the U-turn in US crypto policy has flipped the
script the SEC’s war on crypto failed miserably and regulators around the world have been taking
notes now we’ve talked a lot about what this means for investors in the US but America isn’t the
only country where regulatory uncertainty has been keeping investors sidelined today we find
out how the latest regulatory developments in a pair of Asian crypto powerhouses could turn into
some serious tailwinds for the markets plus which cryptos are likely to benefit the most my name is
Guy and you are watching the Coin Bureau so the US is in the middle of a historic Uturn on crypto
and although new legislation isn’t set in stone yet the message could not be clearer trump loves
crypto and crypto is to be encouraged at all costs according to research by Coinbase and EY Pathanon
more than 80% of US institutional investors say they plan to increase their allocations to crypto
this year and the same survey found that these investors view regulatory clarity as the number
one catalyst for industry growth during the second Trump administration that’s right they say what
crypto needs most right now is not innovation popular adoption or more ETF approvals it’s
clear regulations fix this and conservative institutional capital should come rolling in now
imagine this same story repeated all over the world every jurisdiction that introduces clear
and sensible regulations is another avenue for institutional capital to start flowing into the
crypto market sounds good right now we know all about how the regulatory landscape is shaping up
in the US and for that matter Europe we’re talking about it constantly and if you aren’t up to speed
you can catch up with our latest reports here and here but today we’re turning our attention to
East Asia where crypto juggernauts Japan and South Korea are both on the cusp of regulatory
reforms that should be extremely bullish so we’ll begin in Japan once a trailblazer for
reasonable crypto regulation it has since become a regulatory quagmire that tends to repel crypto
founders and startups after the Japan-based Mount Gox exchange was hacked and lost some 800,000
BTC back in 2014 the government said never again and introduced the world’s first comprehensive
regulatory framework for crypto japan was widely praised for its progressive approach at a time
when most countries were paying little attention to crypto unfortunately though Japanese crypto
exchanges continued to suffer hacks leading to the regulatory screws tightening considerably from
the late 2010s onwards many lessons were learned the hard way in this period and thankfully crypto
exchange security is much more robust nowadays the recent Bybit hack notwithstanding and by the
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after a series of crypto exchange calamities Japan got regulatory clarity all right but it ended
up putting crypto in a straight jacket and the principal patients at this regulatory madhouse
were stable coins for example foreign issued stable coins like USDT and USDC which form the
backbone of the crypto economy and centralized exchange infrastructure were banned for years
in Japan meanwhile regulations for domestic alternatives made the business of issuing stable
coins there unviable this is one of the reasons why the Japanese yen is the second most traded
fiat currency for BTC in the world most of the world is trading BTCUSDT or now BTCUSDC but Japan
is BTC JPY all the way and speaking of Bitcoin dominance is extremely high in Japan with BTC
accounting for 77% of the trading volume on Bitfly Japan’s largest centralized exchange at the time
of making this video this may also be a symptom of the regulatory maze that has stifled DeFi adoption
and made altcoin listings on centralized exchanges extremely slow and difficult now the good news
is that stable coin regulations have been easing since 2023 when the ban on foreign stable coins
was nominally lifted progress has been extremely slow since then but we are finally starting to
see some results in March the Japanese financial conglomerate SBI a former subsidiary of SoftBank
received the country’s first registration related to stablecoin transactions enabling it to process
transactions in circles USDC this made USDC the first and only stable coin to be approved for
use in Japanese markets usdc was listed on the SBIVC trade exchange on the 26th of March this
year and Circle is looking to get it listed on major local exchanges Bitfly Binance Japan and
Bit Bank with exact dates unknown a good start but there are many other problems that need to be
addressed another factor that suppressed crypto in Japan is the way it’s taxed perhaps because Japan
was so early to the crypto regulation party it decided to regulate crypto as a form of payment
now this may not sound bad on paper because you know we all want crypto payments to succeed but
tax purposes this means that crypto gains are treated as miscellaneous income in Japan and taxed
at up to 55% with losses not being deductible this contrasts sharply with the rate investors
pay for capital gains on other financial assets which is 20% regulations like this are the
reason why proc crypto former prime minister Fumio Kashida had his government publish a web3
policy white paper in 2022 and the result was a scathing critique quote “Japan which had once led
the world’s crypto industry up to the mid2010s has become a country that is avoided by entrepreneurs
both domestically and internationally regulations were strengthened and the crypto industry in
the Japanese market lost its attraction many entrepreneurs and investors left Japan to seek
better business environments now the good news is this message was received loud and clear japan’s
ruling Liberal Democratic Party has signaled that it will move ahead with a major crypto tax reform
proposal written by the same web3 working group that published this white paper this proposal
