What is the legality of crypto in Asia? Using and trading cryptocurrency have been on the rise for some years now all over the world.
However, it may not be easy to trade these virtual currencies in every country of this world because the rules and regulations in each may be different.
Trading cryptocurrencies in Asia especially is not an easy thing to do because several governments of several countries in this particular continent are still skeptical and apprehensive about these virtual assets.
They think that it will not only disrupt the current financial system but will also have other serious consequences.
As a result, the rules and regulations regarding crypto in Asia vary from one country to another significantly.
If you want to know about these rules and regulations specifically in the Asian countries, you are fortunately in the right place.
This article will have it all covered for you.
- What is the Legality of Crypto in Asia?
- Central Asia
- West Asia
- South Asia
- East Asia
- Southeast Asia
What is the Legality of Crypto in Asia?
Here are the rules and regulations related to crypto in some of the major countries in Asia for you to know and trade with crypto confidently.
The rules and regulations in a couple of the major countries in Central Asia are as follows:
Though crypto in Kyrgyzstan is considered to be legal, you will need to check on the specifics on its use and trade.
Bitcoin in this country is considered to be a commodity but the use of this particular crypto coin as a currency to make domestic settlements is restricted.
You are also allowed to mine, buy, sell, and trade crypto legally on any local commodity exchange in this country according to the laws of the Kyrgyz Republic but it will not be treated as a currency or a security.
Use of crypto is also legal in Uzbekistan and according to a decree issued on September 2, 2018 crypto trading has been legalized in this country and along with that it is also made tax-free.
Uzbekistan is considered to be one of the most crypto-friendly regions where you can mine crypto freely.
These major countries in the West Asia have a diverse set of rules and regulations regarding crypto which is as follows:
United Arab Emirates
The rules and regulations regarding crypto in the United Arab Emirates, commonly referred to as the UAE, are very unclear and the information seems to be quite contradictory as well. However, use of crypto is absolutely banned in this country.
According to the article D.7.3 of the Regulatory Framework for Stored Values and an Electronic Payment System formulated by the Library of Congress and issued by the Central Bank of the United Arab Emirates in January 2017, any trade or use related to virtual currencies is prohibited in the country.
However, they seemed to open up since 2018 when they issued a license on February 13, 2018 to a gold trader in Dubai, the Regal RA DMCC, to trade cryptocurrencies.
This was the first company among all the countries in the Middle East to get such a license.
The website of the Dubai Multi Commodities Centre or DMCC however stresses on the cold storage of crypto coins. It says that their crypto commodities license is only for proprietary trading in these particular commodities.
No one is allowed to make any Initial Coin Offerings or ICOs and no other company or an exchange is permitted to deal with crypto under this license.
However, later on in November 2020, the Securities and Commodities Authority issued The Chairman of the Authority’s Board of Directors’ Decision No. 23/Chairman of 2020 Concerning Crypto Assets Activities Regulation.
According to this regulation a regulatory framework was established for issuing, offering, trading, and listing of crypto assets.
It also stated that every crypto assets provider will have to be incorporated onshore within the United Arab Emirates.
Israel allows using crypto within the country but according to the statement issued by the Israel Tax Authority in 2017, Bitcoin and other crypto coins will not fall under the category of currency.
The statement also said that it will also not fall under the category of a financial security.
However, the crypto coins including Bitcoin will be considered to be a taxable asset.
This means that every time a user sells Bitcoin or other crypto coins, he or she will have to pay tax as per capital gains tax rules at the rate of 25%.
And, all crypto miners and traders of Bitcoin will be treated as businesses and for them the corporate income tax rule will be applicable which signifies that they will have to pay 17% Value Added Tax or VAT.
Use of crypto currencies in Saudi Arabia is allowed but there is a banking ban imposed on these virtual currencies.
All financial institutions and traditional banks are barred from participating in any type of crypto dealing, handling, correspondence and communications that uses Bitcoin.
The Saudi Central Bank or SAMA also warns the users about the high risks involved with Bitcoin trading and said that the traders will not be guaranteed of any rights or any kind of protection from the government.
The rules and regulations surrounding crypto in Jordan are pretty similar to those in Israel. The government of Jordan has imposed a ban on the banks and financial institutions along with currency exchanges and payment service companies in using Bitcoin and other crypto coins though it is legal for the others to use it.
However, the government has also issued a warning to the public advising them not to use Bitcoin and other crypto coins and telling them about the risks involved in it.
It also mentions in the statement that the virtual currencies are in no way considered to be a legal tender though Bitcoin is still accepted by small merchants and businesses.
