In an interview in February 2016, Mr Zhou Xiaochun, the President of the People’s Bank of China, admitted that the Chinese government had been considering the adoption of a cen-tral bank digital currency (CBDC) for a while. As soon as the interview was over, Asia’s path to becoming a leading blockchain hub had already been paved. A couple of months later, the People’s Bank of China released a detailed statement on its 5-year plan, focused on the de-velopment and adoption of AI and blockchain to boost the economic progress of the country. One of the first steps was made in July 2017 when the Central Bank Digital Currency Re-search Institution officially began operating.
This was a clear sign that when a more conservative country, with a history of banning cryp-tocurrency exchanges, seeks ways to take advantage of blockchain and adopt it as an im-portant part of the national science and technology strategy, Asia has become fully prepared to be crowned as the world’s leading blockchain hub.The road to becoming the top blockchain hub
With financial centres like Singapore and Hong Kong, as well as its willingness to be flexible on the regulatory front and introduce initiatives, easing the adoption of new technologies, it is understandable why Asia, one of the leading FinTech hubs worldwide, has easily turned itself into a cradle for the blockchain revolution. The embraced multi-dimensional approach to ease the DLT adoption, consisting of progressive oversight politics, incubation schemes and tax incentives has seen the niche boom and attract industry’s top talent and prominent start-ups.
Asia, one of the leading FinTech hubs world-wide, has easily turned itself into a cradle for the blockchain revolution.
Asia’s status of a leading blockchain hub was earned through coordinated efforts not only from the leading countries and their respective authorities but from governments and cen-tral banks from all across the continent. Aside from the regulators' willingness to be flexi-ble, the success was due to Asia’s socio-economic environment and the perfect symbiosis of the well-functioning financial sector, rapidly-growing economies and solid interconnectivity.The state of blockchain adoption on a macro level
The interest for blockchain adoption in Asia does not come only from leading countries like Singapore, Hong Kong, Japan or China. In fact, emerging markets such as Thailand or tech-nological leaders like South Korea are also working towards the wide adoption of DLT by implementing policy changes and initiatives, intended to ease the process.China
China is known for its aggressive approach towards ICOs after banning token sales and do-mestic crypto exchanges in 2017. Aside from the government’s aspirations regarding CBDC, the country still remains fairly conservative when it comes to blockchain adoption. As of February 2019, China introduced new rules aimed at imposing responsibilities on those who operate blockchain technologies or the platforms that provide such services.
Overall, the introduced measures seem quite stringent. This makes the landscape in the country even more hostile for start-ups and innovators. When it comes to companies that are already operating within the country, it is yet to be seen how they will be affected and whether they will be able to reshape their business models.Japan
Ever since the government’s decision to acknowledge cryptocurrencies as real money in 2016, Japan has made a claim to become one of Asia’s leading innovators in the blockchain field. The country’s progressive approach is driven by national authorities like the Ministry of National Affairs and Communications and its aim to test a blockchain-based system to ease the way individuals can send documentation to the government electronically.
In the private sector, the Japanese financial service giant, SBI Group is setting the tempo for the wide adoption of blockchain not only in the country but in the whole region. Apart from the multiple projects for cryptocurrency exchanges alongside the Chinese company Huobi, SBI Group also launched an AI & Blockchain fund aimed at popularising the technology and its mainstream adoption.Singapore
Singapore Blockchain Week at the end of September 2018 was expected to bring out fresh news on recent advances in the sector, as well as introduce some promising startups. How-ever, it was the presentation of the Monetary Authority of Singapore that captured the at-tention with its emphasis on the plans to make the country a safe environment for crypto-currency investors.
Today, Singapore is a leading cryptocurrency hub, competing with London for the crown. Ac-cording to blockchain entrepreneurs, the reason for this success is the government’s willing-ness to follow through its commitment to support the ecosystem in the country. In fact, Sin-gapore was first in Asia to issue a guide, defining digital token offerings and one of the most progressive countries, when it comes to providing flexible income tax treatment for virtual currencies.
