Research Report | 2019 Global Digital Currency Trends and Latest Regulatory Policies

In 2019, the digital currency market performed well, and mainstream currencies showed signs of continued recovery. On June 17, Bitcoin reached the $9,000 mark, setting a new high in 13 months. The news that Facebook released the Libra white paper and launched digital currency became the direct driver of this round of gains.

Bitcoin price trend in 2019

Recently, as the cryptocurrency market has recovered, the attention paid to digital currencies has been increasing. The digital currency market, led by Bitcoin, has become active again. Among the top 50 mainstream digital assets by market value, 14 currencies have seen a higher increase than Bitcoin. Among them, the largest increase reached 440%, which is 3.4 times the increase of Bitcoin.

Based on the strictness of the regulatory attitude towards cryptocurrencies and the level of application of blockchain technology, the regulation of digital currencies in various countries and regions around the world is divided into the following five categories.

1. Actively promote and standardize supervision

1) Japan

In March 2019, the Japan Cryptocurrency Business Association issued a proposal on "New Regulation of ICOs". The Japan Cryptocurrency Business Association (JCBA) stated that in order to promote the healthy growth of Japan's blockchain business, and based on the part of the "Virtual Currency Exchange Industry Research Report" published by the Japan Financial Services Agency on dealing with ICOs, it proposed "New Regulation of ICOs". It is mainly divided into the following three points: (1) Regarding the issue of how domestic exchanges in Japan deal with the expansion of virtual currencies, including stablecoins. (2) Regarding the provisions on tokens and settlements in the restricted objects of the Financial Instruments and Exchange Act, including the adjustment of the control token distinction and restriction level. (3) Regarding the restrictions on security tokens, including the clarification of the situation where security tokens are securities. (4) Regarding the restrictions on utility tokens, it is necessary to exclude certain restrictions on business regulations, it is inappropriate to impose excessive obligations on virtual currency exchanges, and clarify accounting standards.

In May 2019, Japan passed amendments to the Fund Settlement Act and the Financial Instruments and Exchange Act: "Virtual Currency" was renamed "Crypto Assets" The revised "Fund Settlement Act" and the "Revised Financial Instruments and Exchange Act", which include measures to strengthen virtual currency exchange and trading rules, were approved and passed at the plenary session of the Upper House on the morning of May 31. The amendments create virtual currency trading rules without clear restrictions and prohibit market manipulation and popularization. The amendments are expected to be implemented in April 2020. Virtual currencies are renamed "crypto assets" to prevent misidentification with legal currencies such as the yen and the US dollar. By adding virtual currencies to the provisions of the Financial Instruments and Exchange Act, speculative trading will be restricted.

2) Malta

In November 2018, three blockchain bills of the Maltese government came into effect, namely the draft MDIA (Malta Digital Innovation Authority) bill, the draft TAS (Technology Service Providers Bill), and the draft VC (Virtual Currency) bill. The first regulatory framework was established for blockchain, digital currency, and DLT technology, making the market in this field a market that protects investors, is honest, and is financially sound.

In April 2019, the Malta Financial Services Authority (MFSA) had approved the previous 14 crypto asset agents’ license applications. The regulator said its representatives will now provide assistance to these crypto service providers under the Virtual Financial Assets Act.

3) Venezuela

In February 2018, Venezuela officially issued the cryptocurrency "Petro". Venezuelan President Maduro announced that Petro will be the country's international accounting unit in the future. In November of the same year, Petro was officially sold to the public and will be traded and circulated in six major international virtual currency exchanges. The Venezuelan parliament passed a crypto asset regulation bill that gave Petro legal effect and allowed it to be used in all domestic commercial transactions, including the sale of goods and services.

In January 2019, according to local news media in Venezuela, Venezuela will open its first Bitcoin ATM. Jorge Farias, CEO of Cryptobuyer, said that the first Bitcoin ATM has arrived in Venezuela, making it easier for people to use cryptocurrencies.