It is legal to use crypto coins in Lebanon though the government of Lebanon has issued a warning to the general public discouraging them about using Bitcoin and other types of crypto coins.
It is legal to trade crypto coins in Turkey and hold them but there is a ban imposed on the banks regarding the use of crypto coins and it is considered to be illegal if these virtual currencies are used as a payment tool especially.
A regulation was issued on 16 April 2021 by the Central Bank of the Republic of Turkey which banned the use of crypto coins including Bitcoin and other types of crypto coins for paying for buying foods and services.
It also bans any other types of digital assets that use DLT or Distributed Ledger Technology directly or indirectly for the same purpose.
It is said that there is a high transaction risk involved in making such payments and these are vulnerable to irreparable damage. This rule came into effect on and from April 30, 2021.
In Qatar use of crypto coins is legal but it comes with a ban on the banks and other financial institutions from using these virtual currencies.
The government of Qatar does not allow the banks to trade in Bitcoin because they are concerned about the fact that it would result in illegal activities, financial crimes and will also be prone to hacking.
Apart from that, use of cryptocurrencies is also forbidden in the Qatar Financial Centre.
Similar to the rules and regulations on crypto in Qatar, use of crypto coins is legal in Iran but it also comes with a ban on the banks and financial institutions. The central bank does not allow them to facilitate any kind of transaction that involves using Bitcoin.
With accordance to that, a statement was issued by the Central Bank of the Islamic Republic of Iran in April 2018 stating that dealing with cryptocurrencies by the banks and financial institutions would result in money laundering and would also enhance the risks of funding terrorism.
Now, if you look at the rules and regulations surrounding cryptocurrencies in the South Asian region, it is as follows:
It is illegal in Bangladesh to use and trade crypto coins. The Bangladesh government has ruled out participation of the financial institutions operating in the country in facilitating Bitcoin transactions.
According to a statement of the Bangladesh Bank issued in September 2014 it is said that if anybody is caught using any type of virtual currencies including Bitcoin may be jailed according to the anti-money laundering laws of the country, which is very strict.
In India, there is neither any ban on the use of crypto in the country nor any regulations imposed on it. However, the government is doing everything to make the people aware of the risks involved in it and is discouraging them to use it.
The government is also trying hard to discontinue the use of Bitcoin and other types of virtual currencies in India saying that it can be used for criminal activities and money laundering.
The government here does not recognize Bitcoin and other crypto coins as legal tender.
However, the government is doing its best to encourage using the underlying blockchain technology in cryptocurrencies in the payment systems.
Add to that, the central bank of the country, The Reserve Bank of India, issued a notice early in 2018 stating that buying and selling of crypto coins by the entities registered and regulated by the RBI is banned.
In 2019, Internet and Mobile Association of India challenged the legitimacy of cryptocurrencies and filed a petition with the Supreme Court of India seeking an order or direction on restraining crypto transactions.
The Supreme Court of India passed a verdict in March 2020 in which the ban imposed by RBI on trading cryptocurrencies was revoked.
In 2021 private crypto coins such as Bitcoin were banned in India but the government started pondering on the creation of a digital currency backed by the government and issued by the Reserve Bank of India.
As of now, the government of India does not prohibit investing in the crypto market coins considering it to be legitimate.
However, the ambiguity regarding the issues related to the payment and level of tax accrued on the income from crypto investments as well as its regulatory system still remains.
However, it is expected that the Indian Parliament will pass a specific law very soon either to ban crypto market in India or to regulate it.
The indications on the public policy on the Indian crypto market are very clear.
According to the opinion of the public policy lawyer and Vice President of South Asian Association for Regional Co-operation in Law or SAARCLAW, the crypto market is very big with billions of dollars invested in it.
It is therefore irreconcilable and unattainable now for the Indian government to ban investing and trading of all sorts of crypto coins in India.
Instead, regulating the market rather than banning it completely will be much more feasible and will be in keeping with the FATF and IMF guidelines as well in this regard.
It is illegal in Nepal to use or trade cryptocurrencies.
Following the footsteps of India, the rules and regulations imposed on crypto by the Pakistani government seems to be pretty similar.
Though it is legal in the country to use crypto, all of these digital coins including Bitcoin are not regulated officially in Pakistan.
However, in a statement issued by the State Bank of Pakistan on January 16, 2021 they said that they do not authorize anyone in person or any organization to execute a purchase, sale, exchange, or investment of virtual currencies, tokens and coins.
In spite of these rules in place, there have been a large number of arrests made by the Cyber Crime Wing of the Federal Investigation Agency or FIA with relation to mining of Bitcoin and other crypto coins on the basis of money laundering allegations.
