Stance of Asian Political Parties on the Crypto Market
Analysis of the Majority Parties in South Korea, Japan, and China
TL;DR
In South Korea, the current controversy over lawmakers' crypto holdings has frustrated discussions regarding the industry's development. However, both the ruling and opposition parties are focused on legislation centered on investor protection and have a shared interest in continuing to fill in the gaps.
China is a one-party state with the Chinese Communist Party (CCP) as the dominant policy maker. While the party is actively supporting blockchain technology, it has a strict stance on crypto trading. Meanwhile, Hong Kong has opened up its Web3 and crypto markets in contrast to mainland China, suggesting a possible shift in Chinese policy.
While Japan has announced plans to promote policies for cryptocurrencies and the Web3 market, Prime Minister Fumio Kishida's cabinet is facing a decline in popularity, raising the possibility of policy changes. The direction of future policies is uncertain.
The global cryptocurrency market and the Web3 industry are undergoing significant changes due to regulatory shifts, with each country adopting its own pace and approach. This variation is primarily due to the diverse opinions about cryptocurrency markets held by political parties in each country. This is an important factor for companies and projects in formulating business strategies and deciding whether to enter a market.
In general, Asian countries have an active and positive attitude towards crypto markets across party lines. However, the risks of business operation may change depending on the ruling party. Considering these political temperature differences in your go-to-market strategy is crucial. Therefore, it is important to closely examine various opinions and policy trends by country and political party, and formulate your strategy accordingly.
South Korea: Bipartisan focus on investor protection
South Korea elected President Yoon Seok-yeol of the People Power Party in the 2022 presidential election. Unlike the distinct colors of each political party on P2E games at the time, attention is now focused on the controversy over the possession of virtual assets by lawmakers rather than the promotion of the industry itself. Especially after the 'Kim Nam-guk' incident, the controversy over the possession of virtual assets by lawmakers belonging to each political party has continued. This has lowered the importance of discussions on the development of blockchain technology and the expansion of the Web3 market. Even though the National Assembly Legislative Research Office mentioned the need to address issues related to cryptocurrency, it was not reflected in this national audit.
However, as the Virtual Asset Act (Act on the Protection of Virtual Asset Users, etc.) passed the plenary session of the National Assembly, there has been common interest and discussion on investor protection regardless of political parties. As a result, the Korea Bankers Association has been implementing the 'Guidelines for the Operation of Real Name Accounts for Virtual Assets' since September 2023. On December 11th, 2023, the Financial Services Commission issued a legislative preview of enforcement and supervisory regulations, including user deposit management standards and cold wallet storage ratios, to stipulate the details mandated by the Virtual Asset Act. As can be seen, South Korea provides investor protection and clear guidelines for cryptocurrency trading.
As mentioned earlier, the debate on cryptocurrency ownership by lawmakers continues. South Korea's political parties have yet to express a clear opinion on the matter, with the parties generally respecting the opinions of the Financial Services Commission and the Bank of Korea.
The activity of the People Power Party is centered around the Digital Asset Task Force, which is led by Representative Yoon Chang-hyun. Since the task force’s establishment, it has been discussing various areas such as STOs, and is leading practical changes such as proposing some amendments to the Capital Market Act for STOs.
The Democratic Party has been somewhat passive since the presidential election, especially after the "Kim Nam-guk" scandal as the politician was formerly part of the party. However, we can still see that Democratic Party lawmakers such as Kim Jong-min and Lee Yong-woo continue to discuss market developments with a focus on investor protection.
China: pro-tech, anti-trade
China is a one-party state, which means that the CCP is the dominant party in the state organization. In this system, the CCP determines the country's major policy directions, which have a direct impact on the country's politics, economy, and society as a whole. While there is a formal opposition, it is largely a fringe party and has little real political influence. Therefore, unlike Japan, it is difficult for China to change its political stance. This may have contributed to the lack of significant change in China's attitude towards blockchain and cryptocurrencies so far.
The Chinese Communist Party has consistently taken a distinctly different stance on blockchain technology and cryptocurrencies. While the CCP actively supports blockchain technology, it maintains a strict stance on cryptocurrencies. In particular, in 2019, President Xi Jinping personally mentioned blockchain technology, and the government is actively utilizing the technology as a means of expanding the digital yuan. The crackdown on cryptocurrency trading, which began in 2013, was further strengthened by the ICO ban in 2017. The recent appointment of Fan Gongsheng, who is critical of cryptocurrencies, as Party Secretary of the Chinese central bank, further continues the ban.
However, as we analyzed in our previous report on the growth and evolution of Hong Kong's blockchain market, the Hong Kong market is actively opening up, unlike mainland China. It is expected that China's policy direction will change as the market stabilizes, as Hong Kong is expected to serve as a testbed or outpost for mainland Chinese funds to trade cryptocurrencies.
Japan: Cabinet approval ratings drop, raising the possibility of policy changes
Japan has been governed by the Liberal Democratic Party since 1955 with only two exceptions. This has been largely due to the lack of a viable alternative opposition, and the diversity of candidates within the LDP's sole majority. This has resulted in an unusual pattern of reshuffling within the LDP when a cabinet member's approval ratings decline. Therefore, if the current cabinet's approval ratings are declining, a reshuffle is likely to occur. In this case, even if the cabinet is from the same party, it is possible that the current policies may not be continued in the next administration.
As covered in our previous report on the Japanese market, Prime Minister Kishida emphasized his government's support for blockchain technology at the country's largest Web 3.0 conference, WEBX. In April 2023, the administration released the "Japan 2023 Web3 White Paper" under the slogan "JAPAN IS BACK, AGAIN". The whitepaper includes plans to focus on 1) tax reform, 2) token vetting/issuance/distribution, and 3) NFT-related regulatory improvements.
Recently, Kishida's cabinet has been experiencing a severe decline in popularity due to inadequate responses to several events. The main reasons for this are:
The blame game over the alleged Abe faction slush fund
The failure to clarify alleged ties to the former Unification Church
The failure of major policies such as the "My Number Card," Japan's version of a digital national ID card.
As a result, Prime Minister Kishida is facing a political crisis as he faces discontent from within the LDP and criticism from outside, and there are growing doubts about his ability to remain in power under Aoki's Law1, which is considered a precursor to regime collapse in Japanese politics, with some analysts suggesting that the LDP may lose power.
As mentioned above, the LDP's announcements are not finalized policies but plans to be implemented. Therefore, if the cabinet's approval rating drops dramatically and external pressure forces a cabinet change, all policies could return to the drawing board. In particular, the Web3 market was the main revitalization strategy of the Kishida administration, and it is unclear whether the same strategy will be continued by the next administration. Therefore, the Japanese market needs to be approached slowly under the status quo, taking into account various factors such as the development of the crypto industry in Japan.
Participate in our 1-minute survey to help improve our weekly reports. As a thank you, you can download Tiger Research's original "2023 Country Crypto Matrix" spreadsheet, an all-in-one spreadsheet for the global virtual asset market analysis after finishing the survey.
Disclaimer
This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.
This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.
According to Japanese political convention, there is a general perception that a government will collapse if the combined support of the government and the ruling party falls below 50%. This concept was popularized by the assertion of Mikio Aoki, Chief Cabinet Secretary under Prime Minister Keizo Obuchi, and former Secretary General of the LDP House of Councillors, and has come to be known as "Aoki's Law" after him.