At a time when countries like China are strictly prohibiting cryptocurrency trading and ban-ning token sales, Singapore works on setting the rules for what is allowed and what is not, thus bringing transparency and improving the ICO environment.Thailand
For some, Thailand may come as a surprise contender for one of Asia’s top blockchain inno-vators. However, it was the second country, after Singapore, to issue a clear classification on ICOs, defining three types of tokens - investment tokens, utility tokens, and cryptocurren-cies.
Apart from that, the country acted extremely quickly on the front of designing and adopting a CBDC. Just a few months after it declared intentions for a national digital currency, it an-nounced the “Project Inthanon”. Lead by the Bank of Thailand and 8 participating banks, the initiative aims at exploring the potential benefits of DLT to optimise the Thai financial mar-ket infrastructure.Hong Kong
Consultancy Asia points out that Hong Kong, alongside Singapore, is one of the leading countries worldwide in terms of numbers of ICO launches and raised funds. Aside from the country’s liberal laws and comfortable business environment, this success was a direct re-sult from China’s decision to ban ICOs and Macau’s decision to restrict banks from partici-pating in them.
Hong Kong’s Securities and Futures Commission (SFC) monitors the ICOs, delivered in the country very closely, which helps to preserve the still-fragile confidence in the token sales niche. A good example of the authorities’ careful approach is the rules, announced by the SFC at the end of last year that restrict retail investors from trading cryptocurrencies via specific funds and platforms. The idea behind this regulatory framework is to maintain the stability of the blockchain and token sales landscape in the country and protect retail inves-tors from fraudulent schemes.South Korea
South Korea is one of the countries that account for the biggest percentage of cryptocurren-cy trading volumes globally with nearly 20% on a daily basis thanks to exchanges like Youbit, BitThumb, Coinone and Upbit. In reality, crypto trading in the country is so popular that it has turned into a problem due to the fact that it drains liquidity from the largest local stocks. A very notable example for this is the fact that Samsung’s price started moving in-versely to that of BTC.
Crypto trading in the country is so popular that it has turned into a problem due to the fact that it drains liquidity from the largest local stocks.
The blockchain market value in the country is estimated to grow exponentially in the next few years, starting from $17.8 million and reaching approximately $316.8 million by 2022.
Other countries, such as Malaysia, Indonesia and Vietnam are also making steps forward with government initiatives such as FinTech sandboxes and blockchain education centres. Even smaller markets like Cambodia, Myanmar and Brunei are leaning towards promoting blockchain adoption and easing the business environment for attracting DLT-related start-ups.On a micro level
The adoption of the DLT is dominant within institutions, large financial corporations and hedge funds. The reason for that is rooted in the drawbacks of the trading platforms in Asia’s venues – from higher fees, through security issues, to below-average consumer expe-rience and usability.
However, although all the drawbacks, currently 9 out of the 10 biggest exchanges by market volume are all based in Asia. The adoption of DLT has the potential to further improve their performance and strengthen their position as world leaders.
On a micro level, it is not only exchanges. Asia marks notable progress in recent years with the birth of some major global players in the blockchain industry. VeChain, for example, is a state-owned Chinese enterprise, provider of the first commercial blockchain platform to help the government track red wine imports.
MVL, a Korean company, runs on the blockchain behind the Uber-like service called Tada. The on-demand car sharing platform expanded to Singapore and is slowly becoming one of Asia’s most-progressive services.
MicroMoney is another great example of Asia’s march towards blockchain innovation. The company aims to support the unbanked citizens to get access to competitive credit lines and payday loans.
Another good example of blockchain’s adoption is Monetary Authority of Singapore’s project Ubin, run in collaboration with world’s leading banks like J.P. Morgan, Citi, BoA, HSBC, etc., intended to establish a more efficient interbank payment system.Moving forward
Asia is poised to lead the blockchain revolution thanks to its embrace of progressive regula-tory measures and its forward-thinking approach from both sides – oversight authorities and businesses. Apart from the pure value that DLT brings, the side effect of the improved envi-ronment on the continent is the opportunity to lure top-notch professionals like developers, investors and entrepreneurs from Europe and the US. Add to that the fact that as of now, the Asia-Pacific region’s economy is the world’s fastest-growing and the path to a brighter future is paved.By Viktor Tachev