Asia’s Financial Landscape: The Most Active Cryptocurrency Market

Asia is known for hosting about 60% of the world’s population. What you probably don’t know is that most cryptocurrency transactions take place on the continent. To be precise, about 31% of cryptocurrency transactions occur in East Asia. Also, 6 in 10 of the top tanking crypto exchanges are based in Asia, as per the Asia Crypto Landscape report by Mira Christanto.

What Makes Asia the most active cryptocurrency market?

Asia has a massive number of crypto miners, traders, users, and other players. According to a 2020 report by Switzerland-based Blockchain Valley Ventures (BVV), about 95% of the bitcoin-based futures volume is in Asia. Moreover, the continent has a history of price controls, dictatorship, and currency depreciation, as per the report. These factors make the region ripe for disruption creating a suitable environment for cryptocurrency adoption.

Conventional financial systems have also boosted cryptocurrency adoption and the popularity of cryptocurrency trading. For instance, investors in South Korea and China have resorted to using cryptocurrencies due to capital control. In Japan, the massive adoption is precipitated by low yields. Countries like Korea, Hong Kong, Japan, and China have deep liquidity pools, while others show great growth potential.

Other major reasons for the growth of the cryptocurrency in Asia include:

—   Investment in the public market is high

—    A technology-savvy population

—    WIFI prevalence

—    The widespread use of e-payments

—    A colossal number of computer science graduates

—   High penetration of gambling

A Growing Crypto Landscape

The Asian crypto market is poised for disruption. According to the Asia Crypto Landscape report, the continent has a thriving cryptocurrency landscape. Not convinced yet? Below are some important points to give you a broader perspective.

—   Coinbase holding is almost equal to Okex, Huobi and Finance combined.

—   The headquarters of some of the largest crypto derivative firms are in Hong Kong.

—   The Japanese market is large, accounting for a third of the total foreign exchange and Contracts for Difference (CFD) retail volume globally.

—    A third of South Korean workers have invested in crypto, representing the largest crypto penetration.

—   Singapore is among the lax Asian markets as far as crypto regulations are concerned. However, it is strict on Know your Customer (KYC), AML, FATF Travel Rule compliance, and fit and proper controllers’ compliance.

Most Asian countries have a thriving crypto landscape due to a wide variety of reasons. For instance, capital controls in Vietnam isolate the crypto spot market. According to the Christanto report, the bitcoin price volatility causes market lag extending several days.

Thanks to the growing adoption of cryptocurrencies, Luno is the top crypto exchange In Malaysia and Singapore. The firm, which has its origin in South Africa, has become a dominant player in Asian countries. The reports received support from BlockDaemon, an independent blockchain infrastructure.

Challenges in Asian Exchanges

Despite the massive growth, Asian-based exchanges have experienced several challenges. For instance, hackers target security loopholes. Also, the Asia-based have been under regulatory pressure.

As a result, the decentralized exchange popularity has grown significantly. Currently, their daily volume has exceeded that of centralized exchanges.

A Series of Unfortunate Events

Kucoin, a crypto exchange based in Singapore, was hacked in 2020. As a result, ether, bitcoin, and ERC20 wallets were compromised, leading to a loss of $150 million. To mitigate the loss, the firm conducted token swaps making the cryptocurrencies worthless.

On October 1, 2020, CFTC charged BitMex for allowing US citizens to operate on the exchange without adhering to AML/KYC requirements. BitMex is one of the leading future exchanges based in Hong Kong.

Also, in October last year, OKex stopped trading, causing panic in the market. This was after reports surfaced that the Maltese-Chinese exchange founder was under investigation by the Chinese government.

Consequently, the bitcoin price dipped three per cent. This was not the first time OKex is reportedly under investigation. Bithub, which is based in Korea, was also raided by police a month earlier.

Decentralized Platforms Provide Solutions

Decentralized exchanges (DEX) have an inherent weakness. Failure can originate from admin keys or The founding team censorship by SEC. This is one reason why IDEXs have resorted to enforcing KYC rules to avoid legal suits.

To curb these challenges, new DEXs have created decentralized platforms that are resistant to censorship. For instance, Injective Protocol, the pioneer of Layer-2 DEX, is championing cross-chain derivative trading. The aim is to woo traders from using BitMex, Deribit, and other centralized platforms. More DEXs will likely come up in the future with more effective solutions.

Final Words

Asia cryptocurrency landscape is on the verge of growth. However, this growth comes with inherent challenges. One of the solutions to these challenges is enhancing decentralized exchange systems. Eliminating this challenge will result in seamless growth and bring the best the industry can offer. That notwithstanding, Asia still leads on many fronts in the cryptocurrency industry. The rest of the world can borrow a leaf and learn one or two things.

Author Bio

Jerry Goddard is a bitcoin and cryptocurrency enthusiast and contributor at CryptoPredictions.com, which provides cryptocurrency forecasts. Jerry is a full-time investor, market analyst and content creator. He focuses on long-term holding rather than on day trading; for that reason, most of his analyses are predictions for a couple of years ahead.

Prepared and edited by Suzanna Hayek