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A fundamental characteristic of crypto is as an asset class that transcends jurisdiction. However, one of the key hubs driving adoption and innovation is Asia.Since the exciting days Premium Kimchi and Bitcoin (bitcoin) arbitrage opportunities, the region plays a role in defining the path of cryptocurrency development and anchoring its future.
According to a Chainanalysis reportin the first half of 2021, Asia is already the destination of 28% of the total global transaction volume ($1.16 trillion) worth ‘s cryptocurrency.Central and South Asia alone saw a 706% year-on-year increase in crypto trading volume, making it the 3rd fastest growing region in the world.
Last year, the headlines in Asia were mainly developments in China. However, the rest of the region is also buzzing, thanks to Singapore’s halo of regulatory clarity and legality surrounding digital assets. The pace of decentralized finance (DeFi) innovation in Southeast Asia has been boosted by an increase in fundraising and investment in projects. Institutional adoption is poised to continue its growth trajectory in 2022 as investors become more comfortable and confident in DeFi’s yield opportunities.
A new chapter without China
China’s stance on cryptocurrencies is not surprising given its longstanding capital control policies. While the recent pace of enforcement has caught many in our industry by surprise, to its credit, players have adapted quickly. Miners resettled in Kazakhstan and the United States, and exchanges and traders settled in Singapore and Hong Kong.
related: Looking for a new home: Bitcoin miners settle after China exodus
As a decentralized asset, the development and innovation of cryptocurrencies is not limited to any one jurisdiction. Investment capital and talent flow wherever there is a nurturing environment, so countries with welcoming regulatory frameworks that encourage innovation and progressive immigration policies will be the biggest beneficiaries.
Already a global financial services and wealth management hub, Singapore is the clear front-runner – cryptocurrencies have been regulated by new legislation since 2019.Having said that, a high bar has definitely been set and there are reportedly a lot of players Strive to meet stringent requirements Monetary Authority of Singapore.
While this may dampen some of the initial optimism about Singapore’s crypto-friendliness, the city-state is still leading the way when it comes to a progressive regulatory framework, thanks to a pro-business environment with low corporate tax rates, sound infrastructure and political stability.
Other rising crypto stars in Asia
Outside of Singapore, Thailand has been actively engaged by crypto startups and traditional financial institutions alike. Thailand’s fourth largest bank – Kasikorn Bank – Start experimenting with DeFi, in addition to recently launching its own non-fungible token (NFT) marketplace. Siam Commercial Bank, the oldest bank in the country, also entered the market. acquire majority stake On Bitkub, the largest digital asset exchange in Thailand.At the same time, the State Tourism Administration of Thailand Exploring utility tokensis part of the payments ecosystem that does not require cash-based transactions.
As interest in digital assets is expected to increase in the coming years, the country’s central bank has planned Introduce more comprehensive rules Around this asset class in early 2022.Players looking to enter this market would do well to keep an eye on the Bank of Thailand (BOT) consultation paper due to be released this year, which Seek consensus on certain restrictions Around crypto business activities. Similar to the Singapore government’s position, the BOT aims to mitigate systemic risk without stifling development and innovation.
Indonesia, with over 66% of the population The remaining Unbanked, a mature Asian market for new crypto use cases.Crypto trading volume exploded 10x, soaring to about $50 billion from nearly $4.5 billion in October 2021.There are more cryptocurrencies now trader than stock investors on the Indonesian stock exchange. Retail investors are attracted by the ease of trading cryptocurrencies in the country, which requires only a smartphone with internet access for around $0.75.
related: Indonesia’s cryptocurrency industry in 2021: a kaleidoscope
The signals from Indonesian authorities have been mixed, Ban crypto payments but legalize transactions, and plans to establish a national cryptocurrency exchange.Central Bank of Indonesia is also exploring national digital rupiah “Battle” with cryptocurrencies, hoping that users will find the Central Bank Digital Currency (CBDC) safer and more legitimate. As the largest economy in Southeast Asia, we can expect local conglomerates to participate in the development of cryptocurrencies through cooperation with incumbents around the world.
Momentum heading into 2022: Increased funding spurs innovation
The high popularity of cryptocurrencies has attracted not only retail traders but also institutional investors, such as hedge funds and family offices, who are now exploring the asset class’s enormous growth potential. Asia is no exception, as large investors have accounted for a significant portion of cryptocurrency trading over the past year, according to to Chainlalysis’ 2021 report.
Recognizing the high-yield potential of cryptocurrencies, traditional asset managers are exploring how best to capitalize on this asset class, with players including Fidelity Investments Invests Big Become a Hong Kong-based cryptocurrency operator. Increased institutional interest has also driven more digital asset management platforms to innovate and launch more sophisticated products to cater to a wider range of users with different risk appetites.Last March, a Malaysian Bitcoin Fund establishedclaims to be the first company in Southeast Asia to provide encryption products for insurance institutions.
old money flows into new money
In the coming years, we can expect more investment in Asian crypto projects as the “Old Money” group positions itself around the future of digital assets.Asia also represents a huge potential for innovation Serve The unmet needs of the region’s 290 million underbanked people, where DeFi services are likely to accelerate with specific use cases, such as smartphone access to services serving the region’s underbanked.
In a virtuous circle of value creation in Asia, increased funding will drive more innovation and adoption of cryptocurrencies.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk and readers should do their own research when making a decision.
The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Cynthia Wu Founding Partner and Head of Business Development and Sales at Matrixport. She was previously the Investment Director of Bitmain Technology, focusing on blockchain investments in financial services. Before dabbling in the crypto space, Cynthia was the Vice President of Hong Kong Exchanges and Clearing Limited (HKEX), responsible for derivatives development and institutional sales. She started her career as a commodity trader.
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