Asia is witnessing the emergence of custodian services to digital assets management platforms at an increasingly fast pace
Ten years after the launch of the Bitcoin whitepaper, there has been less than 20 per cent purchase of the digital assets, and corporate trust in cryptocurrencies remains low.
While media outlets and online forums across Europe and North America are home to endless debates over the merits and demerits of cryptocurrencies, Asia is fast emerging as a world leader in digital asset innovation.
Throughout the region, startups, large corporations, and regulators alike are embracing the digital assets industry, leading the charge in the development and assimilation of this new asset class within traditional markets.
From Chinese government’s plan to launch its cryptocurrency to Japanese e-commerce giant Rakuten’s foray into the digital assets exchange market and Singapore’s tax-cut for payments made in cryptocurrency, it is increasingly apparent that Asia’s economies are not only embracing digital assets but also leading the charge.
Asia’s love affair with digital assets is nothing new. 2017—the year which saw the price of bitcoin rise by some 2,000 per cent—was the first showcase of Asia’s unparalleled interest in digital assets.
The propulsion of digital assets to mainstream attention and astronomical market highs was primarily driven by Asian investors and regulatory proactivity within the region.
While 2017 saw South Korea capture more than 10 per cent of the global bitcoin (BTC) market and 5 per cent of Ethereum (ETH) transactions. Japanese exchanges frequently accounted for up to 60 per cent of global BTC transactions.
Japanese retail investors seemed undeterred by the closure of the Japanese exchange. Mt. Gox, which as early as 2014 processed almost 75 per cent of the world’s cryptocurrency trading regularly. Even at this early stage in the evolution of digital assets.
The zeal of Asia’s retail investors and consumers was matched only by the forward-thinking of its regulators. Japan serving as the first country to legalise bitcoin as a form of payment and the Monetary Authority of Singapore launching Project Ubin. A consortium of banks and fintech companies exploring the use of blockchain within the island nation.
While digital asset markets experienced explosive growth, it was the Asian economies reaping the rewards and Asian regulators building the necessary infrastructures to maximise benefits.
The momentum experienced by the Asian digital assets sector during its nascency has not been lost, in fact, regional actors continue to dominate the field of financial innovation.
One key reason for this is that Asia is home to a growing wealth of talent within the blockchain industry. With an abundance of developers and digital assets service providers already based within the region, a recent study by LinkedIn revealed that “blockchain” is the fastest-growing skill in Singapore and among the top three in China, Japan, Taiwan, South Korea, Hong Kong, and Vietnam.
This comes as no surprise, given the dedication of some of the region’s leading universities, such as the National University of Singapore, to incubating numerous blockchain companies and nurturing digital assets innovation and research.
In addition to the large talent pool for digital assets development within Asia, the region’s longtime reputation for the excellence of its financial markets and the continued proactivity towards the digital assets space have gone a long way in cementing its first-mover advantage in digital asset innovation.
As Asian consumers have continued to show interest in cryptocurrency markets, the region’s regulators have taken establishing clear regulation around digital assets very seriously. The recent G20 summit in Osaka was mirrored by the V20 summit, dedicated to the discussion of digital assets regulation on a global scale, held in the same city.
Both conferences had a strong Asian presence, and both saw global leaders grapple with the topic of accelerating the regulation of the digital assets space. Asia’s regulators, unlike their counterparts in North America and Europe, continue to lay the foundations for the mature regulation of financial technologies—with the Thai Securities and Exchange Commission recently updating the country’s crypto regulations.
Yet amidst all of this activity, there is still much to do to ensure that Asia maintains its leadership position in digital asset innovation, and to grow the digital asset economy.
In order to achieve mainstream adoption of cryptocurrencies and digital assets, there will be a need for consumers to understand the value which digital assets can accrue fully.
Many cryptocurrency novices have zero knowledge of digital assets’ underlying technology, blockchain—and even more limited insight into the variety of products on offer within the broader fintech ecosystem.
In order to provide the necessary understanding and clarity to demystify the digital assets market for mainstream consumers, industry veterans have a responsibility to design platforms which provide a sound knowledge base and understanding of the ecosystem and the wealth of opportunities which this new asset class provides.
The creation of user-friendly digital assets services has, for a long time, been neglected by industry experts. However, the entry of tech giants, such as Facebook, to space has highlighted a need for change.
Asia’s innovators would be wise to take note that we must now lower the barriers to enter the digital assets market, simplifying user experience and empowering novices to engage with the digital assets space via the appropriate channels
The development of professional financial products for the industry, such as insurance for cryptocurrencies, will go a long way in mitigating consumer risk in entering the space — spurring on mainstream adoption.
The time to act is, undoubtedly, now before larger enterprises provide user-friendly solutions which are much needed within the cryptocurrency market and to monopolise the industry.
If these trends continue to develop, Asia will be the first continent to embrace cryptocurrencies in the mainstream. Not only is Asia leading the pack, but the finish line is also insight.
Author: Alex Lam, Co-Founder and CEO of RockX, a new digital asset services platform that aims to further accelerate the development of Proof-of-Stake (PoS) public blockchains
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Image Credit: Eftakher Alam
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