All eyes on Asia — Crypto’s new chapter post-China

The basic characteristics of crypto are like the type of assets that go through jurisdiction. Nevertheless, one of the main centers driving adoption and innovation is Asia. Since the busy days of Kimchi premium and Bitcoin (BTC) arbitrage opportunities of Korea, the region has been playing a role in determining the crypto development path and its future anchors.

According to Chainanalysis, in the first half of 2021, Asia is targeted for 28% of the total global transaction volume worth $ 1.16 trillion of cryptocurrency. Central and South Asia alone saw crypto operations grow 706% year-on-year, making it the world’s third-fastest growing region.

Last year, headlines from Asia were dominated by developments in China. However, the rest of the region is also surprised by the halo of legitimate perceptions with the clarity of regulations in Singapore around digital assets. The pace of decentralized financial innovation (DeFi) in Southeast Asia has been boosted with increased fundraising and investment in projects. As investors become more comfortable and confident in DeFi yield opportunities, institutional approvals are well-prepared to continue on its growth trajectory by 2022.

New chapter without China

China’s stance on cryptocurrency is unpredictable due to the country’s long-standing capital management policy. While the pace of implementation has recently surprised many in our industry, players have – by their credit – changed rapidly. Miners have resettled in Kazakhstan and the United States, with traders and traders settling in Singapore and Hong Kong.

Related: Find new home: Bitcoin miners settled after Chinese departure

As a decentralized asset, the development and innovation of Crypto is not limited to a single jurisdiction. The influx of capital, investment and talent goes where the environment is motivated, so a country with a welcoming legal framework that encourages innovation along with a growing immigration policy will be a big beneficiary.

Singapore, already a global financial services and asset management hub, is clearly a leading company – Crypto has been governed since 2019 under the new law. With that said, the high bar is indeed set by many players who are reportedly struggling to meet the stringent requirements of the Singapore Monetary Authority.

While it may dampen some initial optimism around Singapore’s cryptocurrency integration, the city-state remains the leader when it comes to a growing regulatory framework supported by a business-friendly environment with low corporate tax rates and strong infrastructure. And political stability. .

Other Asian Crypto Stars

Outside of Singapore, Thailand has been surprising with the active participation of crypto startups and traditional financial institutions alike. Thailand’s fourth-largest bank – Kasikornbank – has recently begun experimenting with DeFi on top of introducing its own non-virus (NFT) token market. Siam Commercial Bank, the country’s oldest lender, also entered the game, buying a majority stake in Thailand’s largest digital exchange, Bitkub. Meanwhile, the state-run Tourism Authority of Thailand is looking for a consumption symbol as part of a payment ecosystem that rejects the requirement for cash-based transactions.

With interest in digital assets expected to grow over the next few years, the country’s central bank plans to issue more comprehensive rules around this type of asset in early 2022. Players looking to enter this market will do well to keep a close eye on it. The Bank of Thailand (BOT) consultation document, which will be released later this year, seeks to agree on some restrictions on cryptocurrency operations. Similar to the Singapore government’s position, BOT aims to systematically reduce risk without hindering development and innovation.

Indonesia, with more than 66% of its population remaining bankless, is an Asian market ripe for new applications of crypto. Crypto transaction volume exploded 10 times, rising from nearly $ 4.5 billion to about $ 50 billion in October 2021. There are now more crypto traders than stock investors on the Indonesian stock market. Retail investors are attracted by the ease of trading cryptocurrencies in the country, where all the demand is for smartphones with internet and around $ .75.

Related: Indonesia’s crypto industry in 2021: Crocodile balm

Signs from the Indonesian authorities were mixed, banning cryptocurrency payments, but legalizing trading with plans for a cryptocurrency exchange. The Reserve Bank of Indonesia is also looking for a national digital rupee to “fight” against cryptocurrencies, hoping that consumers will find the central bank’s digital currency (CBDC) safer and more legitimate. As Southeast Asia’s largest economy, we can expect local companies to participate in the development of cryptocurrencies through partnerships with global incumbents.

Momentum to 2022: Increased funding encourages innovation.

The growing popularity of Crypto has led to not only retail traders but also institutional investors such as hedge funds and family offices, which are now exploring the successful growth potential of the asset class. Asia is no exception, as large investors accounted for a significant share of cryptocurrency operations last year, according to Chainlalysis’s 2021 report.

Recognizing the high yield potential of crypto, traditional asset managers are looking for the best way to capitalize on this type of asset, with players like Fidelity Investments investing heavily in Hong Kong-based crypto operators. Increasing institutional interest also spurred more innovative digital asset management platforms and the development of more sophisticated products that cater to a wider range of users with diverse risk appetite. In March last year, the Malaysia-based Bitcoin Fund was launched, claiming to be the first in Southeast Asia to offer secured crypto products.

Old money flows in new.

Over the next few years, we can expect more investment in cryptocurrency projects as “old money” companies set their sights on the future around digital assets. Asia also represents the enormous potential of innovation to serve the unmet needs of the 290 million sub-banks in the region, where DeFi can accelerate with specific use cases, such as services under the local sub-bank. With smartphone access.

Increasing funding will spur more innovation while embracing crypto in a virtuous value creation cycle across Asia.

This article does not contain any investment advice or guidance. All investments and trades involve risk and the reader should do his own research when making a decision.

The ideas and concepts presented here are by the author alone and do not necessarily reflect or represent the views and opinions of the Cointelegraph.

Cynthia Wu Is a founding partner and head of business development and sales at Matrixport. She used to be an investment director at Bitmain Technologies, which focuses on investing in blockchain for the financial services sector. Prior to joining Crypto Currency, he was vice president of the Hong Kong Exchange (HKEX), responsible for product development, derivatives and institutional sales. She started her career as a commodity trader.