Cryptocurrency Regulations World Map - Hong Kong, Macau & Taiwan

Fazzaco reported this week, Hong Kong has proposed new legislation tailored to regulate the crypto space by implementing a licensing regime for crypto service providers​.

In this article, let us dig into the crypto regulations in Hong Kong, Macau and Taiwan, three major Chinese societies outside Mainland China, and find out how digital assets will be regulated in the future in these regions.

About the regions

Hong Kong, where 7.5 million residents call home, is one of the world's major financial centers and the most developed cities. As a former British colony, and currently one of the only two Special Administrative Regions of China, the other one being Macau, Hong Kong enjoys an independent economy system from the rest of China, and so does Macau, but given the size, Macau is heavily dependent on the gambling industry, while the economy of HK is more diverse and vibrant.

Taiwan, an geopolitical hotspot, is also a successful and developed economy in the Greater China region. Having been separated from Mainland China, both politically and geographically, the island holds a softer attitude towards cryptocurrencies, as opposed to the iron-hand across the Strait.

Crypto legality

- Hong Kong: There isn't yet any legislation in Hong Kong that specifically addresses cryptocurrency regulation. Bitcoin and other cryptocurrencies are not considered to be legal currency or securities, but rather virtual commodities. The public has been forewarned by Hong Kong government officials not to invest in cryptocurrencies. The ICO tokens will be governed as securities under Hong Kong's Securities and Futures Ordinance and require a license and authorization from the SFC, according to the Hong Kong Securities and Futures Commission (SFC). The private ownership or transfer of cryptocurrencies between private parties is still unregulated, so long as the tokens are acquired and transferred in good faith and do not contravene anti-money laundering rules.

- Macau: Cryptocurrencies are not accepted as legal money in Macau. The Monetary Authority of Macau warned banks and payment institutions in a statement from 2017 not to take part in or offer, directly or indirectly, any financial services related to cryptocurrency. The Financial Systems Act of Macau is broken by any financial institution that offers regulated financial services without authorization. However, there are no regulations limiting ICOs in Macau's private casino sector.

- Taiwan: Cryptocurrencies are not currently covered by any formal laws or rules in Taiwan. Bitcoin and other cryptocurrencies are typically characterized by the Financial Supervisory Commission (FSC) as highly speculative virtual goods that are bought and sold for profit. The FSC has additionally cautioned citizens numerous times that cryptocurrencies are extremely dangerous and speculative investments.

Crypto trading platforms in the regions

With the most recent legislation in place, Hong Kong's cryptocurrency regulations aim to put in place a licensing system for service providers. In Macau, the mini-size city has little room for crypto trading, and most Macau investors are in fact part of the HK crypto market.

The platforms that provide cryptocurrency services in Taiwan might be set up as offshore or onshore businesses that offer services there. They are typically funded by the creators of such online enterprises as well as by investors who purchase shares in such businesses. MaiCoin, the largest bitcoin exchange in Taiwan, was founded by Alex Liu in 2013.

Future trends in the regions

In the past year, there have been a number of significant regulatory changes in Hong Kong that have an impact on the cryptocurrency industry. These changes are in line with global trends and aim to drive Hong Kong towards a stronger regulatory control framework as the region's crypto activity continues to grow.

Macau, on the other hand, is faced with the issue of how to stay in alignment with / strike a balance between Mainland China and Hong Kong SAR.

In Taiwan, the Financial Technology Development and Innovative Experimentation Act, which creates the regulatory sandbox regime, was introduced in 2018 by the Financial Supervisory Commission with the intention of advancing the development of financial technology. Taiwan has also passed laws governing the sale of securities tokens, albeit the standards are viewed as being fairly onerous by online trading platforms. In the near future, the government is anticipated to provide guidelines for cryptocurrency service providers regarding anti-money laundering.