From South Korea, the Philippines, to Hong Kong and Australia, retail traders are betting on cryptocurrencies in unique ways.
Even with recent pullbacks, cryptocurrencies remain one of the best-performing assets this year, with demand from retail investors in the Asia-Pacific region being a major driving force behind the rise.
A lot is happening in the Asia-Pacific region. Hong Kong recently listed a batch of cryptocurrency exchange-traded funds (ETFs), and Australia plans to introduce these products to its largest stock market. Meanwhile, Singapore is vying to become a cryptocurrency hub, and Web3 blockchain technology is rapidly gaining popularity elsewhere.
In January of this year, the approval of a Bitcoin ETF by US regulatory authorities increased the credibility of cryptocurrencies globally. This decision helped revive the cryptocurrency asset class after a series of scandals and bankruptcies caused Bitcoin prices to fall by 64% during the “crypto winter” of 2022. However, the cryptocurrency market has not been without volatility this year. In March, the frenzy caused by the US Bitcoin ETF pushed Bitcoin to a historical high of nearly $74,000, followed by a nearly 16% decline in April.
Some Asian investors have been long-time enthusiasts of cryptocurrencies, having experienced ups and downs, while others have only recently joined. Retail traders in countries such as South Korea, the Philippines, and Australia have built unique ecosystems.
Leah Callon-Butler, director of the Philippines-based Web3 consulting company Emfarsis, said, “The region has always been an early adopter of Web3 technology and has a strong sense of identification with it. Outsiders often lump ‘Asia’ into a homogeneous region, and it is a big mistake if you want to truly understand how and why cryptocurrencies have risen here.”
Here are the cryptocurrency trends in various parts of Asia:
South Korea:
South Korean traders are one of the most enthusiastic cryptocurrency trading communities in the world. In fact, the country’s currency, the Korean won, has just overtaken the US dollar as the most commonly used currency in cryptocurrency trading. According to data from CryptoQuant, smaller market cap tokens, known as altcoins, are particularly popular, accounting for 80% of trading volume on Korean exchanges, compared to about 50% globally.
Retail investors are also known for their love of cryptocurrency-based esports games, which reward players with cryptocurrencies or non-fungible tokens (NFTs). Charles Pyo, CEO of AI3, a company based in Seoul that focuses on promoting Web3 and artificial intelligence adoption, said that this year, Korean gaming companies such as Nexon Games Co. and NCSoft Corp. are planning to launch new play-to-earn games. AI3 is also collaborating with these companies.
South Korean regulators have strengthened their scrutiny of the industry following the collapse of the cryptocurrency Luna and UST, created by Terraform Labs co-founder Do Kwon. Last year, the country’s parliament passed a bill to enhance investor protection, allowing officials to oversee cryptocurrency operators and asset custodians.
The Philippines:
In recent years, Web3 games such as Axie Infinity and Pixels have gained popularity in the Philippines. For example, “guilds” or groups of people playing games together can earn NFTs and other rewards. Internet cafes have also emerged, allowing these groups to gather in real life.
A game guild called Yield Guild Games has grown and transformed into building Web3 protocols and helping other guilds around the world.
Leah Callon-Butler of Emfarsis said, “The Philippines is the center of global blockchain gaming applications. Guilds have become unique communities above all other games, and they transfer between games.”
The Philippines allows cryptocurrency trading but does not consider cryptocurrencies as legal tender. The central bank has established a sandbox mechanism to encourage innovation but with regulation. The central bank is also piloting a central bank digital currency.
Hong Kong:
Patrick Pan, CEO of digital asset platform OSL, explained that retail traders in the financial center are keen on using leverage in their trades. He said they have a high risk appetite and greater interest in alternative investment products. They are also heavily influenced by social media and key opinion leaders (KOLs) in the cryptocurrency space.
Retail investor Chun Ho Chow, 23, who also works at a Web3 startup, said he is confident in trades that others perceive as too risky. “Many young people want to ‘get rich quick’ by trading volatile assets. Many have become millionaires through such trades and post messages on social media,” he said, although he is aware of survivorship bias, he believes he can achieve the same.
Hong Kong only recently allowed retail investors to legally invest in cryptocurrencies and has since implemented regulations for cryptocurrency exchanges and related entities. Regulators claim that their practices prioritize consumer protection, but some are concerned that this may reduce Hong Kong’s attractiveness to companies that can profit more from activities such as staking and derivatives.
On April 30, Hong Kong allowed the listing of three ETFs directly investing in cryptocurrencies. The demand for these funds will help determine whether Hong Kong’s efforts to become a strictly regulated digital asset center are progressing.
In mainland China, all cryptocurrency activities are banned, including fundraising, exchange trading, and Bitcoin mining. However, the enforcement of these measures has always been questionable.
Australia:
Retail investors in Australia are well-known for their interest in Ethereum, with some even abandoning Bitcoin completely in favor of its alternative cryptocurrencies. According to a survey by cryptocurrency exchange Kraken, Ethereum accounts for 59.4% of wallets held by Australians, while Bitcoin accounts for 17.7%. In comparison, globally, Ethereum accounts for 34.5% of investor wallets, while Bitcoin accounts for 29.9%.
