Kong Securities and Futures Commission, informing it that it would not be allowed to trade digital assets defined as securities under Hong Kong law. This largely owes to pressure from China, which is notorious for its relentless crackdowns on crypto-miners and exchanges.
South Korea has become somewhat infamous for its volte-faces in attitude towards cryptocurrencies. Its varying decisions to alternately ban and allow cryptocurrencies have not only caused a number of exchanges to leave, as well as discouraging others from setting up in the jurisdiction, but have also wreaked havoc on the trading price of Bitcoin in the past year.
Another major economic zone within the Asian continent which has been fled by several exchanges is India. Following the Reserve Bank of India's decision to ban banks from dealing in cryptocurrency, many of the state's active exchanges such as BTCX India, BuyUcoin, CoinSecure, Unocoin, and Zebpay are looking to foreign shores in search of better prospects. Similar action was taken as well by the State Bank of Pakistan.
Among various European destinations, Malta has proven to be a prime destination for crypto-exchanges, and currently boasts the largest crypto-trading volume. A key factor in Malta's appeal is the island's approach towards Distributed Ledger Technology ('DLT'), which it has sought to regulate in a meticulous and modern manner. Three bills regarding DLT, including cryptocurrencies, are currently in review by parliament, and legislation is expected to be promulgated in the immediate future.
This forward-thinking regulatory framework has been designed with a frame to establish legal certainty and enable advancement while ensuring investor protection, and is being overseen by the Malta Financial Services Authority ('MFSA'), an authority which is approachable as well as thorough in its overseeing of financial services throughout Malta. Malta also offers blockchain companies a combination of EU compliant legislation, excellent tax benefits, a professional and highly educated workforce primarily using the English language, and competitive labour and operation costs.
The Maltese jurisdiction has already piqued the interest of a number of entities which operate with DLT, including OKEx, Binance, Monaco, Neufund, Poseidon Foundation, The Abyss, and Bitmora. As the number of exchanges and other DLT companies flock to the Islands, Malta continues along its journey to blaze a trail and become a centre for this emerging technology.
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