A Country-by-Country Guide to ICO Regulations and Trends in the APAC Region

A Country-by-Country Guide to ICO Regulations and Trends in the APAC Region

Who can doubt that 2017 was the year of the ICO and of crypto in general? ICOs raised an amount of US$5.68 billion last year, US$1.4 billion of which was raised only in December 2017, pointing towards a genuine desire for innovation, disruption, and an opportunity for investors to profit by putting their money in funding blockchain projects that offer business funding in exchange for crypto that can be freely traded on exchanges offering liquidity and flexibility to its investors compared to your garden variety investments. And Asia is still front and center of all the rage.

And this so-called “craze” is not showing any signs of slowing down, even in the face of looming (and arguably draconian) regulations governments all over the world have put in place to address the numerous incidents of cryptocurrency exchange hacking and investor fraud that has come along with the hype. It looks like we’ve barely scratched the surface of how ICOs (Initial Coin Offerings) are changing the way companies raise funding, and Asia is where all the action is happening.

Case in point: 2018 has seen ICOs raise more money from the period of January to March than the entirety of 2017 – $6.3 billion, as opposed to $5.68 billion – granted, even without Telegram’s recent ICO skewing the figures for the first quarter of 2018 (which drew US$1.7 billion in funding), the figure equates to a very healthy US$4.6 billion, and we’re just getting started. Here’s a much more revealing fact: six of the top 10 most successful ICO’s in 2018 were funded from Asia (as of April 2018) – 3 from Singapore, and 3 from Hong Kong.

This, despite ongoing efforts to revamp and implement policies related to the conduct of ICOs in some of the region’s most stable and mature economies, especially for crypto in general (China and South Korea come to mind). The thing is, no policy lasts forever – more and more interest is drumming up throughout the region, especially when one talks about the mobile-first region of Southeast Asia, which has barely scratched the surface of ICOs and crypto.

And this is precisely why we’ve come up with a primer on how ICO regulations, trends, and recent developments in the region – in order for us to demonstrate prospective and adventurous investors what to expect when dealing with the Asia Pacific region in general.

Let’s take a brief look at the region, country by country, to see where they stand in the face of rapid developments and creeping regulations.


China has taken an uncompromisingly clear stance against ICOs as exemplified by its blanket September 2017 ban, fueled by concerns about money laundering, terrorist financing, and illicit fundraising practices – this, after being one of the undisputed leaders in the cryptocurrency scene. Financial institutions are likewise forbidden from participating in ICOs. This 180° shift in policy has left projects accruing funds on cryptocurrencies that haven’t seen the light of day, much less a launch – and these projects are now being forced to return monies to their investors. Overseas exchanges as well as OTCs will be strictly regulated from this point forward, and it remains to be seen whether China will be softening its stance on ICOs – but this doesn’t seem to be the case. Reports have emerged last February 2018 that China will be blocking all access to cryptocurrency and ICO-related websites, and further tighten its restrictions on its citizens regarding their participation in crypto – as evidenced by ICO and cryptocurrency promotions disappearing from its search engines.


In spite of the warning that the Japanese Financial Services Agency has made to prospective ICO investors last October 2017, Japan remains an important hub for ICOs and cryptocurrency in a time of increasingly tighter controls. Albeit not exactly a free market haven for ICO action, it has only really emerged as a refuge for Asia’s top crypto minds in the wake of sweeping Chinese and Korean regulations to their own markets – practically achieving its status as such by default. Whether this remains the case in 2018 is something that remains to be seen: after the very public hacking of one of the country’s largest exchanges, Coincheck, a breach that resulted in the loss of about US$532 million, this may very well change. But things are looking up – Japan has taken an important step in legalizing ICOs across the country by appointing a government-backed technical working group that has formulated guidelines that serve safeguards for investors as well as more stringent vetting in the face of money laundering and terrorist financing, which the JFSA is set to decide on approving or rejecting in the months to come – and which may very well be implemented as a law in the years to come.