4) Marshall Islands

In March 2019, the Marshall Islands passed a key bill on the creation of a sovereign digital currency, making it the first country to accept cryptocurrency as a national legal tender. This week, a key bill on the creation of a sovereign digital currency (SOV) was passed. The President of the Marshall Islands said that as part of the plan, 2.4 million SOV will be distributed to the Marshallese.

II. Incorporation into the current securities supervision

1) United States

In May 2018, regulators in the United States and Canada jointly launched about 70 investigations into initial public offering fraud and scams of digital currencies, an action also known as "Operation Digital Currency Purge."

In July 2018, the U.S. Internal Revenue Service (IRS) announced that it had established an international working group with Australia, Canada, the Netherlands, and the United Kingdom to address digital currency-related crimes.

In August 2018, Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN) under the U.S. Treasury Department, pointed out that whether the money transmission institutions that can convert digital currencies are located in the United States or abroad, even if the foreign entities do not have physical institutions in the United States, as long as their business involves the United States in whole or in part, they should also follow the requirements of the Bank Secrecy Act (BSA).

2) Australia

In April 2018, the Australian government announced plans to implement new rules for virtual currency trading through the Australian Transaction Reports and Analysis Centre (AUSTRAC). The main point in the announcement is that virtual currency trading platforms located in Australia must now be registered in Australia and comply with the government's anti-money laundering (AML)/counter-terrorism financing (CTF) compliance and reporting obligations. Virtual currency exchanges must fulfill new obligations, including: registering with the agency, adopting and maintaining AML/CTF procedures, identifying and verifying users, and reporting suspicious behavior and transactions involving legal currency of 10,000 Australian dollars or more, and must keep transaction records for 7 years[7]. AUSTRAC stated in the report that if an exchange provides trading services without registration, it will face criminal charges and penalties. These measures show that the Australian government is based on the anonymity and global nature of virtual currencies and hopes to prevent criminals from using virtual currencies to launder money or finance terrorism through regulation.

3) Switzerland

In 2017, the Swiss Financial Market Supervisory Authority (FINMA)[3] announced that it had established a blockchain/ICO working group with the Swiss Federal Office for International Financial Affairs (SIF), the Federal Office of Justice, and the Swiss Financial Market Supervisory Authority (FINMA) to conduct a special investigation on how to reasonably regulate blockchain technology and ICOs to determine whether there are any violations of regulatory provisions. FINMA pointed out that if it is found during the investigation that the ICO procedures violate regulatory regulations or skirt the law, it will initiate enforcement procedures to rectify the situation. Due to the fluctuation range of the token prices involved in ICOs, it is difficult to rule out the possibility of fraud.

In March 2019, according to Cointelegraph, the Swiss government's legislative body, the Federal Parliament, has approved a motion to instruct the Federal Council to amend existing regulations on judicial and administrative authorities so that these regulations also apply to cryptocurrencies. The bill aims to determine how to curb cryptocurrency-related risks and whether entities operating crypto trading platforms should be equivalent to financial intermediaries and thus subject to financial market supervision.

3. Relatively loose, adopting the regulatory sandbox model

1) United Kingdom

In May 2018, the UK Financial Action Authority (FCA) said it was investigating 24 unauthorized companies involved in the cryptocurrency business to determine whether they might be conducting regulated business activities that require FCA authorization. The FCA does not regulate digital currencies, but it regulates digital currency derivatives, and said it would regulate each case on a case-by-case basis depending on the structure of the ICO. This year alone, the FCA has initiated seven whistleblower reports related to digital currencies.

In June 2018, the UK Financial Action Authority (FCA) published a letter to the CEOs of the banks it supervises, warning of the risks of dealing with cryptocurrencies. If the activities are considered "crypto assets" by the FCA, it is necessary to increase the review of customer activities and take some measures to reduce the risk of financial crimes, such as conducting due diligence on key individuals and ensuring that the existing financial crime framework fully reflects cryptocurrency-related activities.

2) Singapore

In November 2016, the Monetary Authority of Singapore (MAS) proposed a “regulatory sandbox” for fintech products, making Singapore the second country in the world to launch a regulatory sandbox after the United Kingdom.

