How Asia is Becoming the World’s Crypto Powerhouse
In Brief
Asia is emerging as the world’s crypto powerhouse, driven by progressive regulations in Singapore and Hong Kong, robust institutional adoption, and diverse retail use cases, solidifying its global influence in digital finance.
The post-election crypto rally in the U.S. has rippled worldwide, with Asia embracing the waves. Countries like South Korea and even Bhutan are making headlines for owning over US$1 billion in Bitcoin holdings and experiencing a flurry in digital asset trading volumes, respectively.
Nonetheless, Asia’s appetite for crypto is nothing new; according to Chainalysis’ 2024 Global Crypto Adoption Index, the continent claims five of the top ten nations—a sign of its rising influence in the global market and continuous efforts to advance the crypto ecosystem.
Several economic factors are at play in Asia’s rise as the world’s crypto powerhouse, with Singapore and Hong Kong leading the charge. For a start, proactive regulation creates a clear framework for crypto businesses, promoting favorable conditions for the institutional adoption of decentralized finance.
The increased institutional interest, in turn, brings about essential resources for innovation and facilitates the convergence of digital assets with traditional financial rails. On the retail front, digital assets cater to the needs of individuals across various income brackets, offering benefits like lower transaction fees through stablecoin payments alongside sophisticated products for more substantial investments.
Asia’s Regulatory Edge
Sound regulatory standards form the backbone of crypto markets. Effective oversight weeds out fraudulent activities that negatively affect public confidence and creates a conducive environment for legitimate businesses to enter and thrive.
Ranked first and second on the Henley Crypto Adoption Index 2024 for the most crypto-friendly countries, Singapore and Hong Kong are front runners in Asia’s regulatory landscape. The Monetary Authority of Singapore (MAS) is known for implementing strict regulatory policies, primarily through the Payment Services Act. Under this framework, crypto companies undergo rigorous background checks before being granted the Major Payment Institution License.
Such commitment to transparency and safety becomes a major pull factor for businesses to set their bases in Singapore. A notable example is Coinbase, which has established its Asia office in the city-state and has even partnered with the Economic Development Board to launch a new Engineering Hub.
Meanwhile, the Securities and Futures Commission (SFC) of Hong Kong shines in its forward-looking regulatory approach, as seen in its pioneering approval of spot Bitcoin and Ether exchange-traded funds in Asia.
Following this milestone, the SFC has also expressed steadfast interest in approving advanced financial products such as Ethereum staking, giving Hong Kong a first-mover advantage ahead of the U.S. These initiatives reflect a progressive regulatory stance along with a nuanced understanding of crypto’s unique properties, setting a precedent in the global crypto scene.
The Rise of Institutional Adoption
Institutional participation is a critical catalyst for the crypto market, as these establishments bring substantial capital inflows and infrastructural support. Such resources exert a domino effect by spurring liquidity, price stability, and technological development.
While institutional crypto adoption in the U.S. is largely driven by private firms such as BlackRock and Franklin Templeton, Asia has numerous case studies of governments taking the lead. For instance, while Singapore’s MAS maintains a conscientious stance towards speculative crypto trading, it also recognizes the transformative potential of distributed ledger technology. This culminated in Project Guardian, a multi-pronged initiative where 26 financial institutions like Deutsche Bank, J.P Morgan, and Ant Group are brought on board to explore asset tokenization use cases within traditional financial systems.
Similarly, the Hong Kong Monetary Authority is expanding the Project Ensemble sandbox to explore cross-border tokenized use cases with the Banco Central do Brasil and the Bank of Thailand. These initiatives highlight a collaborative and experimentative approach through which institutional adoption can help legitimize crypto utility and drive broader market acceptance.
Digital Assets For Diverse User Profiles
Retail crypto adoption paves the way for mainstream acceptance by improving the usability of digital assets in everyday life. This is especially so in Asia, where 61% of respondents in a Coindesk study believe that digital assets will reshape global finance and services are more readily available to meet the needs of tech-savvy populations. Stablecoins drive adoption by facilitating digital payments, while advanced financial products appeal to the wealthy elite. Together, these crypto user cases address the needs of individuals of different income brackets.
Pegged to real-world fiat currencies, stablecoins are perceived as the least volatile among digital assets. Their stability is further enhanced in Singapore and Hong Kong, where stablecoin regulatory frameworks are in place. 2024 has seen stablecoin payments in Singapore soaring to a record-high of $1 billion, and stablecoins account for 40% of Hong Kong’s total value in crypto. Factors contributing to the popularity of this asset class include its ability to lower barriers in traditional financial systems—like fast cross-border transactions at lower fees—and is readily available on widely used payment apps such as Grab. Such features make crypto practical and convenient for the everyday retail user.
For advanced retail investors in Asia, a report by Aspen Digital indicates that 76% of family offices and high-net-worth individuals are currently investing in digital assets, with an additional 16% planning to follow suit. This marks a significant uptick from the 58% recorded in 2022. With motivations like portfolio diversification, hedging against inflation, and potential for higher returns, more advanced retail investors are turning to digital assets for long-term use cases and seeking sophisticated financial products.
Asia’s demand for digital assets among advanced retail investors is supported by ready access to crypto services—a strength that its US counterpart struggles to match despite housing the world’s largest cryptocurrency market. While the US grapples with regulatory ambiguity, Singapore and Hong Kong have jurisdictions that issue licenses for major crypto operators like Anchorage and Bitgo, facilitating a streamlined and reliable user experience.
More notably, traditional financial institutions in Asia are leveraging their infrastructure for crypto services. For instance, Singapore’s DBS Bank is working towards becoming the first bank in Asia to offer Bitcoin and Ether options trading, along with structured notes for eligible private investors. This development showcases not only growing investor confidence in digital assets but also a healthy symbiosis between traditional and decentralized finance.
Building a Strong Foundation for Regional Leadership
Global crypto adoption will only continue to grow, and Asia is poised to take the lead. The case studies of Singapore and Hong Kong demonstrate how timely regulatory developments help cultivate a secure and progressive crypto market. The institutional support through pilot programs and sandboxes further highlights how a collaborative environment is essential to champion blockchain’s convergence with traditional finance.
Finally, by capturing the diverse needs of users—from daily payments to sophisticated products—these developments bolster the population’s familiarity with digital assets and enhance their practical use cases. Through innovation and regional leadership, crypto is on a steady path to being an integral component of finance.
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About The Author
Danny is the Co-founder of Tranchess, a DeFi protocol offering structured and liquid staking solutions. With over 17 years of experience in investment banking at Société Générale and BNP Paribas, he brings extensive leadership experience in trading, sales and management in the APAC region. Danny is also the Co-Chairman of the Digital Assets Association (https://digitalassetsassociation.org/) in Singapore, a non-profit association at the forefront of integrating blockchain technology into the fabric of traditional finance.
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Danny is the Co-founder of Tranchess, a DeFi protocol offering structured and liquid staking solutions. With over 17 years of experience in investment banking at Société Générale and BNP Paribas, he brings extensive leadership experience in trading, sales and management in the APAC region. Danny is also the Co-Chairman of the Digital Assets Association (https://digitalassetsassociation.org/) in Singapore, a non-profit association at the forefront of integrating blockchain technology into the fabric of traditional finance.