However, in spite of all these efforts from the part of the Pakistani government, there have been a lot of controversies with regards to virtual currencies in the country.
A lot of prominent Pakistani social media influencers and bloggers were known to be involved publicly in trading Bitcoin. They are also known to have been publishing content on a regular basis on social media favoring regulation of cryptocurrencies.
As a result the Khyber Pakhtunkhwa government passed a resolution in December 2020 to legalize crypto in the country. They are ideally the first state in Pakistan to do so.
It is illegal in China to use or trade cryptocurrencies. No financial institution in this country is allowed to facilitate crypto or Bitcoin transactions.
According to the rules and regulations of the country, all financial companies operating within their periphery are prohibited from trading or holding cryptocurrencies.
On December 5, 2013, the People’s Bank of China or PBOC took the first initiative to regulate Bitcoin and prohibited the financial institutions from trading them.
Later, on April 1, 2014 the PBOC ordered all payment companies and commercial banks to stop Bitcoin trading and close every account related to it within two weeks.
And, in September 2017, all crypto exchanges and trading platforms operating within China were banned. As a result more than 173 such platforms shut down their business by the end of July 2018.
As for mining operations of Bitcoin and other crypto coins, the People’s Bank of China announced in early 2018 that the State Administration of Foreign Exchange will crack down Bitcoin mining led by Pan Gongsheng.
As a result, several Bitcoin mining operations had stopped operating in China by January 2018 itself.
As of now, the country has imposed a complete ban on crypto mining and trading by a law that was put to effect on September 24, 2021.
The Hong Kong government however has legalized the use of crypto coins and digital assets and the Secretary for Financial Services and the Treasury on January 8, 2014 addressed Bitcoin in the Legislative Council.
Here it was declared that at present the government has not imposed any legislation with reference to regulating Bitcoin and other crypto coins directly.
However, it was also stated that the current law of the Organized and Serious Crimes Ordinance will continue to provide sanctions against any unlawful or criminal activities that involve Bitcoin such as money laundering and fraud.
The chief executive of Hong Kong Monetary Authority or HKMA, Norman Chan, said on November 16, 2013 that Bitcoin is a virtual product and will not be regulated by the HKMA.
However, he added that the dedicated government authorities will have a close watch on the usage of Bitcoin and other crypto coins locally as well as all its development overseas.
Cryptocurrencies are legal in Japan. However, the Japanese government does not consider Bitcoin as a security, bond or a currency according to the existing Banking Act and Financial Instruments and Exchange Law.
The same law also forbids traditional banks as well as the securities companies from dealing with crypto coins and Bitcoin.
However, the government clarified that there is no law at present that would prevent legal business entities as well as individuals unconditionally from receiving Bitcoin for offering goods or services.
However, the government said that taxes will be applicable according to the tax laws of the country on Bitcoin transactions.
According to the Payment Services Act, since April 2017 all crypto exchange companies operating in Japan are regulated.
This Act however needs these exchanges to be registered, have proper security measures in place, maintain proper records as required, and take proper steps to protect the customers.
According to the law, all these exchanges should follow the best practices to prevent and comply with the anti-money laundering law and have proper measures in place to protect the users and investors.
According to the Payment Services Act, cryptocurrency is defined as a property value and is limited to only those that are stored on electronic devices electronically. It also states that it is not a legal tender of the country.
It is legal to use crypto in South Korea though minors and foreigners are forbidden from trading these virtual currencies. Only the adult South Koreans are allowed to trade and that too on registered exchanges only.
The law also needs them to use their real name accounts with the bank in which the particular crypto exchange also has their account.
On the other hand, it is the responsibility of both the bank and the crypto exchange to verify the identity of the customers and at the same time ensure that proper measures and provisions for anti-money laundering are in place.
The Taiwanese government has legalized the use of cryptocurrencies in the country but has imposed a ban on the banks and financial institutions from using it or facilitating any type of transactions using Bitcoin.
The regulators, on the other hand, warns the general public about using Bitcoin saying that they would not have any type of legal protection should anything untoward happen.
This is because there is no assurance of conversions and the coins are not entitled to any lawful claims since it is not issued by any financial authority.
The regulators also warn all financial institutions that if they are caught using Bitcoin necessary regulatory measures will be taken against them for non-compliance.
A joint statement was issued by the Financial Supervisory Commission (Republic of China) and CBC on December 31, 2013 that warns people against using Bitcoin because it is extremely volatile and speculative.
And on January 5, 2014 the FSC chairman Tseng Ming-chung said that the FSC will not permit installing any Bitcoin ATM in Taiwan since it is not considered as a currency and therefore should not be used by the public and should not be accepted by the banks as a mode of payment.
