Asia seems to be standing at the forefront of the global cryptocurrency landscape and is headed to become the next crypto hub, with data revealing that central and southern Asia are leading regions in digital asset adoption.
With a number of key seminars taking place in South Korea, Singapore, and Hong Kong, the region is moving fast in establishing itself as a key player in the decentralized finance (DeFi) industry.
How is the region trying to achieve that?
Trade Volume in Asia Surges
ChainAnalysis’ 2023 crypto adaptation index showed central and southern Asia to be leading the way in crypto adaptation, with six of the top 10 countries being located in the region.
In addition, crypto trading volumes are also on the rise in the region, fuelled by market uncertainty in the West powered by the United States Securities and Exchange Commission (SEC) suing three major cryptocurrency exchanges earlier this year, it seems like most major players in the crypto space are moving East.
Anndy Lian, author of NFT: From Zero to Hero, explained:
“As US regulators sued three major crypto exchanges this year, billions of dollars of trading volumes have migrated to Asia. Investors and marketplaces are flocking to Singapore, Japan, South Korea, and more recently to Hong Kong, which introduced a new regulatory regime for crypto.”
Lian added that resilience in Asian crypto volumes is underpinned by institutional investors who view the regulatory environment in the region as less risky and more welcoming for DeFi firms.
Even though market activity has been stagnant, with global crypto adaption taking a hit, influenced by the collapse of FTX and the de-pegging of the TerraUST stablecoin, a number of lower-middle-income (LMI) category countries have been seeing a recovery in grassroots crypto adoption.
“Many of the top countries on our Global Crypto Adoption Index, from Central & Southern Asia to Africa, are in the LMI category, and taken together, LMI countries have seen the greatest recovery in grassroots crypto adoption over the last year. In fact, LMI is the only category of countries whose total grassroots adoption remains above where it was in Q3 2020, just before the most recent bull market,” research by ChainAnalysis revealed.
Asian Countries Are Embracing Cryptocurrencies
“In recent years, Asia has emerged as a hotbed for cryptocurrency innovation and adoption, sparking a growing debate over whether the continent is poised to become the next global crypto hub. With a dynamic blend of technological prowess, regulatory shifts, and a burgeoning interest in digital assets, Asia’s crypto journey is a captivating one to watch,” Rishi Vaidya, the co-founder and head of partnerships and marketing at Carbo-X Token and a recent speaker at the EDGE Global AI and Web3 Investment Summit in Hong Kong told Technopedia in an exclusive interview.
Overall, Asia has been populated with crypto events, including the Korea Blockchain Week at the start of September, Token2049 in Singapore in mid-September, and the Edge Summit in Hong Kong last week.
Token2049 has even made headlines as being the largest cryptocurrency event, sporting 300 exhibitors and 400 side events, and leading faces in the DeFi industry are drawn to the region thanks to its more lenient regulatory regime.
Singapore was the first country to agree on stablecoin regulation meanwhile, Hong Kong had decided to let retail investors trade digital assets while trading crypto in mainland China continues to stay illegal.
Karl Blomsterwall, the CEO of Planet IX and another speaker at the EDGE Summit, told Technopedia:
“Over the last couple of months, we have seen a push from Hong Kong to position itself in a favorable position to capture a larger share of the future crypto and blockchain market. It’s not surprising as the lack of regulatory clarity and commitment in other regions, such as the US, opens up for new entrants.”
Lian added that with so much uncertainty surrounding crypto regulation in the West, a number of major cryptocurrency exchanges have decided to shift their focus to the region, helping it “grow better and in a more stable manner”.
Asia to Become the Next Crypto Hub
Carbo-X Token’s Vaida, Asia’s fascination with cryptocurrencies, can be tracked to the early days of bitcoin (BTC). While the digital asset started as a speculative playground, it has managed to evolve into a more serious investment landscape, with a number of countries in the region embracing cryptocurrencies and establishing a strong foundation for several crypto businesses to flourish.
“China’s foray into the digital yuan and blockchain technology has added further weight to Asia’s crypto dominance. Asian nations have invested heavily in blockchain technology and cryptocurrency infrastructure. South Korea, for instance, has become a hotbed for blockchain startups, while Singapore is a global leader in fintech innovation. These advancements in technology are not just creating opportunities for local entrepreneurs but are also attracting international crypto giants.”
Vaida further noted that regulation will play a bigger role in determining whether Asia will manage to evolve into a crypto hub.
“Asian governments have been exploring various regulatory frameworks to balance innovation and security. Japan, known for its progressive approach, has introduced clear regulations for cryptocurrencies, instilling investor confidence.”
Lian added that Singapore’s proactive approach to regulating stablecoins has given the country a competitive edge in the crypto space, as it offered the region a clear and consistent legal framework for issuers and users of such digital assets.
“By setting standards for anti-money laundering, consumer protection, and financial stability, Singapore has attracted many global players in the crypto industry, such as Binance, Coinbase, and Gemini, to set up their regional headquarters in the city-state. Singapore’s stablecoin regulation has also influenced other Asian countries, such as Japan, Thailand, and Malaysia, to adopt similar measures or to collaborate with Singapore on cross-border supervision and innovation. As a result, Asia has emerged as a leading region in the crypto markets, with high levels of adoption, liquidity, and innovation.”
Increased Adoption Plays a Major Role
“One of the driving forces behind Asia’s crypto boom is the increasing adoption of digital assets. In countries like India, where a massive population lacks access to traditional banking, cryptocurrencies offer a new financial frontier. Moreover, the younger generation in Asia is more receptive to digital currencies, which bodes well for long-term adoption,” Vaida said.
Planet IX’s Blomsterwall added that the blockchain industry tends to wield much of the world’s talent and is expected to grow massively over the next couple of years. Data found Singapore has the second highest number of crypto-related jobs relative to the country’s population, with 90.86 vacancies per million people, further pushing the region as a great pool for further crypto adoption.
“Asia’s crypto ecosystem is not limited to its own borders. International investors and crypto companies are actively seeking opportunities in the region. Silicon Valley giants are eyeing partnerships and investments in Asian startups, recognizing the potential of this market.”
Even though the region pushes itself as an emerging space for the DeFi industry, challenges remain.
Vaidya mentioned regulatory uncertainties, security concerns, and the need for cross-border collaboration as some of the most critical factors many nations in the region must still consider.
“With the recent fraud in JPEX, however, it will be interesting to follow which stance policymakers take towards crypto – keep their current strategy or revert back to a more conservative view.”
However, led by its rapid technological innovation, growing crypto adoption, and dynamic business landscape, Asia “is undeniably on the path to shaping the future of cryptocurrencies”.
Asia’s crypto boom signifies a seismic shift in the global financial landscape, pushing the region to become a massive crypto hub in the coming years. Fuelled by regulatory clarity, technological innovation, and growing adoption, the area has emerged as the epicenter of cryptocurrency investment and innovation.
Despite challenges, Asia’s proactive approach, coupled with increasing acceptance among its populace, positions it as the driving force shaping the future of digital currencies.