IOTA Highlights Asia’s Move Toward Risk-Based, Pro-Innovation Crypto Frameworks

• IOTA backed Asia’s shift to risk-based crypto rules but warned against strict wallet regulations.
• Foundation pushed for privacy tools, smarter oversight, and tiered access instead of broad token bans.

Regulators across Asia are drafting updated crypto policies that aim to support innovation while addressing risk. The IOTA Foundation has welcomed these efforts, advocating for privacy-respecting compliance and balanced legal frameworks across multiple regions.

In June 2025, Hong Kong introduced a licensing regime for fiat-referenced stablecoins through the Stablecoin Issuers Ordinance and issued AML/CFT guidelines. The proposal included counterparty verification for all wallet-to-wallet transfers, including those involving self-hosted wallets, to support financial traceability.

IOTA supported Hong Kong’s aim for clearer rules but raised concerns about applying the full Travel Rule to self-hosted wallets. Instead, it proposed a tokenised KYC-proof model using verifiable credentials. This approach enables compliance checks without exposing personal data, supporting privacy and regulatory goals through blockchain analytics and interoperable tools.

IOTA Urges Balanced Crypto Regulation Across Asia

In July 2025, Thailand’s SEC suggested ending the full ban on Conflict-of-Interest (COI) tokens. The draft rule allows people to trade these tokens, but under strict rules. The rules require clear transparency, open disclosure of any links, and tight oversight to stop misuse and hidden conflicts.

IOTA agreed with this decision, stating that utility tokens like COI can help users by lowering expenses or giving access to certain features. IOTA emphasised that clear supervision and transparency protect users better than strict bans, while allowing exchanges to compete fairly with global platforms.

In August 2025, Malaysia’s Securities Commission proposed major updates to its digital asset exchange rules. Under the new plan, exchanges would be allowed to list tokens without getting approval in advance, but they would have to meet tougher operational standards. The proposed changes include higher capital requirements, tighter rules for shareholders, and limits on high-risk digital assets.

IOTA backed the reforms’ aim but raised concerns about broad limits on utility and new tokens. The group called for stronger post-sale oversight, clearer rules for stablecoins and a tiered capital system. It also said supervision should follow a risk-based approach, warning that arbitrary trading-history requirements could slow innovation.

South Korea plans to extend venture-business benefits to companies that work with virtual assets. The goal is to support innovation in digital finance. IOTA has welcomed this plan. The foundation said it will help crypto companies gain legal status, attract investment, and push blockchain use in areas like artificial intelligence, DeFi, and supply chains.

IOTA Foundation stated in a blog,