Home Articles Overview of ICO regulation in different countries. Chapter 1: Asia

Overview of ICO regulation in different countries. Chapter 1: Asia

This is the first in the series of articles, prepared by Descrow team, which observes the particularities of ICO regulation in different countries. The first chapter looks closer at Asian market and provides the review of general legal trends.

The number of startups wishing to raise funds via ICO investment mechanism continues to attract attention from regulators all over the world. Lack of control can be a source of troubles not only to the industry itself, that has been regularly brought into discredit by scammers but also for national governments. Recently German Klimenko, the advisor to the Russian President on the internet, shared with the press that the Russian Association of Blockchain and Cryptocurrency has calculated the Russian economy loss from the absence of ICO regulations in the country and the results are impressive. According to the Association calculations, the state budget is missing 18 billion rubles, not including potential tax revenues, which add additional 3.5 billion rubles.

During the last three months a number of regulators one after another has publicly announced their position on tokens and ICO launch. Almost all of the governments have already released the ICO investments risks clarifications accompanied by the disclaimers of responsibility in case the investors decide to participate in such risky endeavors. In this overview, we strived to shortly introduce to you the current state of affairs in regards to ICO regulations under different jurisdictions.


In September the global crypto market was to experience a shock: seven main PRC regulators in joint announcement declared ICOs to be an outlaw. The dedicated committee concern was the fact that the majority of checked by regulators ICOs appeared to be nothing else but financial scam and pyramids. The People’s Bank of China has published in the report that 90% of companies, which documents were examined, are collecting money in illegal and fraudulent ways from the people.

Thus, all ICOs, targeting Chinese market, domestic or international, have been banned in the country. Furthermore, the Directive statement orders all Chinese companies, that have already collected funds via ICOs, to fully return funds to investors.


Contrary to Mainland China, the Hong-Kong regulators, the Securities and Futures Commission (SFC), did not show the same readiness for disconcerting decisions. SFC has decided not ban ICO and confined itself to publishing the set of rules for the ICO launching firms. The SFC position is the following: tokens of many ICOs could be considered as securities, and, therefore, have to comply with the Hong-Kong securities law. Consequently, ICOs of such companies are activities regulated by law and companies hold full legal responsibility. The parties involved in the activities that target Hong-Kong citizens have to obtain licenses and register in the SFC regardless of their location.

According to the statements, the decision to consider certain tokens as investment instruments depends on their actual liabilities, which could be:

  • provision of property and corporate rights;
  • the use as the debt instrument;
  • collective investment scheme where tokens are shares.

The Hong-Kong approach could be regarded as liberal. As we will see later, Hong-Kong regulators share some common views with regulators from the US, Canada, and Singapore.


At the end of October, the Financial Services Agency of Japan, an integrated financial regulator responsible for overseeing banking, securities, and insurance sectors, has published the risk warnings for ICO related investments. The agency highlighted that ICO digital tokens are the high-risk investment due to high price volatility and high “potential for fraud”. Many projects do not deliver on their promises to investors.

In the statement, the agency says that “the price of a token may decline or become worthless suddenly”. ”You should have a deal at your own risk only after understanding enough the risks above and the content of an ICO project if you buy a token”

FSA also emphasizes that initial coin offerings “may fall within the scope of the Payment Services Act and/or the Financial Instruments and Exchange Act depending on how they are structured”.

The agency recommended the startups that taking the responsibility to conduct an ICO to strictly follow the legal requirements. Without proper registrations, the ICOs that fall within the scope of regulatory activities could be prosecuted.

South Korea

On 29th of September it appeared in the news, that as the result of digital currency meeting in Seoul, the Financial Supervisory Service (FSS) has decided to ban raising money through “all forms” of virtual currencies. Similar to Chinese colleagues, the South-Korean regulators have explained the decision with the care for investors argumentation: the regulators’ examinations have revealed the unprecedented number of fraud in ICO sector. Many in the cryptoworld were simply shocked as previously South Korea was considered to be in the same raw with Japan among the most promising countries for crypto industry development.


At the beginning of September, the Securities Commission Malaysia has also published the press release warning ICO investors. The commission warned the companies that potentially the initial coin offerings could be a subject to securities regulations. As many others, the Malaysian regulator warned also the investors “to be mindful of the potential risks involved in ICO schemes”, resulted, in particular, from secondary market high price volatility and lack of legal protection for investors. The statement concludes “as the terms and features of ICO schemes may differ in each case, investors who wish to engage or invest in ICO schemes are reminded to seek legal or other professional advice if there are doubts on the legitimacy of these schemes”.

It is worth noticing, that in its statement the Malaysian regulator remains neutral towards ICO itself. There are no directions in regards to fees or any other methods for crime suppression.


At the beginning of October, Taiwan’s Financial Supervisory Commission chairman Wellington Koo has told during a joint session that Taiwan government intended to support the development and adoption of initial coin offerings and acknowledge blockchain technology and cryptocurrencies as lawful. Koo stated that Taiwan government is not planning to ban the blockchain and crypto-related activities. Moreover, the innovative startups were promised a government comprehensive support.

The legislator Jason HSU, a congressman from Taiwan’s Nationalist party, which has long adopted a deregulatory pro-FinTech stance, stated during the session:

“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities.”


Thailand Securities and Exchange Commission (SEC) has issued its stance on ICO in the middle of September. With the development and growing popularity of ICO, the Thailand SEC has developed a concern that “in some cases, ICO may be deliberately used as a tool for fraud and scam”.

The statement wording suggests that Thai regulator is striving to find the balance between protecting the investors and supporting digital innovations. The commission viewpoint is in many ways similar to Hong-Kong, Japan, and the US SEC stances:

“Since the digital tokens can diverge widely in design and representation, some may resemble financial returns, rights and obligations in similar ways to securities under the Securities and Exchange Act”.

As a final statement, the agency accentuated that the control over ICO market is the only way to gain the best value from the promising blockchain market, the development of which the Thai government does not plan to suppress.


The city-state Singapore seems to gradually become a sort of Mecca for startups launching ICOs. The attractiveness of the country could be explained by such factors as clear convenient taxation rules and open friendly government attitude, which among other benefits include the governmental funding of promising projects. A number of projects have already been launched with the fintech industry support programme via Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulatory authority.

In regards to ICOs, the Authority wishes to hold the Singapore reputation as a financial center and at the same to prevent money laundering. Already in August MAS claimed that tokens of certain ICO projects may be subject to the Securities and Futures Authority regulations. The stance was shared right after the similar announcement by the US SEC: tokens will be considered as securities depending on the context of their issue.

After revealing its position on tokens, together with the Consumer Advisory on Investment Schemes of Singapore Police Force, MAC has issued the statement on potential risks of digital token and virtual currency-related investment schemes. Among the factors to consider are the incorporation within Singapore territory, credible and reliable information on the issuer and token sales, and token liquidity guarantees on the secondary markets. Moreover, investors should be worried in case the rocketing returns are promised or there are grounds to suspect criminal money laundering.

The authority is certain that not the restrictions but the right regulations will be a magic pill that will cure the ICO market. With relevant regulations investors will be protected by law and more people will be able to participate in ICO projects. MAS advised investors to mitigate risks when possible and in case of questions, do not hesitate to turn to MAS for assistance and clarifications. The authority promised to provide full information on the ICO projects, which have presence in Singapore.

The materials are prepared by the Pr-department of Descrow project, a first in the world platform for secure ICO investments. For more detail, you can check the project’s website.