In 2017, cryptocurrencies' combined market cap surged to over US$600 billion from US$15 billion, while bitcoin's price soared 1,500%. Japan, China and South Korea, three Asian countries at the forefront of the cryptocurrency revolution, are at opposite extremes in regulating cryptocurrencies. Mainland China declared initial coin offerings ("ICOs") and cryptocurrency exchanges illegal in September 2017. South Korea followed suit banning ICOs last year and plans to ban crypto exchanges in 2018. At the other extreme, Japan legalized bitcoin as a means of payment in April 2017, regulates cryptocurrency exchanges and subjects cryptocurrencies to Japan's taxation regime.
Most other major jurisdictions, including the US, the UK and Hong Kong, do not recognize cryptocurrencies as a legal means of payment, but treat them as virtual assets or commodities, or depending on their features, as securities. However, an increasing number of smaller jurisdictions, including Gibraltar, Estonia and the Isle of Man, to name but a few, are branding themselves as ICO hubs and looking at regulation to mitigate the most blatant risks – hacking, money-laundering and fraud.
Hong Kong is seeing its fair share of ICOs, which may be regulated by the Securities and Futures Commission if they are classified as offers of securities.
Kim Larkin, Solicitor, Charltons has been invited to update members on the regulation of cryptocurrencies and ICOs. In particular, her talk will cover:
- A comparison of cryptocurrency regulation in key jurisdictions
- Cryptocurrencies as a legal payment means vs as assets, commodities and securities
- What is an ICO and when is it a securities offer?
- The regulation debate – pros and cons
- A possible light touch regulatory framework for cryptocurrencies
- Crypto regulatory outlook for 2018