The operators within Asian crypto-economies are at a crossroads. It is a time where certain firms are mainly staying away from the crypto sector, which they perceive lack investor protections, while there are others that pump investment into blockchain hubs, hoping to become the “Crypto Valley of Asia.”
Despite this love-hate relationship with cryptocurrencies, South East Asia particularly has seen a flurry of crypto activity. The regulators, as well as policymakers in this region, are easing up on rules, and several of the new projects to lure fintech investment have just been unveiled.
The race for claiming the title of the crypto valley of Asia gains momentum, with some new entrants like the Philippines and Thailand clipping at the heels of crypto-friendly nations, such as Vietnam, Japan, as well as Singapore. Now, it will be the time to place the bets.
The top-down approaches of several Asian countries
The Philippines is actually the latest country which sprinted out of the blocks. In August last year, the government has announced the launch of a new $100 million blockchain, as well as crypto hub set to be built at the Cagayan Special Economic Zone and Freeport of Philippines, in the North of the country. This crypto hub is sought to model Zug in Switzerland, which is the birthplace of Ethereum, and which already secured some commitments from 25 tech companies.
The initiative of the Filipino government reflects a top-down approach which maybe offers the quickest route towards mass adoption among consumers in the near future. Not just that it is going to spread awareness, as well as help in educating the public, but it is also going to facilitate and even integrate more profound participation from some dominant players in the corporate world, by also providing a dedicated space with infrastructure support for fintech and blockchain development.
South Korea actually has some similar hopes for the blockchain crypto hub on Jeju Island. The governor of the island, named Won Hee-ryong, has expressed his desire to designate the area as an exclusive zone for crypto and blockchain businesses. The government of South Korea has set some plans about investing almost $4 billion in this year, to develop pilot projects and a platform economy which is built on data analytics.
The government of Singapore was also delving into crypto advancements. In October last year, this island-city has brought in Binance, which is one of the largest crypto exchanges in the world.
Being one of the first Bitcoin adopters, Japan is out in front of its South East Asian neighbors when it comes to easing regulations, as well as becoming a crypto haven for companies. Cryptos are legal tender in the country, so it also holds one of the first self-regulatory bodies for crypto exchanges in the world.
Sensible regulations – the needed ingredient for the adoption of crypto
One necessary component for the quickest and safest approval of cryptos is sensible regulations. It actually creates a healthier environment for businesses to thrive while discouraging illegitimate entities to profit maliciously. Regulations are actually very likely to be successful if they are loose at first, to encourage innovation, but over some time tightened to reduce risks. Hence, countries that are quick to crack this are going to have a clear shot at winning the race.
In order to close the gap with Japan, several countries in South East Asia were busy easing regulations to attract fintech firms from abroad. Since August 2018, local banks in Thailand are permitted to invest in crypto, or run crypto-related businesses, and even issue digital tokens through subsidiaries. This is something of an about-face, as, in February, the Bank of Thailand ordered all of the local banks of the country to cease all crypto-related dealings.
During December of the last year, the finance minister of Malaysia stated that any entity that wants to issue crypto must defer to the central bank of the country. Also, the financial committee of India is set to present the long-awaited draft bill on crypto regulation in December.
What is going to set these countries apart in the race to establish itself as the crypto valley of Asia is also going to find the balance in the rollout of these regulations. Having some clear rules such as the one of Singapore, actually, mean that the governments may pave the path to collecting taxes from the crypto activity. And still, finding the line between supporting and suppressing will also prove difficult.
Predictions about the future
If the regulatory barriers are actually high, then just established institutions will have the ability to conform. This will reduce innovation, but at the same time, it will guarantee a safeguard for the ones that utilize or invest in cryptos. If the barrier is low, innovation will be stymied, but the risk in using cryptos will be higher. Countries that find such balance will have the ability to position themselves at the forefront of crypto performance in Asia.
Despite the attention from recently which Thailand, South Korea, and the Philippines were receiving in the crypto space, if one had to place a bat on the first “Crypto Valley of Asia” it would definitely have to be Japan. The yen actually boasts the second largest share of global Bitcoin trading, after USD, with the yen at one time representing about 58% of the market.
Also, while China imposed hostile regulations, the door is wide open for investors, as well as traders to enter the welcoming crypto nation of Japan. Two things which are going to hold Japan back is its inclusive nature and the language barriers.
Countries which have the ability to regulate cryptocurrency in a sensible way quickly and legally recognize them as valid currency may actually well usurp the head start of Japan to become the de facto “Crypto Valley of Asia.”