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Experts Say Crypto Is Destined For Success In Asia

source-logo  cryptonews.com 25 May 2023 08:02, UTC

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Asia, with its diverse and expanding population and rising income levels, has emerged as a top destination for all things crypto.

A 2022 report from the venture capital firm White Star Capital found that Southeast Asian countries host more than 600 blockchain startups combined. One of the favorite locations for crypto entrepreneurs is Hong Kong. It has risen to become one of the world’s biggest crypto hubs, with its favorable regulatory environment and advanced infrastructure making it an attractive base for entrepreneurs from every corner of the globe. Singapore too, is often viewed as being just as friendly, building a strong reputation as a sandbox of crypto innovation.

A similar attitude to crypto can be found across the continent. Japan, which has allowed Bitcoin to be used as a payment method since 2017, has recently begun a pilot project for its own Central Bank Digital Coin. Meanwhile, the UAE has done everything possible to position itself as the Middle East’s digital asset champion, introducing federal licenses for virtual asset service providers as part of a larger effort to establish a crypto-friendly regulatory framework. Moreover, countries as far and wide as India, South Korea, Thailand and the Philippines have some of the highest levels of crypto ownership in the world. Asia also plays host to major industry events, ranging from WebX Asia, one of the largest Web3 conferences in the world, to TOKEN2049, where many of the region’s best known crypto entrepreneurs and innovators gather.

Edward Hong, chief platform officer at Hashed, said numerous data points support the idea that Asia is now the world’s leading crypto market. For instance, decentralized applications are being adopted much more quickly in Asian countries than elsewhere. “Seven out of the top ten countries adopting Web3 applications are located in Asia, according to Chainalysis' 2022 Global Crypto Adoption Index,” he said.

Another telling stat comes from a recent report by Triple-A, which shows Asia is home to approximately 260 million of the 420 million crypto users worldwide, as of 2023. “Consequently, venture capitalists across the globe are actively exploring the Asian market, seeking to capitalize on its potential and make strategic investments in this thriving landscape,” Hong said.

Asian Governments Warm To Crypto

Asia’s crypto-friendly reputation may seem surprising to outsiders. Although there are notable exceptions, including Japan and the so-called “Asian Tigers” such as South Korea and Taiwan, there’s a perception that most Asian states are still developing nations lagging behind in many areas of technology development. In addition, Asian societies are often viewed as having somewhat conservative attitudes, at least compared to Western standards. So it stands to reason that many Asians might be wary of crypto.

Such perceptions are largely unfounded, though. Smartphone usage has exploded across Asia in recent years, leading to a regional internet penetration rate of 67.4% in 2022, just shy of the global average of 70.9%. So there’s a lot of connected people in what is by far the world’s most populous region. Moreover, while Asians might retain some outdated beliefs, those attitudes do not extend to crypto. On the contrary, many Asian governments have implemented more crypto-friendly regulatory frameworks than many of their Western counterparts. While there are exceptions, such as Pakistan, many Asian countries have been quite vocal about their positive attitude to crypto, said Yves La Rose, executive director and founder of the EOS Network Foundation.

“Asian markets are offering more welcoming rules at a time when regulation is tightening in other parts of the world,” La Rose said.

Meanwhile, Western nations have adopted a much more cautious stance on crypto lately. Jessie Chan, chief of staff at ParallelChain Lab, said countries like the U.S. and Canada were once leading innovators in the industry. But their attitude has shifted, and they have begin to stifle innovation with a heavy-handed approach to crypto regulation, she suggested. Asian states, on the other hand, are doing the exact opposite as they strive to attract crypto startups. “For example, Singapore is taking a regulated yet accepting approach towards digital asset service providers in the country, which serves to encourage the influx and growth of the crypto industry within the country and the APAC region,” Chan said.

Asia’s crypto friendly regulations may be a sign that its governments are learning from the mistakes of Western countries. Strict regulations in the U.S., for example, have deterred many crypto companies from doing business there. So Asia is pursuing an alternative approach, creating an environment that welcomes blockchain entrepreneurs. “The overall negative sentiments in the U.S. regulatory space have created an opportunity for Asia to shine,” Akio Tanaka, founding partner of Infinity Ventures Crypto, said.

