Why Crypto Investors Are Betting on Asia

Cryptocurrencies have gone a long way in recent years. They were but a niche market and a fascinating piece of technology at first, and now they are a globally used currency accepted by both the financial institutions and the governments.

This change has also led to changes in the regulatory landscape. At first, cryptocurrencies were completely unregulated and not taxed at all. Now, when there’s such an increase in use, governments are looking for ways to treat crypto investments as those in traditional markets. This has led many investors to look to Asian countries as a haven from what they perceive as over-regulation.

Progressive Regulatory Framework

There are many factors to take in when analyzing the rise of cryptocurrency markets in Asia. It’s best to start at home, where cryptocurrencies were first developed. Over a decade ago cryptocurrencies were a novel and unregulated concept offering a decentralized approach to traditional finances.

Web3 wallet for your digital assets!

Install

Install

Over the years, western governments have implemented a progressive regulatory framework with the goal of making the cryptocurrency market better regulated, easier to predict, and safer for investors. All of these goals were achieved to an extent but they had a downside as well. The market was now less free and more heavily taxed.

Investors tend to run away from the market that is too heavily regulated and that has started to happen for crypto. The nature of the product – blockchain technology – itself allows the investors to operate anywhere in the world and to be on the lookout for new markets. The best cryptocurrencies were available worldwide from the get-go.

Asian markets are especially appealing to cryptocurrency investors and they are already making a push to those markets, as the regulation debate is heating up in the US, Canada, and the EU.

Overview of the Asian Market

The Asian market is the perfect fit for cryptocurrency for a variety of reasons, some of which were obvious from the get-go. There’s a growing middle class with disposable income to spare and invest in the latest financial development. Crypto is one such development that’s especially piqued the interest of the Asian public, as it’s modern and future-oriented.

The population in Asia is also very tech-savvy, much more so than in the western countries. The investors will have an easier time adopting the new technology and its features.

There are already efforts made by some Asian countries to take part in the cryptocurrency market race and to create a legal framework for the use of cryptocurrencies. South Korea, Singapore, and Japan were among the leaders in this regard.

All of these countries are known for their business-friendly attitudes and low-tax fiscal policies that attract foreign investors. Moving towards crypto as the next big thing for the Asian markets is therefore a logical next step.

The two largest countries on the continent, however, have taken a different approach. Both India and China prohibit cryptocurrency trading. The two countries make up more than half of the continent's population and the largest economies.

Legal Framework in Asia

South Korea and Japan have changed the legal framework for the use of cryptocurrencies to accommodate the growing interest in it. Japan has established a licensing framework for crypto exchanges. The framework tries to address the transparency issues that the Western exchanges have had at first. Therefore it offers a better service based on the previous experience.

South Korea has lifted its ban on the initial coin offerings. The government is also doing what it can to promote the use of cryptocurrencies and investments in crypto coins. It’s proven to be an effective effort and there’s an increased interest in crypto.

Trading Volume

As the investors are moving to Asia the crypto exchange landscape is changing. This is happening so quickly that it’s easy to notice with just a glimpse at the market. Leading crypto exchanges such as Binance, Huobi, and OKEx have established strong footholds in Asia. At this point, the exchanges already have millions of users.

The exchanges allow the investors to buy and sell a variety of different cryptocurrencies including the most popular ones such as Bitcoin, Ethereum, and Solana.

Cryptocurrencies and Innovative Finance

There’s also a growing demand for DeFi and NFTs in Asia. This in turn raises the need for cryptocurrencies, further expanding the market. These digital products have found a growing market in Asian countries as their population has money to invest and a good understanding of digital assets.

The general public is also interested in following trends and investing in products and features that appear to be status symbols. Digital products and innovative technology in general are such symbols and it helps with the speedy adoption of crypto tech in Asian countries, especially as the US turns on them.

How the EU Plays Into It?

The changes in the European market have an effect on the Asian ones as well. Companies that operate in Europe often move to Asia when they experience regulatory problems created by the EU’s vast and complex bureaucracy. This is already starting to happen in both the EU and the UK.

Binance, one of the largest cryptocurrency exchanges left the Netherlands just a few weeks ago. The regulations set by the Dutch didn’t allow Binance to offer their service. As soon as Binance announced their decision, the French government opened an inquiry into its business practices as well.

Events such as these are making cryptocurrency companies focused on the Western markets move to Asia and find new customer bases. The EU often follows the US lead in these areas, but it also tends to go further when it comes to regulations and government oversight.

Hong Kong’s And Chinese Crypto Market

Hong Kong has a lively crypto market. It’s partly the response to the restrictive crypto policy in China. The communist government in China still prohibits the use of crypto and considers it to be illegal. There’s a small crypto market in mainland China due to the difference in the local laws, but Hong Kong’s crypto market is almost as large as that of China.

There are a few crypto projects currently in the works in Hong Kong and China and these are making a splash due to their interesting tech and infrastructure, but don’t have a large pool of users. 

• Conflux – it’s a cryptocurrency based on blockchain that uses Proof of Work for its transactions. It’s the most prominent cryptocurrency actually developed in China.
• Neo – often called Chinese Ethereum since it uses a similar Layer 1 blockchain technology and offers some of the same features in terms of scalability.  As is the case with Ethereum Neo works best when it comes to smart contracts.
• Huobi is a crypto exchange set up in China. It also has its own coin called HTX. Huobi was one of the pioneers in margin trading.

To Sum Up

Cryptocurrency markets are moving to Asia in recent years and the trend will continue for the years to come. This is mostly a response to the changing regulation climate in Europe and the US since it has become more heavily regulated when crypto was widely adopted.

The Asian markets are also very well suited to the crypto industry- with its growing, educated, and urban middle class.