In May 2018, the Monetary Authority of Singapore will issue two major decrees to include both non-securities and securities tokens in the regulatory framework. For cryptocurrencies, the Monetary Authority of Singapore is planning new regulatory documents. The "Recognized Market Operators" that are being revised are being drafted, and the regulatory framework will include trading platforms of securities-type cryptocurrencies in its regulatory framework to cater to the emergence of new trading platform business models. The "Payment Services Act" is being drafted, which will include other non-securities cryptocurrency trading platforms in its regulatory scope and require the platforms to take KYC, AML, CFT prevention measures, etc.

In May 2018, with the emergence of emerging trading markets based on blockchain technology and peer-to-peer technology, the Monetary Authority of Singapore plans to adopt a three-tier regulatory structure, relax entry barriers, and start a one-month public consultation. In the same month, the Monetary Authority of Singapore issued the "Simplifying Rules to Increase Business Flexibility of Market Operators" announcement, aiming to protect the interests of investors while identifying emerging business models to promote innovation in financial services.

3) Hong Kong, China

In November 2018, the Hong Kong Securities and Futures Commission issued a "Statement on the Regulatory Framework for Management Companies, Fund Distributors and Trading Platform Operators of Virtual Asset Portfolios". The content includes requiring that funds with more than 10% of zichan guimo (ALJM) in virtual assets can only be sold to professional investors, and any funds and brokers investing in virtual assets must register with the Securities and Futures Commission.

In March 2019, according to the Hong Kong Economic Times, the Hong Kong Monetary Authority will issue the first batch of virtual bank licenses as early as this week. The Hong Kong Monetary Authority has selected 8 companies from about 20 applications for final due diligence and plans to issue 5-6 licenses. Alibaba's Ant Financial and Tencent's Tenpay may be on the final list.

4) South Korea

In July 2018, financial regulators planned to relax regulations based on crypto assets in line with the “unified supervision” policy formulated by G20 countries, directing the Financial Services Committee (FCS) of the Financial Supervisory Service (FSS) to revise guidelines related to all activities of cryptocurrency traders.

In September 2018, the South Korean government banned initial coin offerings (ICOs), arguing that the practice of raising funds through the issuance of crypto tokens was tantamount to "gambling." In January this year, the South Korean government said it would not lift the ban because the country's Financial Services Commission had found that some ICO companies from overseas jurisdictions were still deceiving South Korean citizens to raise funds.

In January 2019, the Ministry of Science and ICT and the Ministry of Trade, Industry and Energy of South Korea began to implement the ICT industry regulatory sandbox system, and the "Information and Communications Convergence Act" and the "Industry Convergence Promotion Act" also officially came into effect to help companies launch new technologies and services as soon as possible. Companies can obtain "empirical exceptions" and "temporary licenses." In the field of ICT convergence, the government has accepted applications for licenses such as "blockchain-based overseas remittance services."

4. Cautious supervision and partial opening up

1) Malaysia

In March 2018, the new anti-money laundering and anti-terrorist financing policy of the National Bank of Malaysia for digital currency came into effect. The policy requires digital currency exchanges in Malaysia to join customer investigations.

In January 2019, Malaysia's finance minister said in a statement on Monday that Malaysia will regulate ICO and cryptocurrency trading. The finance minister said that according to the regulations of the Securities Commission of Malaysia, an order that will treat digital currencies and digital tokens as securities will be implemented on January 15. The commission is expected to launch a framework by the end of the first quarter to stipulate "regulatory requirements for issuing ICOs and trading digital assets on digital asset exchanges in Malaysia."

2) Russia

On March 11, 2018, Russia has completed the first draft of the federal law "On Digital Financial Assets", which stipulates the relationship arising from the creation, issuance, storage and circulation of digital financial assets, as well as the obligations that all parties need to fulfill under smart contracts. At the same time, it clearly defines cryptocurrencies, digital tokens and mining, and legalizes mining activities.

