The term ‘crypto-friendly’ refers to a place or region that is relatively accepting of cryptocurrencies and blockchain technology in general. With the rising popularity of cryptocurrencies, emerging Southeast Asia has emerged as a hub for digital currency, with more and more people embracing the currency. In this article, we’ll explore why Southeast Asia is so crypto-friendly.
Lack of Financial Infrastructure
Many emerging economies in Southeast Asia, such as Indonesia and the Philippines, have a limited banking system, leaving the population with limited options when it comes to accessing traditional financial services. Cryptocurrencies have filled this void by giving people access to financial transactions, including remittances, online payments, and P2P transactions, without the need for a traditional bank account. The low accessibility of mainstream financial services has made it incredibly valuable for the region to provide inhabitants with the convenience of cryptocurrencies to conduct their day-to-day activities.
Furthermore, many of these countries face hyperinflation, making the use of cryptocurrencies a reliable way of preserving value and converting funds into unfamiliar currencies.
Governments in emerging Southeast Asia have been relatively welcoming towards cryptocurrencies, with many governments in the region jump-starting blockchain technology, research, and development. Countries such as Singapore, Malaysia, and Thailand have the necessary regulatory frameworks in place to support this new technology and encourage businesses to invest in it. Thailand, for example, has enacted laws towards Initial Coin Offerings, and granted licenses to cryptocurrency exchanges. In the process, this has allowed for local companies to adopt crypto and use the blockchain in public services.
The Philippines, on the other hand, became one of the first countries globally to regulate cryptocurrencies, after the Central Bank introduced regulations to protect users and counter any money laundering activities.
Growing Technological Innovation
Start-ups exploring cryptocurrencies and blockchain technology solutions has seen steady growth in the Southeast Asia region. It has even established itself as a hub for trading platforms, with Bitkub, Tokocrypto, and Zipmex as some of the well-known cryptocurrency exchanges in the region, making it easy and efficient for traders to adapt and use cryptocurrencies as essential forms of payment and exchange.
Blockchain and cryptocurrency technologies are still in the developmental stages globally, and with many emerging countries’ emerging economies lacking the necessary infrastructure, cryptocurrencies’ application could become a significant contributor to advancements across banking, commerce, and finance.
Ease of Use
People are always looking for easier and more efficient ways to transact payments, remittances and make financial transfers. The accessibility and adaptability of cryptocurrencies has made it possible for more people to take part in financial transactions without requiring the use of traditional banking systems. This also extends to carrying out transactions with no third party involved, as individuals can conduct their transactions and wallets, which creates an added sense of security and privacy.
Over the years, Southeast Asia’s growing economy and emerging markets have provided a fertile breeding ground for technological innovation. This, in turn, has led to the creation of a conducive ecosystem to develop and implement innovative technology like cryptocurrencies and blockchain.
The region’s regulatory support, coupled with the ease-of-use and convenience of cryptocurrency, has made it increasingly attractive for blockchain companies, investors, traders, and enthusiasts. Despite the sector still being relatively new, it is clear that Southeast Asia has signaled its intention to be a trendsetter in the crypto world and looks set to play a significant role in making the most innovative technologies an adopted feature in the world’s standard commercial landscape.
Cryptocurrency adoption has been driven mainly by developing countries, where the promise of financial democratization is particularly appealing. In Southeast Asia, where many people lack access to traditional banking services, crypto has the potential to boost financial inclusion. Vietnam, which does not recognize digital currencies as legal tender, has nonetheless seen a surge in crypto ownership, with nearly 17% of its population owning crypto, according to a report by Chainalysis. One reason for crypto’s popularity is its practical use in remittances, which can be significantly cheaper than traditional methods. Indonesia has banned the use of crypto for payments but plans to set up a crypto exchange this year and is likely to regulate virtual assets equally with other financial and investment instruments. The Philippines is the most pro-crypto country in Southeast Asia, allowing a wide variety of crypto payments and aiming for 50% of retail payments to be digital by the end of 2024. With the passage of MiCA in Europe, stablecoins could be a viable Web3 payment method that could help reverse crypto payment bans in Vietnam and Indonesia. Regulators in emerging Southeast Asia are likely to take steps to legalize digital assets, eventually leading to a more comprehensive virtual currency ecosystem in these countries.