The Year of the Dog is traditionally one that entails change and uncertainty, and 2018 is likely to be no different. John Church explores legal developments in the region that will be trending in 2018
In a year already marked with uncertainty and instability within markets, there is a good reason to be cautious and keep up with due diligence in sectors that are evolving at a rapid pace in Asia and the rest of the world.
Law firms and their clients will need to be at the top of their game as they tackle advancements in both regulation and security, and the digital transformation arising from the tech evolution that is reshaping every aspect of business.
With the meteoric rise of cryptocurrencies that carry with them the very real risk of money laundering and other crime, those same regulators are struggling to keep pace with their effective control and blockchain-based governance.
Meanwhile, many law firms have been busy teaming up with tech boutiques to give them the knowledge leverage required to assess and advise in trending tech areas like artificial intelligence (AI), data security, fintech, and other tech-influenced domains such as healthcare and telecommunications.
On cryptocurrencies, Paul Dorrans, a consultant with Simmons and Simmons, questions whether Asian regulators are prepared to deal with them. “The decentralized nature of the technology that underpins cryptocurrencies presents unavoidable AML [anti-money laundering] risks,” says Dorrans. “Regulators are increasingly concerned by this.
“Regulators and financial institutions should co-operate to ensure that appropriate due diligence is undertaken on firms oerating in the market for cryptocurrencies and that the regulatory regimes in different countries, for AML and KYC [know your customer], are as closely aligned as possible with global standards. A tighter and more specific regulatory framework for cryptocurrencies could enhance their legitimacy and utility in the financial markets, but care is needed so as not to unduly stifle innovation.”
Stefanie Yuen Thio, the joint managing partner at TSMP Law Corporation in Singapore, believes fintech and bitcoin will continue to be a hot topic of discussion in the next 12 months. “The MAS [Monetary Authority of Singapore] has already announced various initiatives to sandbox this sector in relation to the regulatory requirements,” she says. “I believe that more clarity and fine-tuning of the regulations in relation to cryptocurrency and digital tokens may be appropriate, in addition to the continued selective relaxation of fintech laws.”
India has its eye on similar priorities and 2018 will see the nation impacted by bitcoins and cryptocurrencies law.
Rabindra Jhunjhunwala, a partner at Khaitan & Co, says the nation’s finance minister recently announced that bitcoins are illegal and the government does not consider it as legal tender, and will take measures to eliminate their use. “The government wants a law to regulate trade of cryptocurrencies such as bitcoin in India and has formed a committee to fast track the process,” he reasons. “According to various sources, Indians form around 10% of the total global trade in bitcoin. Considering that the interest amongst the general population is gaining by the day, the government is looking to bring in regulations that will protect the common man and safeguard their hard earned money.”
Elsewhere, in South Korea, the issue is also prominent. Michael Kim, the co-founder of Kobre & Kim and lead counsel in high-stakes disputes and investigations, points to digital currencies as a trending red-button issue this year.