Brian Kang, co-founder of Factblock, agreed, saying “Hong Kong and Singapore are ahead. They have learned from U.S. institutions’ mistakes and enable startups to build better from scratch in a less hostile regulatory environment.”

The World’s Biggest Crypto Community

Of course, Asia’s incredibly large population virtually guarantees it will lead the way in terms of crypto adoption, experts say. With more than 4.7 billion of the world’s estimated population of 8 billion said to be living in Asia, the numbers dictate that it’s home to a significant proportion of global crypto users.

Hong said this vast population ensures that many crypto developers are based in Asia too. “Numerous decentralized apps are emerging from Asia, and upon examination it’s evident that consumer applications are consistently at the forefront of this,” he said. “It can be attributed to Asia’s large population, rapid digitization and high internet penetration.”

With so many developers located in the region, it’s not surprising Asia has given birth to many of the crypto industry’s biggest brands. Tanaka pointed to well known cryptocurrency exchanges like Binance and Huobi, which are both headquartered in Asia. In addition, Asia’s population is also younger than that of many other regions, meaning people may be more open to new ideas and concepts, he said. “When GameFi emerged, Asia was the first region where this trend saw traction,” he pointed out.

A Powerhouse Of Web3 Innovation

One of the reasons for Asia’s crypto enthusiasm stems from the growing belief in the emergence of Web3 as a game-changer for the internet. Crypto is one of the key components of Web3, which refers to a vision of a new kind of internet that incorporates concepts such as decentralization, blockchain technologies, and token-based economics.

Advocates of Web3 say it will return the internet into the hands of its users, giving them ownership of their digital assets and control of their private data. It’s a more equitable and democratic internet where everyone will be treated equally, in contrast to today’s Web2 era, which is dominated by massive corporations like Google, Amazon and Facebook.

Asian countries are at the forefront of the Web3 movement, and will likely continue to be so for the foreseeable future. “Hong Kong is showing a tremendous amount of support for web3 development right now,” La Rose said. “All key stakeholders, including legislators, the financial secretary, and the monetary authority have become much more serious recently about fostering a favorable environment for the growth and development of the cryptocurrency sector.”

Tanaka noted Japan’s government has been very aggressively promoting Web3, believing that the emerging sector can revitalize an economy that has been stagnant for several decades. “Japan has recently adopted Web3 as its national strategy and created the first regulations for stablecoins among major economies, which will be introduced this year,” he stated.

It’s not just Asian governments that are embracing Web3, as many of the region’s startups are focused on some very specific use cases that could potentially transform economic markets. For instance, Jessie Chan’s ParallelChain Lab is pioneering the tokenization of real-world assets on-chain and bridging them to public Web3 platforms. “This single use-case not only generates new streams of value creation for the Web2 and Web3 communities but also establishes credibility and trustworthiness for both networks that will never have materialized without crypto,” she pointed out.

The Holy Grail For Crypto Startups

The consensus is that Asia will cement its status as a crypto hub, due to the combination of its friendly regulations, strong infrastructure foundation and growing momentum.

According to MarketAcross COO and managing partner Itai Elizur, Asia has become the land of opportunity for crypto builders. “Asia is really the obvious destination for anyone serious about blockchain,” he said. “It’s very likely that the next crypto bull run will be driven by Asian markets, mainly because GameFi will be a huge factor and the Asian gaming community is massive."

Asia’s strong presence in GameFi is one of the main reasons why Tanaka believes Asian crypto firms will get even more attention from global crypto investors and founders going forward. “The region provides more friendly incentives for new projects to launch and raise funding,” he added.

Even more compelling is that many Asian governments are setting their crypto-friendly policies in stone, passing laws to eliminate any uncertainty over the viability of blockchain-based business ideas. Countries like Hong Kong have made considerable progress already, and its legislators have made it loud and clear that they’re currently developing a legal framework that will encourage digital asset adoption.

“A clearly defined regulatory framework is the Holy Grail of the crypto industry,” La Rose said. “There is an incredible opportunity for countries offering clarity and oversight to absorb market share”.