South Korea

South Korea has followed a similar blueprint to China as regards the banning of ICOs – and in previously being one of the movers and shakers in the cryptocurrency scene. ICOs have been banned in South Korea since September 2017, severely curtailing the country’s once-sterling reputation as one of the world’s prime hubs for crypto. However, the fire still burns for the country’s investors – there is still a strong sentiment for ICOs in the country as evidenced by the number of local investors skirting regulations by participating in ICOs elsewhere, as they look outside the country for investments. But as we have mentioned earlier, policies change all the time – and there is a legitimate clamor echoing in the halls of South Korea’s congress to legalize ICOs under the watchful eye of the government, designed to assuage the usual concerns that have been raised against it. And legislation has been introduced towards this goal – we may very well see South Korea legalize ICOs before too long, which could restore South Korea’s status as one of the premier hubs for virtual currency action.

Hong Kong

Hong Kong has emerged as an important jurisdiction for ICOs and cryptocurrencies in light of China’s blanket ban. It is thus of no surprise to see that three of the top 10 ICOs for the first quarter of 2018 were from Hong Kong, as it remains one of the places wherein ICOs are legal; and albeit tightly monitored, Hong Kong’s policy is liberal compared to China. Many of the field’s best and brightest have flocked to the region, where prospective issuers have circumvented the draconian regulations of China by establishing themselves in Hong Kong. Hong Kong’s Securities and Futures Commission (SFC), in a communication issued last February 2018, has allowed the ICO token trade to continue provided they are not classified as securities under current legislation. In spite of this relatively more positive environment for ICOs to prosper, it’s not the Wild West where anything goes: the SFC has repeatedly issued communiqués of the risks involved in the business, and it is not afraid to flex its muscle when it is deemed necessary, as evidenced by the SFC shutting down Black Cell’s ICO last March, and forcing its issuers to pay its investors in full. Blockchain startups have nonetheless taken a keen interest in the Special Administrative Region, and its emergence as one of the better jurisdictions in Asia makes it one to look forward to.


Singapore has much in common with Hong Kong in terms of its emergence as an important jurisdiction for blockchain startups and ICOs – it shares 3 ICOs apiece with Hong Kong in the top 10 ICOs for the first quarter of 2018 to show for as proof of its status as a prime hub for the industry as well as its willingness to promote an environment where such startups can prosper. Virtual currencies are unregulated in Singapore; however, the conduct of activities surrounding and governing them are very much so, making it a modern-day Mecca of sorts along with Hong Kong for the business. However, any virtual currency that is analogous in function to shares or units in an investment scheme, or otherwise analogous to debentures will be regulated by the Monetary Authority of Singapore (MAS) as such. The MAS has implemented a framework wherein intermediaries of token transactions require a license, and exchange operators need to be approved. Furthermore, the MAS requires said intermediaries to implement strict compliance, KYC, and AML procedures, which has allowed for a relatively scandal-free and open environment for legitimate issuers to flourish. Forget China and South Korea for now, as Singapore, and to a lesser extent, Hong Kong, are the new regional epicenters for ICO action.


Indonesia is the most populous country in Southeast Asia as well as being one of the region’s more stable and mature economies, and its stance towards ICOs and cryptocurrencies reflects its sense of foreboding about the industry, amid concerns about the far-ranging consequences that they may pose to the economy, and above all, the risk they pose in disrupting its stability, and the usual concerns about money laundering and terrorist financing. It is for this reason that why the Central Bank of Indonesia has stated that it will not recognize bitcoin transactions as legal, and has issued repeated warnings to prospective investors to not engage in the trade. Not surprisingly, two of its largest exchanges, TokoBitcoin and Bitbayar, shut down shortly thereafter, effectively ending the hope that ICOs and cryptocurrencies will gain any sort of traction in the market. More recently, however, the Central Bank has floated the idea of issuing its own digital currency in order to streamline its payment systems, which should go on trial mode later this year.


