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The Current State of ICO regulations in Asia

by Victor Lee (2018 March 18)

· crypto,cryptocurrency,blockchain,ico,tokensale

The regulatory landscape with regards to blockchain technology, and in particular to initial coin offerings (ICO’s) is always changing. Staying up to date on the current regulatory environment is incredibly difficult and time consuming, so we’ve decided to do it for you!

We will also make frequent updates to this post as the regulatory landscape continues to change :)

Hong Kong

While Mainland China has banned ICO token fundraising and secondary market trading, Hong Kong has remained open for business. In February of this year, The Hong Kong Securities and Futures Commission (SFC) statedthat they will allow the trading of ICO tokens as long as they are not classified as securities.

Examples of actions taken by the SFC against non-compliant ICOs is the case of their shut down of Black Cell Technology’s Initial Coin Offering (ICO) on the grounds that the token qualifies as a security because the holders of the tokens would be eligible to redeem equity shares of Black Cell. Other than restricting ICOs that qualify as securities, Hong Kong’s SFC has not issued any other regulatory guidelines regarding ICOs conducted in the Chinese Special Autonomous Region (SAR).


At present Japan doesn’t have any well defined regulatory framework specific to ICOs. However, cryptocurrency exchanges with operations in Japan are currently required to apply for a license granted and regulated by Japan’s Financial Services Agency (FSA). This makes Japan the only major economy and advanced legal jurisdiction to formally regulate cryptocurrency exchanges under a bespoke licensing regime. For now, the FSA also manually has to approve each of the cryptocurrencies or tokens that can be listed on these licensed exchanges. So far, this has meant exchanges specializing in tokens have not been granted or are still waiting to be granted their license, as the approval process for individual tokens takes time.

In the meantime many Japanese ICO projects have needed to seek approval with the FSA on a case by case basis. Some have even structured their ICOs outside of Japan and blocked participation from Japanese residents. Regarding enforcement, the FSA has already issued a warning to a Macau based ICO agency that was actively soliciting Japanese investors to participate in various token sales without FSA approval. Despite the current uncertainty around conducting ICOs in Japan, there seems to be a political drive to encourage ICOs as a way to reinvigorate the Japanese startup ecosystem and provide new relevance for traditional Japanese tech giants. Therefore we expect some new and clearer guidelines for ICOs in Japan to be released by the FSA later in 2018.


The Monetary Authority of Singapore (MAS) released a report in November 2017 with guidelines to determine whether a token would be classified as a security in the country, stating that they will not regulate virtual currencies, but rather the activities that they are involved with. Singapore has remained a relatively neutral jurisdiction on cryptocurrency and ICO businesses claiming that they have no desire to ban cryptocurrency trading and have not expressed a need to restrict individuals to participate in ICOs.

More recently, the MAS has mandated that intermediaries of cryptocurrency transactions (which includes ICO participation) will need to implement stricter due diligence and anti-money laundering (AML) procedures. Stricter due diligence processes protect investors and prevent funds from being used in illicit activities. Singapore is competing with Japan to become a hub for blockchain technology businesses in Asia, but has taken a more hands off approach to active regulation of exchanges and ICOs.

South Korea

South Korea originally banned its citizens from participating in ICO’s conducted in Korea, but a study conducted in December of 2017 revealed that one in five Korean millennials have purchased bitcoin, ether, or participated in an ICO. Recently, it has been suggested that the ban on participating in domestic ICOs by Koreans (which doesn’t apply to foreigners living in Korea btw) will be lifted although the government has yet to declare a set of standardized rules. A lift on this restriction is paramount if South Korea wishes to encourage a new breed of startup fundraising and tap in to Koreans’ love of crypto.

Mainland China

Chinese citizens are allowed to hold bitcoin and other cryptoassets, but that’s about all they are officially permitted to do inside the Mainland. While China has instituted a ban on initial coin offering participation since September, heavily liquid Chinese crypto traders, most of whom were or are still bitcoin miners, continue to be a strong force in the ICO investing landscape. China’s police force has recently stated that they plan to increase monitoring of foreign token exchanges and block access to their websites in order to prevent money laundering.

It remains uncertain if or when China will release it’s restrictions on organizing and participating in ICOs in the Mainland, but as the nation has such a burgeoning fintech ecosystem, exploding startup scene and the government is actively exploring blockchain technology it seems inevitable that this ban will be lifted. The most likely scenario is the release of some strict guidelines for organizing and participating in a Mainland Chinese ICO.


The combination of questionable ICOs over the past year and increasing interest from mainstream investors may require standardized regulations to protect less knowledgeable participants. Universal regulations will promote ethical business models while unethical models are swiftly punished. The most significant crypto and blockchain projects will develop and flourish in places that are friendly towards new and innovative technology. Nations that try and control bitcoin and other cryptocurrencies will inevitably fail and lose the massive economic upside that this technology has to offer.

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