Exploring the Progress of Cryptocurrency in Asia

This blog takes a deep dive into the Asian crypto market and its current state. We discuss progress being made on the adoption and regulation fronts and how each country is navigating the process of institutionalizing crypto in its economy. Understanding a region that holds over 65% of the market share in crypto today is an important step.

In the last five years, Asia has emerged as a hotbed for cryptocurrency innovation and adoption. From the bustling streets of Tokyo to the financial districts of Singapore, the region has seen a remarkable surge in interest and investment in digital assets. This blog post will explore cryptocurrency’s progress in Asia, key developments, adoption trends, and the future outlook. According to the IMF, “The total market value of the world’s crypto assets surged 20-fold in just a year and a half to $3 trillion in December of 2021”. However, what has changed since the pandemic is the correlation between Asian equity markets and Bitcoin volatility. For example, according to this chart, the returns correlations of Bitcoin and Indian stock markets have increased by 10-fold over the pandemic, suggesting limited risk diversification benefits of crypto. 

Bitcoin becomes relevant

The Rise of Crypto in Asia

Asia’s journey with cryptocurrency dates back to the early days of Bitcoin. However, in the last decade, the region truly embraced the potential of blockchain technology and digital currencies. Countries like Japan, South Korea, Singapore, and China have been at the forefront of this movement, fostering vibrant crypto communities and driving innovation. In Singapore, 75% of institutional investors plan to increase digital asset allocations in 2024. In Hong Kong, institutions like Harvest Funds and VSFG have announced their intention to submit applications for a spot in the Bitcoin ETF. Financial institutions like DBS Bank in Singapore, Hong Kong and Shanghai Banking Corp, and Hana Bank in South Korea have all taken pro-crypto actions in recent years. All these events point to a friendlier and welcoming environment for crypto in the region. 

Japan: A Pioneering Nation

Japan stands out as one of the early adopters of cryptocurrency and blockchain technology. In 2017, the country officially recognized Bitcoin as a legal method of payment, paving the way for widespread adoption. Today, Japan boasts a thriving crypto ecosystem, with major exchanges, retailers, and even government-backed initiatives supporting digital currencies. 

In Japan, owning and investing in crypto has no restrictions. The Payment Services Act defines crypto exchange providers as businesses that carry out transactions, broker services, asset management, and crypto management on behalf of another person. They have fully integrated crypto into their financial and regulatory systems, making it a safe alternative to fiat currency. 

South Korea: Crypto Enthusiasts' Haven

South Korea consistently ranks among the top countries in terms of cryptocurrency trading volume. Despite regulatory ups and downs, the country’s tech-savvy population has embraced digital assets. According to CCData, the Won accounts for 41% of the market, up from 24% in September. In the same period, the US dollar’s market share has fallen from 51% to a tick under 40%. Seoul, the capital city, is home to numerous blockchain startups and hosts vibrant crypto communities. 

Singapore: The Fintech Hub

Singapore has positioned itself as a leading fintech hub in Asia, with cryptocurrency playing a significant role in its financial landscape. The city-state has adopted a progressive approach to blockchain regulation, attracting investment and talent worldwide. Singaporean authorities have introduced frameworks to regulate crypto exchanges and promote innovation in the sector. Companies only need to apply for a license to operate in the region and have their primary location in Singapore. 

China: Navigating Regulatory Waters

China has had a complex relationship with cryptocurrency, oscillating between crackdowns and cautious acceptance. While the Chinese government has imposed restrictions on cryptocurrency trading and ICOs (Initial Coin Offerings), it has also embraced blockchain technology as part of its national strategy. Their stance on blockchain caused a mass exodus in 2021 as the Bitcoin mining industry left the country. 

However, the country is developing a CBDC. The People’s Bank of China understands the need for a digital currency, but decentralization is not on the table. Chinese tech giants are actively exploring blockchain applications, and the country continues to lead in mining operations.

Summary

All the activity in the region around blockchain has positively impacted the acceptance, regulation, adoption, and implementation of crypto in the Asian market. According to Binance News: “In the first two months of 2024, the Asian market’s share of crypto trading volume ranged between 67% and 69%. Reuters reports that the trading volume in the Asian market is very similar to the bull market in 2021 when Bitcoin reached a record high.”The volume is only increasing, and the correlation between crypto prices and Asian markets seems to strengthen. Those countries that have embraced cryptocurrency are excellent case studies for its benefits to the larger population. Making crypto more accessible to the Asian population opens up millions of wallets and trillions more in transactions.