On March 20, 2018, Russian President Vladimir Putin submitted a federal bill on virtual currency and ICO regulation, involving digital financial assets and alternative means of raising funds. The bill defines cryptocurrencies and tokens as digital financial assets, not legal tender, and cannot be used to pay for goods and services in Russia. Transactions are only allowed through authorized cryptocurrency exchange operators. Know-Your-Customer (KYC) rules are also established for ICOs.

In April 2019, the Russian government proposed regulations that would restrict Russian traders to local crypto exchanges, allowing only “qualified” investors to trade Bitcoin and other cryptocurrencies. If the government is given the ability to restrict flows outside its borders, it seems that the ability to enforce such regulations will be significantly enhanced.

3) Thailand

In May 2018, the Thai government issued an edict to promulgate the Electronic Assets Act, which was interpreted by industry insiders as the Thai government's positive attitude towards virtual currencies. The Thai Digital Assets Act provides a top-level design for legal virtual currency trading in Thailand.

In January 2019, according to a statement from the Thai Securities and Exchange Commission, the Thai Ministry of Finance has approved operating licenses for four digital asset businesses and rejected two businesses seeking to become authorized exchanges. Among them, Bitcoin Co., Ltd., Bitkub Online Co., Ltd. and Satang Corporation Co. Ltd. were approved as authorized digital asset exchanges, and Coins TH Co Ltd was approved as a cryptocurrency licensed broker and trader. Cash2Coins Co Ltd and Southeast Asia Digital Exchange Co. Ltd were rejected.

In March 2019, the Stock Exchange of Thailand (SET) planned to launch its digital asset platform in 2020. In a statement, the Stock Exchange of Thailand said that the Thai capital market will undergo a transformation to the digital age in two areas. The first area will be the full digitization of the capital market infrastructure to provide paperless operations. The second direction will be to build a new ecosystem that supports digital assets to create new opportunities and change the investment landscape.

In March 2019, the Thai Securities and Exchange Commission (SEC) approved the country’s first ICO portal. It is reported that the website is operated by a foreign company and will provide customers with ICO screening, background checks, smart contract source code confirmation, KYC and other services.

4) Samoa

In April 2018, the Central Bank of Samoa launched an investigation into a token project called ONE COIN. In the same month, the country’s central bank also issued a warning, emphasizing that investment plans for digital currencies carry widespread risks.

In September 2018, the Central Bank of Samoa announced that individuals promoting cryptocurrencies in the country will be treated the same as financial institutions. According to the statement issued by the Reserve Bank of Samoa, promoters of cryptocurrencies will have to comply with the country's existing money laundering legislation. Therefore, these cryptocurrency promoters will be required to obtain the necessary licenses and comply with the requirements like all other financial institutions.

5. Strict supervision and clear prohibition

1) China

In June 2018, at the ministerial-level joint meeting on dealing with illegal fund-raising, the central bank stated that it would severely crack down on "virtual currency" related activities suspected of illegal fund-raising. For ICOs and virtual currency exchanges such as Bitcoin that are suspected of illegal fund-raising and illegal securities activities, the central bank will work with relevant departments to promptly issue announcements to clarify attitudes, warn of risks, and deploy local rectification.

In August 2018, the China Banking and Insurance Regulatory Commission, the Central Cyberspace Affairs Commission, the Ministry of Public Security, the People's Bank of China, and the State Administration for Market Regulation issued a "Risk Warning on Preventing Illegal Fund Raising in the Name of "Virtual Currency" and "Blockchain", emphasizing that activities that raise funds by issuing so-called "virtual currency", "virtual assets", "digital assets" and other methods under the banner of "financial innovation" and "blockchain" are actually using "financial innovation" as a gimmick, and are a Ponzi scheme of "borrowing new to repay old", and the capital operation is difficult to maintain in the long term.

