China's Warning on Cryptocurrency and Espionage
China's Ministry of State Security has intensified warnings about cryptocurrency risks, claiming digital assets are used to facilitate money laundering, cyberattacks, and serve as tools in espionage operations. The ministry stated that cryptocurrencies are often deployed by overseas forces to disrupt financial order and threaten national security.
The MSS emphasized that cryptocurrency transactions are not truly anonymous, cautioning that overseas intelligence agencies may misrepresent the privacy protections of digital assets to potential recruits. While most cryptocurrencies like Bitcoin and Ethereum allow transaction tracing, privacy-focused coins such as Monero and Zcash offer stronger anonymity protections when used correctly.
China has implemented successive restrictions on cryptocurrency activity, including a comprehensive ban on exchanges in 2017, a mining prohibition in 2021, and declarations that all cryptocurrency businesses are illegal.
Singapore Emerges as Asia's Crypto Leader
Singapore's cryptocurrency activity increased 55.4% to $284 billion in the year ended June 2026, reclaiming its position as the largest crypto economy in Central and Southeast Asia and Oceania, according to data from Chainalysis.
Institutional platform activity drove much of the growth, rising 94% to $60 billion. However, this expansion was concentrated among a limited number of market makers, over-the-counter trading firms, and institutional brokerages, characterized primarily by high-volume activity from existing platforms rather than new market entrants.
The broader CSAO crypto economy contracted 6.8% over the same period, making Singapore's institutional growth a regional outlier.
South Korea Considers Market-Making Framework
South Korea's Financial Services Commission announced it is reviewing a market-making system for digital assets following a volatility incident involving a yen-backed stablecoin.
On September 17, the stablecoin JPYC began trading on the Upbit exchange, opening at 12 Korean won per token before reaching 37.6 Korean won within an hour—more than four times its intended value. Limited liquidity on the platform attributed to the price spike.
South Korea's Virtual Asset User Protection Act currently lacks an exemption for market-making activities from market manipulation provisions, restricting liquidity providers' operations. The FSC indicated it would review introducing market-making systems to improve efficiency and stability in the digital asset market.
Additionally, United States payments firm MoonPay launched South Korean operations, partnering with local financial institutions on remittances, payments, settlements, and digital asset distribution, though required regulatory approvals remain pending.
Japan and Hong Kong Advance Crypto Integration
Binance Pay launched a service allowing overseas visitors in Japan to spend over 100 cryptocurrencies at PayPay-supported merchants, representing the first crypto payment service to access PayPay's merchant network through the HIVEX interoperability framework. PayPay, accepted at millions of locations nationwide, settled transactions in yen while Binance Pay used Tether USD as its backend settlement layer.
In Hong Kong, regulators expanded oversight of licensed cryptocurrency firms. The Securities and Futures Commission and the Accounting and Financial Reporting Council agreed to coordinate on audit and assurance work, establishing frameworks for information sharing, case referrals, and joint inspections.
HSBC announced plans for a phased rollout of RedCoin, a Hong Kong dollar stablecoin, beginning with person-to-person and merchant payments before expanding to corporate and institutional applications. The bank also launched an educational campaign to prevent fraud involving the new stablecoin.