would slash the tax on crypto gains to 20% make losses taxdeductible and reclassify crypto as a
distinct asset class subject to Japan’s Financial Instruments and Exchange Act and not the Payment
Services Act which is the current instrument used for regulating crypto this is a huge win and
unambiguously very bullish because it makes crypto a much more lucrative investment for Japan’s 104
million adults back in December of 2021 the CEO of Japan’s Bitcoin exchange told CoinDesk that if
the authorities were to reduce the tax on crypto gains to 20% then some 10 to 20 trillion yen would
return to Japan’s crypto markets on the higher end that’s 130 billion US suggesting that we might see
some unfathomable inflows coming from Japan in the coming years now unfortunately the Bitcoin CEO did
not mention where he got this number from so it could be wildly inaccurate however it is safe to
say that a tax cut of this magnitude would be very positive for crypto prices at least the prices of
cryptos offered in Japan unlike the double-edged sword of ETFs which can produce outflows just as
easily as inflows a massive tax cut on crypto can only encourage more people to buy more of it and
it should be even more exciting if you subscribe to the theory that Bitcoin is the quintessential
debasement trade meaning that the more that fiat currency loses value due to money printing
the more valuable BTC becomes now the reason I mention this is because Japan is further down this
particular road than any other country and has one of the most cooked of all major world currencies
and if you’re not sure why then check out our report on the yen carry trade for the background
on all of this however there has been some confusion about crypto regulatory reform in Japan
of late last October the Financial Services Agency launched a review into the existing crypto laws
at the time we said this was very big news mainly because the review would ask whether crypto should
be regulated as a form of payment under Japan’s Payment Services Act or if it would be better
reclassified as a financial product under Japan’s Financial Instruments and Exchange Act this
question appeared to have been answered in late March when a report in NICK claimed that the FSA
was readying a proposal to reclassify crypto as a financial product according to NIC’s report this
bill will be submitted to the Parliament as early as 2026 and will place crypto under the regulatory
authority of the FSA although no source for this claim was given this would reclassify digital as
a distinct asset class and mean the tax on gains being slashed from 55% to 20% now you may notice
a big overlap with the reforms proposed by the LDP that I mentioned a moment ago this is a little
confusing but no worries the party of government and the finance regulator agree on the reform
cool got it well that was our conclusion until the next day when the FSA denied the claims in the NIC
article a spokesperson told Cointelegraph that the FSA had not made any specific policy decision on
whether or not to revise the Financial Instruments and Exchange Act and whether or not to classify
crypto assets as financial instruments so the LDP says it’s going ahead with this reform and the FSA
says it hasn’t made any decision about it it’s not exactly what I would call regulatory clarity but
let’s keep an eye on this story a decision will be finalized at some point and we suspect that the
reclassification and tax reform proposals will see the light of day eventually now there is one more
interesting story that came out of Japan recently also in late March the US SEC published a letter
from Web 3 Advocacy Group Asia Web 3 Alliance Japan addressed to crypto task force chairman and
commissioner Hester Pierce the letter proposes a US Japan joint working group of the SEC’s crypto
task force and quote relevant Japanese authorities such as Japan’s Financial Services Agency Ministry
of Economy Trade and Industry and the Bank of Japan as far as we can tell this advocacy group is
not affiliated with the Japanese government so we have to wonder if any of these relevant Japanese
authorities were consulted beforehand at any rate though the gist of the letter is hey we notice
the SEC flipped super pro crypto now and we want some of that to rub off on Japan the letter lists
the regulatory challenges facing crypto in Japan including the tax burden and asset classification
issues but also varying interpretations of existing law and tax frameworks across Japan that
create an excessive compliance burden for crypto firms now we think the latter problem is the main
argument for any international working group on crypto regulation whether it’s the US and Japan
or any other countries a consistent approach to regulations is the bare minimum for businesses to
be able to function without spending all of their resources on compliance and this applies both
nationally and internationally crypto which is necessarily borderless and global will struggle if
too many jurisdictions go in different directions regulatory fragmentation has been blamed for
example for sluggish institutional adoption of crypto in Europe despite the EUwide markets
in crypto assets or MIA regulations that have been phased in since 2023 if Japan has one way of
categorizing crypto assets issuers and projects the US has another Germany another and so on
then compliance is likely to become prohibitively expensive and difficult for decentralized networks
and organizations used to borderless frictionless value transfers this could be a total minefield
so as this letter points out it would be handy if there were some internationally recognized
definitions of for example tokenized securities utility tokens and nonsecurity digital assets this
would make it easier for crypto founders to comply with regulations in multiple jurisdictions and
provide the clarity needed for more businesses to engage with crypto across borders so an
international regulatory task force of the US Japan and perhaps others isn’t such a bad idea
