From Singapore to Thailand and Indonesia, Asia's crypto environment continue to develop

From Singapore to Thailand and Indonesia, Asia's crypto environment continue to develop
Retail News Asia

Cryptocurrency is unique in that it is a cross-jurisdictional asset class. Nonetheless, it is one of Asia's primary hubs for adoption and innovation. The region is helping to define crypto's development paths and establishing the groundwork for its future.

According to a survey by Chainanalysis, Asia accounted for 28 percent of worldwide transaction volume in the first half of 2021, totaling $1.16 trillion in bitcoin. Crypto transactions in Central and Southern Asia alone increased by 706 percent year over year, making it the world's third-fastest growing area.

The news from Asia last year was dominated by events in China. The rest of the region, meanwhile, was buzzing, bolstered by the halo of perceived legitimacy that came with Singapore's regulatory clarity on digital assets. 

A surge in funding and project investment has accelerated the speed of decentralized finance (DeFi) innovation in Southeast Asia. Institutional adoption is well-positioned to continue on its growth trajectory in 2022, as investors become more comfortable and confident in DeFi's yield potential.

Read : This Southeast Asian nation crowned as the world's most crypto-friendly country 

Crypto's development and innovation are not limited to any single nation because it is a decentralized asset. Countries with a friendly regulatory structure that stimulates innovation, as well as progressive immigration laws, will benefit greatly.

Singapore, which is already a global financial services and wealth management center, is a clear forerunner, with crypto regulation in place since 2019. With that stated, a high bar has been established, with several players unable to meet the Monetary Authority of Singapore's rigorous criteria.

While this may have dampened some initial enthusiasm for Singapore's crypto-friendliness, the city-state remains a leader in terms of a progressive regulatory framework, which is supported by a pro-business environment that includes a low corporate tax rate, reliable infrastructure, and political stability.

Thailand, outside of Singapore, has been humming with activity from both crypto entrepreneurs and traditional financial institutions. Kasikorn Bank, Thailand's fourth-largest bank, has begun testing with DeFi, in addition to launching its nonfungible token (NFT) marketplace lately. 

Siam Commercial Bank, Thailand's oldest lender, has also entered the fray, acquiring a majority position in Bitkub, Thailand's largest digital asset market. Meanwhile, Thailand's state-owned Tourism Authority is looking into utility tokens as part of a payment ecosystem that eliminates the need for currency.

The country's central bank plans to adopt more thorough laws for digital assets in early 2022, as interest in this asset class is projected to rise in the coming years. 

Players interested in entering this market should keep an eye on the Bank of Thailand's (BOT) consultation document, which is set to be released later this year and seeks consensus on some limits on crypto business activities. The BOT strives to manage systemic risks without restricting development and innovation, much like the Singapore government.

With almost 66 percent of its people being unbanked, Indonesia is an Asian market ready for novel crypto use cases. In October 2021, the volume of cryptocurrency transactions increased tenfold, from around $4.5 billion to around $50 billion. 

On the Indonesia Stock Exchange, crypto traders currently outnumber stock investors. The ease with which retail investors can trade cryptocurrency in the country is enticing, as all they need is a smartphone with internet connectivity and about $.75.

The Indonesian government has sent confusing signals, banning crypto payments while legalizing trading and announcing plans for a national crypto market. 

The Central Bank of Indonesia is also looking into creating a national digital rupiah to "fight" cryptocurrencies, with the hope that users will view central bank digital currencies (CBDC) to be more secure and respectable. 

We may expect local companies to join in the growth of crypto through partnerships with global incumbents as Southeast Asia's largest economy.

A Malaysia-based Bitcoin fund was also created in March 2021, claiming to be the first in Southeast Asia to supply guaranteed institutional crypto goods.

As "old money" companies position themselves for a future centered on digital assets, we should expect additional investments into Asian crypto ventures in the next years. 

Asia also has enormous innovation potential to meet the unmet requirements of the region's 290 million underbanked, where DeFi services may accelerate with specific use cases such as services that provide smartphone access to the region's underbanked.

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