Neighboring Malaysia has adopted a much softer stance than its counterpart in Southeast Asia in spite of its consistent announcements advising potential investors to scrutinize the origin of the companies they intend to invest in, and to be mindful of the risk they are exposing themselves to. The Bank Negara of Malaysia issued a communication last December 2017 reaffirming its stance that cryptocurrencies are not recognized as a legal payment method, which therefore leaves its users without the protection of the country’s existing controls. Furthermore, it has also introduced regulations that aim to preserve the financial system’s stability while addressing the real threat of illicit activity related to virtual currencies. Exchanges are required to report their activities and do their due diligence and KYC controls for its participants, and virtual currencies will be regulated in Malaysia from 2018 in the face of threats that may attempt to use the system in order to circumvent regulations on terrorist financing and money laundering.


The Securities and Exchanges Commission of Thailand has announced that ICOs that issue tokens resembling or analogous to securities under its present definition under the Securities and Exchange Act will fall under its jurisdiction. Thus, wherever ICOs constitute a securities offering, issuers are mandated to comply to regulations that the SEC has put forth. With that in mind, Thailand has made the bold step of regulating the crypto industry completely and recognizing virtual currencies as digital assets just this May 2018, aligning its policy towards a balance between  promoting innovative technology (in the form of the blockchain), and protecting its investors from the scammy underbelly of some unscrupulous parties. This has created an environment that is conducive for investors and enthusiasts altogether, and paves the way for the SEC to administrate all matters regarding ICOs and crypto in the future. Financial institutions, however, remain forbidden from participating in the crypto industry, as per a February 2018 ruling. The fallout from this very recent development is something to definitely take a close look at in the near future, but the signs are positive – it’s certainly a step forward for blockchain startups and prospective investors alike by providing them a balanced framework to start over from. Watch this space.

The Philippines

The Philippines has a relatively nascent but active ICO and cryptocurrency scene, but there is action in the country, with large exchanges such as Coins.ph and BuyBitcoin making waves in the scene. That said, a busy 2017 filled with ICOs and related activity has led the country’s Securities and Exchange Commission to quickly adapt and respond with a framework for regulating such activity in the country, especially given the fact that there have been rampant cases of ICO and cryptocurrency-related fraud in this largely-unbanked country, in spite of its announcements calling for investors to be wary and informed. There is room for ICOs in the country as much as there is definitely room for work in terms of regulation.


While Vietnam is definitely among the steadily improving economies in Southeast Asia, it’s not exactly a large market for ICOs and crypto in general, given the fact that virtual currencies are prohibited under an October 2017 declaration that forbids their use as a means of payment. This is further compounded by a gap on its treatment of cryptocurrency – the lack of a regulatory framework governing virtual currencies threatens the adoption and potential that their use can promote in an economy that hungers for technologically-driven innovation and growth. However, as further awareness grows and as pockets of the economy continue engaging in crypto action, it’s not far-fetched to believe that its policy may change going forward (as the region continues to grapple with the elephant in the room – regulation).

In Summary

With that said, given the nature of the region’s regulation governing virtual currencies and ICOs (or the lack thereof), how should issuers navigate the potentially tricky environment while tapping into what is potentially a strong market for virtual currency in the course of formulating a marketing strategy for an ICO? The key is in promoting them in the right channels at the right time. In spite of Facebook and major search engines such as Google and Bing banning advertising related to ICOs, programmatic campaigns still offer a powerful medium to promote them in pre-launch and in the launch proper. When there’s a will, there’s a way, and ICO marketing in APAC is no exception.

The Asia-Pacific region is definitely brewing with ICO and cryptocurrency action: issuers and investors alike should strike whilst the iron is hot, and strike where the regulatory environments are conducive – as well as keeping an eye out for potentially lucrative markets whose policies may change. There is a lot of room in the region for growth, and knowing exactly how and where to act makes all the difference whether an ICO will be successful or not – especially when you talk about the Asia Pacific region (and on a micro level, Southeast Asia), given the market’s mobile-first and eclectic nature – and this is where our expertise comes in.

Damien Magnenat
[email protected]

Founder & CEO, ASEAN Digital Strategist

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