especially while we have a very pro- crypto SEC to lead the charge i mean do we want to leave
a global regulatory regime up to the financial action task force hell no anywh who we’ll have
to wait and see if the SEC or any of Japan’s regulators have anything to say about this task
force proposal for the moment though the big news from Japan is the regulatory and tax reforms
proposed by the Liberal Democratic Party now then if we take a left at Japan we’ll arrive in South
Korea where there is good news and bad news so let’s start with the good since 2017 institutions
and corporations have been shut out of the South Korean crypto market by strict rules on who can
open an account at a crypto exchange but this is about to change korea is famously cryptocra
with more than 30% of the population having an account on a crypto exchange south Koreans held
around 70.3 billion of crypto at the end of last year and trading volume on Korean sexes is on
the cusp of flipping the country’s stock market considering that 100% of the trading volume
on Korean sexes nominally comes from retail investors and that Korean stocks are traded
by corporate and institutional investors all around the world that is pretty amazing still if
we can get Korea’s corporate and institutional investors on domestic exchanges it would be huge
news for the cryptos that have exchange listings and are popular in Korea that is the good news
is that you don’t have to overthink this one i’ll give you a clue it starts with an X and ends
with a P now if we turn to Upbit we can see that XRP accounted for $360 million in trading volume
or 22% of all the trading on the exchange in the last 24 hours that’s more than BTC USDT ETH Soul
Doge and Suie combined dino coins are king on upbit and there is only one king of the dinocoin
jungle in Korea since Korean capital in crypto is so heavily concentrated in this one crypto you
might want to keep an eye on its chart around the time that Korean institutional capital is let
loose on the crypto market a yes about that though south Korea’s Financial Services Commission has
started rolling out crypto investment accounts for corporations and institutions with a pilot that
began in February but during this initial phase only selling is allowed yes you did hear that
right korean institutional crypto participation is bearish until further notice this phase will
run through the first half of 2025 during which participation is limited to crypto exchanges law
enforcement agencies charities and educational institutions they can finally sell any crypto that
has acred to them since 2017 which they previously could not do inside Korea buying is out of the
question though in other words all of the crypto seized by law enforcement donated to universities
and collected as fees by centralized exchanges since 2017 is now being sold for Korean one so
if you’ve seen EOS dumping recently you know who to blame just kidding I think anyway the good news
is that starting from the second half of this year buying will be allowed and participation extended
to institutional and professional investors the bad news is that institutional corporate and
individual investors in South Korea are not likely to be investing heavily in crypto for the rest of
this year at least the economy has been taking a beating since a botched military coup ordered by
the president in December embroiled the country in an ongoing crisis and around 40% of South Korea’s
GDP comes from exports so US tariffs are hanging over the country like a guillotine precisely at a
moment when there’s no credible leadership able to cut deals with or plead for mercy from President
Trump but as we have been all telling ourselves this year we’re in this for the long run 2025 has
been pretty hairy so far with ostensibly bullish news having little positive effect on crypto
prices this is bad news if you bought crypto a few months ago and need to sell it right now but price
action doesn’t stop good news from being good news and away from the charts good news is everywhere
you look thailand for example just approved the use of USDT and USDC for listing on local crypto
exchanges in Australia meanwhile upcoming federal elections in May could bring a yearslong effort
to introduce a regulatory framework for crypto to fruition both the ruling party and the opposition
coalition are competing to win over crypto voters with promises to prioritize regulation if they
win the election over in Argentina which overtook Brazil as the largest country in South America for
crypto inflows in 2024 the securities regulator has finalized rules for virtual asset service
providers these include mandatory separation of company and client funds annual audits obligations
around cyber security and risk disclosures and so on all very good things that are needed if
institutional capital is to come anywhere near crypto i could keep going but I think you get
the picture regulations around the world are finally moving in the right direction and this
is providing the foundation that crypto founders developers and investors need to cook in peace
this is a structural change though whose effects will be felt over years not over the 15-minute
time frame on Trading View let’s not forget we spent the last few years in a historic period of
repression at the hands of a powerful US regulator gone rogue the whole world saw how badly that
went for everyone involved and lessons have no doubt been learned we often say that narrative
follows price but this is most true on shorter time frames in the long run regulatory clarity
should allow the industry to flourish and prices will catch up sooner or later now while you’re
waiting for that to happen why not check out our recent video to find out which cryptos are on
Wall Street’s watch list in 2025 that’s all from me for now as always thank you for watching and
I’ll see you next time this is Guy over and out
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