Safe to say that 2020 was the year crypto truly went mainstream.
Astronomical price rises, one word tweets shaking the community, popping up of new exchanges and ICO offerings, bumper listing of Coinbase, Meme coins rage, China clampdown, introduction to Non Fungible tokens.
It’s hard to believe that all of this happened in one year.
These developments kept cryptocurrency enthusiasts, as well as new folks on the edge as the world started noticing the meteoric rise of a new asset class.
The Asian Connection
The genesis of the currency, and the proposed advantages of it as a transactional medium are well understood.
In 2008, Satoshi Nakamoto, a mysterious person with no trace in history, wrote a white paper and launched a new currency – ‘Bitcoin’.
Nakamoto’s invention was controlled entirely by software, which would release a total of twenty-one million bitcoins, almost all of them over the next twenty years.
Every ten minutes or so, coins would be distributed through a process that resembled a lottery. Miners—people seeking the coins—would play the lottery again and again; the fastest computer would win the most money.
Participation among crypto enthusiasts increased leading to increase in bitcoin price, exchanges started popping up.
Cryptocurrency was on a roll.
Technologists realised that Blockchain technology could be applied in many more applications and that would require more robust language. This led to continuous iterations and spawned evolution of new cryptocurrencies including Ethereum.
Now, like most technology shifts, one would imagine that this you would imagine that the US, UK and other western countries would be at the forefront of this revolution.
That is not true.
Vietnam has the highest penetration of cryptocurrency as per the Global Crypto Adoption Index 2021. Thailand and the Philippines also rank among top 20 countries.
ow has this wave taken off in Southeast Asia?
Not just speculation
FOMO and the desire for astronomical returns will always be a reason for this boom.
There is no denying that, as long as humans exist.
However, the practical adoption of cryptocurrencies and underlying infrastructure goes well beyond this in Southeast Asia.
Southeast Asia is largely an underbanked region. In particular, only 4% of Cambodia’s population, 21% of Vietnam, 27% Philippines, and 40% of Indonesia’s population are banked.
Thus, digital currencies, if harnessed correctly, can prove to be an important tool for financial inclusion to a large population that don’t have access to a bank account.
Another key aspect has been the way payments have played out in the region.
Many believe that Southeast Asia’s payment journey has been akin to that of China, in the sense that it went from cash to digital/wallet payments, with credit cards not being as important as in the West.
This naturally has made consumers more open to the idea of using a digital cryptocurrency.
In retrospect, Southeast has always better poised to lead the cryptocurrency adoption owing to higher adoption of these digital wallets.
Support from regulators
One of, if not the biggest concern, of cryptocurrency adoption is government regulation. In Southeast Asia, after some initial hesitation, the approach has changed overtime.
Southeast Asian governments have demonstrated an increasing willingness to meet progressive customer requirements and allow for cryptocurrencies to have a legitimate presence in the region.
Currently, as it stands, some countries in the region are “crypto-friendly” in their approach while still drafting regulations. However, trading on exchanges is largely permitted across most – a big step.
Singapore is quickly emerging as a crypto hub, akin to Switzerland. Its crypto-friendly attitude – like no capital gain tax on cryptocurrency income, has created an environment where entrepreneurs and investors are welcomed to setup base in the country.
Traditional banks have also played their part. DBS Bank, the largest in the country, launched its full-service trust solution for cryptocurrencies this year.
Phillippines too has been making waves. The Philippines Central Bank has approved several crypto exchanges to operate, and some remittance and transfer companies and are also planning to introduce blockchain app bonds.
Another interesting example is Cambodia – its national bank has launched its first digital currency named Bakong in November 2020.
A mobile app of the same name was also developed for transactions to increase financial inclusion in Cambodia, where most of the population is still unbanked and to reduce its dependency on USD which is an unofficial second currency of Cambodia after the Riel.
Clearly, the trends are promising and these countries could provide the playbook for other countries to follow.
How the startup ecosystem is responding
Cryptocurrency start-ups are aplenty in the region.
Companies like Pintu, Mango Markets, and Cybavo have now raised in excess of US$100 million combined. Even some of the smaller countries like Philippines, Cambodia and Malaysia are seeing players emerge, such as coins.ph, Copycash and others. Meanwhile, huge global incumbents like Gemini, Binance and others continue to ramp up hiring and focusing on the region.
While there is still a long way to go, it is clear that the Southeast Asian crypto journey has a bright future.
To the moon.