2) India

In April 2018, the Central Bank of India (BRI) announced a ban on Indian banks from selling or buying virtual currencies, and gave banks a three-month grace period to handle existing virtual currency businesses. This is the latest example of Asian regulators cracking down on speculation in highly volatile virtual currencies. After the ban is implemented, individuals in India will not be able to transfer money from bank accounts to cryptocurrency trading wallets.

In June 2018, Subhash Chandra Garg, Minister of Economic Affairs of the Indian Ministry of Finance, revealed that India's cryptocurrency regulatory regulations will be announced in July and the draft framework has been formulated. Garg said that the Indian government will not regard digital currency as currency, will not allow digital currency to enter the country's payment system, and the executive agency will take measures to end the illegal use of digital assets.

In January 2019, the Indian government has provided an update on the country’s cryptocurrency regulatory framework. The government provided an update on its stance in areas such as national cryptocurrencies and licensing of cryptocurrency businesses. The country is reportedly moving forward with cryptocurrency regulations with “due caution.”

3) Vietnam

In April 2018, the Prime Minister of Vietnam signed a directive on "strengthening the legal framework for the management of Bitcoin and other digital currencies". The framework includes that the State Bank SBV should instruct credit institutions and intermediary payment service institutions not to conduct illegal transactions in digital currencies; the SBV will cooperate with the Ministry of Public Security to deal with the use of digital currencies as a means of payment; the Ministry of Finance will guide listed companies, securities companies, fund management companies and securities investment funds not to engage in illegal issuance, trading and brokerage activities involving digital currencies; the import of hardware used to mine virtual currencies should be restricted; the public security, industry and trade, information, communications, justice and other departments should increase the investigation, prevention and handling of marketing fraud activities related to digital currencies.

In August 2018, the State Bank of Vietnam (SBV) warned the public that digital currencies are not legal tender in Vietnam, and the issuance, use and supply of digital currencies are prohibited. Those who violate this regulation will be fined 1.5-2 million rupees (about 6,500-11,000 US dollars). According to the new version of Vietnam's criminal law, providing and using illegal payment methods may also be a crime.

Information summary on the issuance of legal digital currencies by central banks around the world

Singapore

Singapore has once again demonstrated its clear regulatory stance on digital currency business by passing the Payment Services Act. Digital currency exchanges and digital wallets are included in electronic payment services and payment-type digital currency services. They can apply for a "standard payment institution" or "large payment institution" license according to the company's business amount standards to enable them to operate in compliance with regulations.

·Basic requirements: Three types of licenses will be issued under the "license system": 1. The "currency exchange" license is easy to apply for: it is limited to legal currency exchange services and has a small regulatory scope; 2. The "standard payment institution" license is easy to apply for: it regulates the above 7 types of services, and the payment or transfer amount does not exceed 3 million Singapore dollars per month in a year, or the electronic payment flow involved in a year does not exceed 5 million Singapore dollars per day; 3. The "large payment institution" license is difficult to apply for: it regulates the above 7 types of services, and the payment or transfer amount exceeds the above "standard" license.

Representative platforms: Huobi, Bibox

Australia

Basic requirements: The regulator of the financial sector in Australia is the Australian Securities and Investments Commission. The main license is the Financial Services Provider License. The licensee can conduct brokerage business and trade on his own account. There must be a physical office. There must be at least one Australian as the company manager. Investment services can only be provided to Australians within Australia.

At the final stage of the application, capital requirement funds must be frozen. Once the company is licensed, the required capital will have to be issued paid-in capital and 50% of the capital requirement funds must be liquid assets. Client funds must be segregated. Investment companies must comply with regular reporting obligations on capital adequacy and large risks, as well as internal audit reports, compliance reports, risk management reports, anti-money laundering reports, audited financial statements and audit reports, compliance programs, training registrations and product review policies. License holders must become members of the Investor Compensation Fund. Licensees must also purchase professional liability insurance and directors and officers liability insurance.

Application fees: Capital requirement is A$1.1 million and annual fees range from A$3,500 to A$50,000, depending on transaction volume.

