Contrary to expectations, many Southeast Asian countries, such as Thailand, Singapore, etc., have taken protective measures and kept a safe distance from the Bitcoin Exchange Traded Fund (ETF) that has just been approved for trading on the stock market by the US Securities and Exchange Commission (SEC).
Immediate response
Since January 10, ETFs have been trading on public exchanges, allowing investors to access the price movements of assets without owning the underlying assets directly. This means ETFs are the easiest way to invest in assets or asset classes such as gold, speculative bonds or bitcoin without having to buy the assets themselves. On their first day of trading, spot bitcoin ETFs in the US attracted $4.6 billion in capital.
Analysts say the move is a major victory for Wall Street and a victory for the cryptocurrency industry after nearly two years of turmoil that saw several cryptocurrency companies collapse, including FTX in November 2022. Supporters hope the move will boost demand for cryptocurrencies and help them move further into the mainstream. However, the SEC has made it clear that it remains skeptical of cryptocurrencies and that the decision does not mean it has endorsed or approved bitcoin.
Still be careful
In contrast to Wall Street, the Asian markets have been less enthusiastic about the news of ETFs trading on publicly traded markets in Southeast Asia, with the Monetary Authority of Singapore calling cryptocurrency trading “highly volatile and speculative in nature” and thus unsuitable for retail investors, reiterating its ongoing disapproval. Meanwhile, Thailand’s Securities and Exchange Commission has made a decision on spot bitcoin ETFs. In a statement on January 16, the agency said that the development of spot bitcoin ETFs in overseas markets is still in its early stages, and such ETFs may not provide direct economic value in the current context of Thailand.
The reason for the above reaction is that recently, both Singapore and Thailand have witnessed the bankruptcy of big names in the virtual currency field when the price of this currency plummeted in 2022, such as Three Arrows Capital, Zipmex. In particular, Singapore is the country that enforces the most stringent regulations on cryptocurrencies to protect retail investors. The Central Bank of Singapore has introduced new regulations to protect the interests of individuals by limiting the ability to trade cryptocurrencies, including banning credit lines for the purpose of purchasing volatile digital assets. Among the new measures that will take effect in stages from mid-2024, incentives that encourage individuals to trade digital tokens are prohibited; granting free trading credits or using digital assets as rewards... are also prohibited.
While financial regulators in Singapore, Thailand, and even South Korea have taken a tougher stance on cryptocurrencies, financial regions like Hong Kong and Dubai are trying to attract crypto-related investment, according to Nikkei Asia. Last month, the Hong Kong Monetary Authority (HKMA) and the Financial Services and Treasury Bureau (FSTB) released a public consultation paper seeking public views on the regulatory regime for stablecoin issuers. In addition, the HKMA announced licensing and the establishment of a “sandbox” to communicate supervisory expectations and compliance guidelines to potential stablecoin issuers.
Meanwhile, data from Chainalysis shows that in 2023, India will hold the top spot in the global cryptocurrency adoption index, while also holding the position of the world's second largest cryptocurrency market in terms of trading volume. However, cryptocurrency business in this country is facing major challenges due to strict tax regulations, pushing investors and businesses to Dubai - considered the new paradise of the thriving cryptocurrency ecosystem with low taxes and simple business establishment processes.
Analysts predict that the number of cryptocurrency owners could increase from 850 million to 950 million by 2024. According to experts, with clear legal moves and guidelines, albeit cautiously, the Asian region will still become one of the fastest growing cryptocurrency economies globally.
KHANH HUNG
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