Finally, here are the rules and regulations surrounding crypto coins in the Southeast Asian regions.
In Cambodia, use of cryptocurrencies is legal but there is a banking ban imposed on it. The National Bank of Cambodia or NBC has forbidden all banks operating in the country from conducting crypto transactions and receiving payments with cryptocurrencies.
According to the regulations imposed by the central bank of the country, Bank Indonesia bans the use of crypto coins including Bitcoin as a payment tool all over the country though it is legal to trade and hold these virtual currencies.
In a statement issued on December 7, 2017 the bank said that this regulation will be put into effect from 1st January 2018.
The Indonesian Ulema Council also issued a haram fatwa on November 11, 2021 against the use of crypto coins including Bitcoin as a currency. This, they said, is in accordance with the Islamic law as well as the Indonesian banking and monetary regulations both.
This particular fatwa also prohibits trading and holding of crypto in the country apart from those transactions that are in accordance with the Islamic Salah standards of tradable, transferable and own-able goods.
These standards include having a physical form, a clear value, and a known number. It should not be completely speculative.
Therefore, the rules and regulations in Indonesia are a bit confusing and unclear which is why you should check for the updates regularly.
It is not illegal in Malaysia to use cryptocurrencies. However, the Bank Negara Malaysia or BNM issued a statement on January 6, 2014 stating that Bitcoin is not considered to be the legal tender in the country.
It will not regulate the operations of Bitcoin at the moment but the users should be well aware of the risks involved in using Bitcoin, the bank said in their statement.
It is also legal in the Philippines to use crypto, according to the statement issued by the Bangko Sentral ng Pilipinas or BSP issued on March 6, 2014.
This statement, like all others, also mentions the risks related to Bitcoin and other coins while trading and using them.
Apart from legalizing virtual currencies, the central bank also said in the Circular 944that it would regulate the crypto exchanges operating in the country.
However, the BSP does not recognize Bitcoin and other crypto coins because these coins are not issued by any central bank and are not backed by any commodity as a guarantee as well.
Singapore legalized the use of cryptocurrencies in December 2013 through the Monetary Authority of Singapore.
They reportedly declared that the MAS will however not interfere with the merchants accepting Bitcoin in exchange for their goods and services because it is entirely a business decision.
The Monetary Authority of Singapore also warns the users of the risks related to Bitcoin using and trading stating there is recourse to seek if the coins stop to operate.
There will be no specific party identifiable who will be responsible for returning the money in such situations.
As for the tax implications on crypto use and trading, the Inland Revenue Authority of Singapore issued specific guidelines in January 2014. This guideline mentioned the specific conditions in which a Bitcoin transaction will be treated as a barter exchange.
Ideally, it is when the coins are used as a mode of payment for offering goods and services. The businesses in such situations will be taxed on the basis of their Bitcoin sales.
However, in April 2019, Bitcoin was referred to as a digital payment token by the MAS according to the principles of the Payment Services Act.
You can use cryptocurrencies in Thailand because it is legal but remember that the Bitcoin exchanges operating here can exchange digital coins for their national currency Thai Baht only.
All crypto exchanges operating in Thailand must have the e-commerce license from the Thailand Business Development Department.
In addition to that, the law needs these exchanges to follow proper CDD or Customer Due Diligence requirements and KYC or Know Your Customer policies according to the Ministerial Regulation Prescribing Rules and Procedures for Customer Due Diligence rule.
In addition to that, the exchanges are also required to report any suspicious transactions to the Anti-Money Laundering Office or AMLO of Thailand.
You are allowed to trade and hold cryptocurrencies legally in Vietnam but you will not be able to use them as a payment tool because it is considered to be illegal by the Vietnamese government.
However, the Vietnamese government does not forbid trading Bitcoin as a virtual good or asset.
The State Bank of Vietnam also states that the use of Bitcoin, its issuance and supply as well as of other virtual coins as a mode of payment will be punishable according to the law.
The penalties for such violations can be anywhere from 150 million to 200 million VND or Vietnamese Dong, the national currency of Vietnam.
It is legal to trade cryptocurrencies in Brunei and hold them. However, Bitcoin and other crypto coins are not considered to be a legal tender in this country.
These virtual coins are also not regulated by the Brunei Monetary Authority or AMBD or protected under the laws of it.
However, the AMBD advises the general public that they should not be tempted easily by any advertisements on crypto investment.
Instead, it asks them to do their due diligence before participating and to understand the financial products and the consequences of participating as well.
Since laws related to crypto vary from one country to another and also keep on changing, it is important to be updated with them. Thanks to articles like this one, it is easy now to be well versed with them and trade with more confidence.
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