·Representative platform: CMG

■Hong Kong

·Basic requirements: A physical office must be established and employees must be Hong Kong residents. The license application must be submitted by a Hong Kong company or a registered Hong Kong company. The company applying for a license must have at least two senior executives responsible for company management, and appoint one of them as an executive director. The applicant company and its senior executives, employees and shareholders must meet the appropriate person principle stipulated by the Hong Kong Securities and Futures Commission. The Hong Kong Securities and Futures Commission will evaluate the applicant's debt-paying ability and financial status, education and other qualifications, relevant experience in the proposed business, ability to conduct regulated business activities with integrity and fairness, company reputation and financial stability.

Regulatory requirements: Licensed companies must always maintain paid-in capital and liquid capital not less than the minimum capital requirements. Licensees holding client funds must open accounts in banks in Hong Kong. Client funds must be kept in segregated storage. All licensees must keep records of financial solvency and financial status, financial education overview, internal compliance and internal control systems.

All licensees must keep proper financial records in accordance with internationally recognized accounting standards and submit monthly, quarterly and annual reports. All companies must disclose financial reports to the public.

·Representative platforms: Welab Digital Limited, SCDigital Solutions Limited, LiviVB Limited

Russia

Basic requirements: Unlike many other fully regulated jurisdictions, Russia does not have a physical office location requirement. Russia’s regulator is the Central Bank of Russia. The Central Bank of Russia issued its first license (Finam Forex) and is reviewing five more applications. The Central Bank of Russia has set a 60-day approval time target. The license is called a foreign exchange dealer and the licensee can only conduct business as a foreign exchange dealer. As part of the fit and proper person assessment, executives, directors and shareholders must submit proof of education and professional qualifications, relevant experience in the industry, and a criminal record. The company must submit a business plan.

Application fee: All licensees must deposit $255,000 (2 million rubles), which will be transferred to the Investor Compensation Fund. The minimum capital requirement is $1.2 million (100 million rubles).

Representative platform: BQEX

Philippines

The Securities and Exchange Commission (SEC) of the Philippines said that the SEC and the BSP are jointly exploring the use of digital currency as a financial tool for fundraising. The SEC is also considering classifying certain tokens used in crowdfunding as securities, and banks will trade through registered channels to meet regulatory requirements while providing digital currency trading services under the supervision of the BSP. There are two types of VC licenses issued by the Philippines, one is a license issued by the Central Bank of the Philippines, and the other is an offshore license issued by the Philippines CEZA, which allows legal currency transactions in the Philippines.

Basic requirements: Licensed exchanges must invest at least $1 million within two years, and compliant ICO projects can receive financial support, etc.

Representative platform: GMQ Coin Ex

USA

The US MSB license is a type of financial license supervised and issued by Fincen (Financial Crimes Enforcement Agency, an agency under the US Treasury Department). The main regulatory objects are businesses and companies related to money services, including digital currency and virtual currency transactions, ICO issuance, foreign exchange, international remittances, etc. Companies engaged in the above-mentioned related businesses in the United States must apply for an MSB license to operate legally.

Basic requirements: A company registered in the U.S. with a U.S. legal address and a bank account in the U.S. Total transaction amount: List the total transaction amount of financial products or services issued by the MSB exceeding $100,000 in each separate month in the previous 12 months.

Representative platforms: Coinbase, Bittrex, OKCion, Huobi

■Canada

Canada is one of the countries with the most transparent legislation on digital currency transactions in the world, and has a relatively clear definition of digital currency, believing that digital currency does not have monetary attributes. Stephen Poloz, Governor of the Bank of Canada, said that cryptocurrencies are technically securities. In September 2017, the British Columbia Securities Commission (BCSC) of Canada issued the first Bitcoin fund license to First Block Capital, which focuses on cryptocurrency investment. The company was granted registration as an investment fund manager and tax-free market dealer to operate a Bitcoin investment fund.