Kurtis Dawe, a 33-year-old trader from Sydney, is particularly bullish on Ethereum over Bitcoin because Ethereum’s price appreciation has not been as significant, and many alternative cryptocurrencies use the Ethereum blockchain. “I believe it has more room for growth than Bitcoin,” Dawe said, adding that he recently sold all his Bitcoin positions. He is also optimistic that Ethereum ETFs will be listed soon, further boosting its price.
Japan:
As part of an extensive plan to boost its economy, the Japanese government is trying to develop Web3 companies. It has started relaxing cryptocurrency rules regarding listing and taxation and allows venture capital firms and other investment funds to directly hold cryptocurrencies. Nomura Holdings and other financial firms are also driving the development of Japan’s security token market (a tokenized real-world asset) by transforming corporate bonds, securitized real estate, and other financial products into tokens.
However, regulations remain strict overall. For example, mutual funds are not allowed to hold cryptocurrencies, including Bitcoin ETFs.
Masamichi Matsushima, a cryptocurrency analyst at Monex Group Inc., said that Japanese financial firms are still slow to engage in activities such as custodial services in the cryptocurrency field because they tend to avoid any activities that have not been explicitly approved by regulatory officials.
India:
Cryptocurrency investors in India are interested in the US Bitcoin ETF. Through a program called “Liberalised Remittance Scheme” by the Reserve Bank of India, investors can remit up to $250,000 abroad annually and use the money to buy foreign securities. Meanwhile, startups are seeing an increasing demand for cryptocurrency derivatives and are expanding their product offerings.
The situation has changed compared to last year. Cryptocurrency trading in India dried up after the implementation of a burdensome tax regime in 2022. The government presented this as a way to formalize cryptocurrency assets, but the side effect was excessively high transaction costs.
Officials have also recently cracked down on offshore exchanges that are not registered locally while promoting their own central bank digital currency. Various pilots are currently underway.
Singapore:
Due to its relatively small population, Singapore is largely an institutional market for cryptocurrency investors, partly because the Monetary Authority of Singapore has repeatedly warned residents not to engage in cryptocurrency trading. Singapore prohibits cryptocurrency companies from public advertising, a key tool for such entities to promote their products.
However, for institutions, Singapore encourages the use of blockchain for tokenization, cross-border remittances, digital bonds, and similar initiatives, which can often speed up payments and reduce costs. One of these initiatives is the “Project Ubin” by the Monetary Authority of Singapore.
Taiwan:
In Taiwan, the new US Bitcoin ETF is a major topic of discussion. Initially, cryptocurrency investors could purchase Bitcoin ETFs through brokerage firms offering sub-brokerage services, but in January, the Financial Supervisory Commission of Taiwan instructed domestic brokers to stop accepting client orders to “protect investors.”
The Financial Supervisory Commission later added that it would negotiate with brokers and may reopen Bitcoin ETF services in April, but that has not happened yet.
Thailand:
The sharp decline in cryptocurrency prices in 2022 dealt a heavy blow to retail investors in Thailand, especially with the collapse of the cryptocurrency exchange Zipmex. This prompted regulators to strengthen oversight. However, the government led by Prime Minister Srettha Thavisin, who took office at the end of last year, is vigorously promoting Thailand as a digital asset trading center in Southeast Asia. He has exempted some taxes on cryptocurrency and digital asset trading, allowing traders to invest in overseas cryptocurrency ETFs.
Additionally, competition in the cryptocurrency trading business in Thailand has intensified with the entry of Binance and Kasikornbank, one of the country’s major commercial banks. Binance has partnered with Gulf Energy Development Pcl, the country’s largest private power company controlled by Thailand’s second richest person, to launch a new cryptocurrency exchange. Recently, regulators have allowed mutual funds to directly invest in cryptocurrencies for the first time.
Vietnam:
Many Web3 games are developed in Vietnam, including Sky Mavis, the developer of Axie Infinity. Another game called Sipher also comes from Vietnamese developers.
Giap Van Dai, founder and CEO of the Nami Foundation, which provides a cryptocurrency trading platform, said that local investors are seeking cryptocurrencies for higher returns.
He said, “Vietnam has not established regulations regarding cryptocurrencies and blockchain, providing a so-called sandbox for developers, investors, and market growth.”
Cryptocurrency-related businesses are not prohibited by Vietnamese law, but cryptocurrencies are not considered legal tender. Issuing cryptocurrencies and using them as a payment instrument technically violates the law. The central bank has warned that cryptocurrency trading carries risks, and fraud victims will not be protected by the law. Earlier this year, the government required the Ministry of Finance to complete cryptocurrency legislation by May next year to combat money laundering.
Tags:
ETF
Ethereum
Bitcoin
United States
South Korea
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Note: The translation provided above is a direct translation of the original article.