Representative platform: ONEROOT

■Japan

·Currently, there are 16 companies in Japan that have obtained licenses to operate digital currency transactions. However, since the end of January this year, the exchanges have been subject to on-site inspections. During this period, the Japanese Financial Services Agency has successively issued suspension and rectification orders and other punitive measures for major platforms to further strengthen the supervision of digital currencies. It is reported that the Japanese Digital Currency Trading Association recently issued a new autonomous regulatory policy. The policy stipulates that trading institutions must set a maximum limit on customer transaction amounts to prevent the loss of customer assets.

Basic requirements: The exchange needs to obtain authorization from the Ministry of Finance and the Financial Services Agency (FSA) of Japan, and obtain a license before it can operate. Otherwise, it cannot provide relevant services to users as a virtual currency trading platform. Japan's regulations on Bitcoin exchanges include: Bitcoin exchanges need to have reserve requirements, separate customer accounts, and adopt anti-money laundering and KYC (know-your-customer) processes.

Representative platforms: COINBASE, BTCBOX, BITTRADE

Malta

The regulator for Forex and binary options providers in Malta is the Malta Financial Services Authority. The main license is a Category II license, which allows companies to carry out all investment services and hold client funds (only Category III license holders can trade on their own accounts). There are also two Category I licenses (A and B), which allow the holder to carry out brokerage business but not hold client funds.

Basic requirements: There must be a physical office location. There must be at least two senior executives managing the company, and investment services can only be provided within Malta.

Regulatory requirements: Changes in original equity, directors and management must be approved by the Malta Financial Services Authority. Client funds must be kept in separate bank accounts. Licensees must fulfill reporting obligations in terms of capital adequacy and large risks of the company's positions. Other reporting obligations include internal audit reports, compliance reports, risk management reports, anti-money laundering reports, audited financial statements and audit reports. License holders must join the investor compensation fund.

Application fee: 17,000 euros, average approval time is 6-8 months. The capital requirement for the second type of license is 125,000 euros, and the third type is 730,000 euros. The annual license fee ranges from 3,000 euros to 10,000 euros, depending on the company's actual revenue.

Representative platform: Binance

■Thailand

In May 2018, the Thai SEC officially announced that all local companies engaged in cryptocurrency-related businesses need to obtain a license before they can operate, and required existing companies in the market to submit license applications to the SEC within 90 days, that is, before August 14. During the SEC's review of the application, these companies can still conduct business normally.

Basic requirements: registered in Thailand; registered capital of not less than 50 million Thai baht (about 1.57 million US dollars); actual assets of shareholders not less than 50% of registered capital. The platform conducts regular reviews to ensure the security of user assets and transactions; fair prices; trading pairs can be Thai baht or SEC-certified cryptocurrencies; comply with AML/CTF laws, conduct due diligence on users and retain transaction records, etc.

Related fees include: 1. License fee: 25 million baht (about 780,000 US dollars); 2. Annual review fee: 0.002% of the transaction amount, with a minimum charge of 500,000 baht (about 14,000 US dollars) and a maximum charge of 20 million baht (630,000 US dollars)

Representative platforms: Bitcoin Exchange Co. Ltd., Bitkub Online Co. Ltd., Satang Corporation (Satang Pro).

Seychelles

The regulatory authority of Seychelles is the Financial Services Authority. The relevant license type is securities dealer, and the licensee can provide a variety of financial instruments (including stocks, bonds, swaps, options, futures and contracts for difference).

Basic requirements: The office location must have permanent staff. The licensee must employ at least two natural persons as directors and at least one licensed securities consultant or one licensed investment consultant. All licensees must purchase professional liability insurance. Each manager of the company must meet the suitability requirements.

Regulatory requirements: There is no minimum liquidity requirement (including cash or other types of assets), but the company's minimum capital must be maintained at more than $50,000. If the company undergoes any substantial changes (such as the appointment or dismissal of directors or managers), is subject to any disciplinary penalties, or has any changes that cause the licensee to cease operations, the licensee must notify the Financial Services Authority.

After the client deposits the funds, the company must immediately deposit the client's funds in a separate bank account. The licensee must keep records of all deposits and withdrawals from the client's bank account. Accounting and auditing requirements include that all licensees must keep appropriate accounting records in accordance with International Financial Reporting Standards. All licensees must appoint an auditor within 30 days of obtaining the license. Foreign auditors must be authorized by the Financial Services Authority.

Application fee: The capital requirement for the license is $50,000 and the annual fee is $2,500.

Representative platforms: BitMEX, Huobi Pro, JEX, K-net, Digifinex, BitMEX

■Samoa

The Central Bank of Samoa, a Pacific island nation, said that individuals promoting cryptocurrency projects locally must comply with the same regulatory regulations as financial institutions. The Central Bank of Samoa stated in a statement that anyone who wishes to promote or promote cryptocurrency and digital currency will be treated as a financial institution in accordance with the provisions of the Money Laundering Prevention Act Amendment designated in 2018. A valid business license issued by Samoa must be obtained and the reporting requirements of the central bank for financial institutions must be complied with.

Basic requirements: The registered capital requirement for the license is US$5 million, deposited in any bank on the island.

Representative platform: ZB.com

■Bahamas

·In April 2019, the Bahamas Securities Commission (SCB) issued a draft legislation to regulate the issuance or sale of digital tokens in or outside the Bahamas, as well as the behavior of sellers and intermediary service providers. SCB, the full English name Securities Commission of The Bahamas, is an important national financial regulator in the Bahamas. In recent years, its regulatory authority has been highly recognized by global markets and investors, and has attracted much attention and sought after in the industry. Its important function is to supervise the behavior of financial service companies such as funds and securities, and is responsible for formulating relevant industry laws and regulations to ensure that the market operates in a fair, healthy and orderly environment.

·Basic requirements: Have a physical office; at least one local company head; employees include local CEO and compliance officer; actual business planning and appropriate compliance standards.

·Representative Platform: INFINOX Bahamas, BHP

■Estonia

Estonia is one of the EU member states and is the first to introduce applicable cryptocurrency regulation. Estonia is known for its innovative ways and high regulatory levels in promoting DLTs and cryptocurrency regulation. Since early 2012, Estonia has begun to use blockchain technology in its health, justice, security and commercial regulations registration centers. License holders allow operators to operate as the following entities: 1. Providers of virtual currency and fiat currency exchange services; 2. Providers of virtual currency wallet services.

·Basic requirements: 1. If the turnover is greater than 40,000 euros, you need to apply for VAT2. If the directors of the company are all members outside the EU, you must designate a full-time staff such as a notary office/law firm to serve as the company's contact person. 3. Work visa: After 5 months of actual operation of the Estonian company, the company's directors can apply for a work visa. If it is a special talent, a special talent certificate is required; the salary income of the director shall not be less than three times the local average salary.

·Representative platforms: IronX, OKCoin, Yihe, CIF

■Bermuda

·In April 2018, The Bermuda Monetary Authority (BMA) issued the Virtual Currency Business Act (2018), which clearly stipulates that opening a virtual currency electronic exchange is a business of "Virtual Currency Business", and that operating the business requires applying for a license from the BMA.

·Basic requirements: Licenses are divided into two categories: F and M. The holders of both licenses can engage in some or all of the above-mentioned virtual currency business. Although the applicant can choose the type of license to apply for, the final issuance will be determined by the BMA.

·Representative Platform: VLHL

■Namin

· Labuan is one of the most famous offshore financial centers in the global market and the first offshore financial center in Malaysia. Labuan is also one of the channels for foreign investors to enter ASEAN countries. In 2010, Labuan offshore companies were officially allowed to conduct commercial transactions with local Malaysian limited liabilities. According to this regulation, Labuan became a midshore island, achieving a one-country, two-tax system.

·Basic requirements: Currently, you have a virtual currency trading license in other areas, but you can have at least 2 years of experience in the shareholders' directors and operating team; the actual payment of US$120,000 is US$150,000 in funding certificate when submitting the application; an office in Labuan is required to set up a detailed business plan and the next 3 years plan, KYC manual and anti-money laundering manual

·Representative Platform: Fusang Group