Earlier this year, Chainalysis released its Crypto Adoption Index report. In it was listed the top countries for crypto adoption and it was evident that rates within Asia were significant. Five out of the ten countries were in Asia, with India, Indonesia, and Vietnam rounding out the top 5 entries.
Other stats show that crypto adoption is sharply on the rise in the continent, even beating out rates in the West. This leads to the question of how these Western countries can learn from Asia and revitalize their crypto use:
Banking the Unbanked
Whenever crypto use in Asia is looked at, one thing that sticks out is its ability to offer financial services to those who typically are shut out of them. In Vietnam, for example, up to 61% of the population does not have access to traditional banking services. In that case, cryptocurrency (specifically DeFi) offers them a chance to trade, invest, take loans, and so on.
Investment is a very big part of this as a person who cannot access a regular bank account probably cannot buy stocks or shares. But with a smartphone and some internet access, they gain entry into the world of crypto. And this world has a lot to offer in terms of investment opportunities. You have your legacy tokens like Bitcoin and Ether and also new offerings entering the market every day. As Kane Pepi writes, meme coins give investors a chance to expand on their options in a way traditional finance might not (source: https://cryptonews.com/kr/cryptocurrency/best-meme-coins/).
Following this example, the West would benefit from promoting crypto as an opportunity for the traditionally unbanked. Most of the efforts thus far have been to bring already-banked and empowered people into the fold, ignoring the significant population of underserved consumers.
An Emphasis on Remittance
Another major case of crypto use in Asia is remittance. In 2021 alone, Vietnamese nationals living abroad sent $18 billion in total back to their home country, which was an increase from the previous years. The simple truth is that remittance rates within Asia are massive and many who do this are turning to cryptocurrency to save fees. Tokens like XRP and Litecoin are known for their high speeds and low fees and this makes them a go-to for people looking to complete remittance transactions.
The West, ironically, has no shortage of immigrants who could take advantage of this service but perhaps more promotion needs to be done. It has worked in countries like Vietnam and India so there is already some sort of template to follow. If crypto can be adequately marketed within immigrant communities specifically for sending money back home, the spike in adoption rates would be significant.
Non-Hostile Laws
The crypto regulatory scene in Asia is, for all intents and purposes, complex. On one end of the spectrum, you have China which has outright banned cryptocurrency transactions, only officially allowing the digital yuan. Then you have countries like Singapore and Vietnam that have robust crypto laws that, while not making digital assets legal tender, give room for the industry to grow.
For the most part, it does not seem like the governments are at war with the crypto industry. Contrast that with Western nations like the US where cryptocurrency businesses find themselves constantly at odds with regulators. The SEC has taken virtually every major industry player to court, from Ripple Labs to Coinabse. This has led to calls for SEC reform, as well as years-long legal battles that do not benefit the industry. As such, the West needs to work towards crypto regulations that protect investors while not antagonizing industry stakeholders. The last decade has seen some strides in that regard such as new tax codes and the launch of the spot crypto ETFs. If this can continue and better attitudes are adopted, crypto use will be higher.
Hedging Against Inflation
A consistent use case for cryptocurrency has been to alleviate the effects of inflation all over the world. We’ve seen this in countries like Greece and even El Salvador, which made cryptocurrency a form of legal tender. Because traditional financial systems are not always stable, people will always look for ways to protect their money. Given that several Asian nations have faced economic hardship, cryptocurrency has been touted as a form of relief, though not without controversy.
While the governments of Western nations cannot advise citizens to turn towards crypto, the industry behind digital assets has to diversify its use cases in the eyes of the public. So far, crypto has been heavily pushed as a way to make money and less so as a way to protect the money consumers already have. If more balance can be achieved in crypto’s messaging, more Western investors will turn to it not to trade speculatively in the short term but to secure stability in the long term.
Taxes
Tax rates have always been an incentive for businesses to shift their operations and for investors to take on certain assets. While the situation is not the same in every Asian country, some are looked at very favourably by the industry thanks to their tax laws. In Malaysia, for example, there is no capital gains tax which means that many crypto transactions are tax-free. The same is true for Hong Kong, along with the fact that no goods and services tax (GST) or value-added tax (VAT) are applied to crypto. This has undoubtedly attracted a lot of businesses to the region. On top of this, more investors would feel confident going into the crypto space since they do not have to contend with complex crypto laws.
What the West can take from this is that crypto laws have to be geared towards attracting businesses and appealing to investors. Rather than treating taxation as a witch-hunt of sorts, collaboration with and a welcoming attitude towards the crypto industry will go a long way to driving up adoption rates.
Youth and Tech-Literate Populations
Asia has a leg up over the rest of the world when it comes to crypto adoption because it is home to 60% of the world’s youth. On top of this, the number of smartphone users on the continent with access to the internet is only growing. And, as stats have shown, crypto use is most prevalent among young people.
This means that not only will Asia see a big chunk of current crypto use but it will continue to do so into the future. The West’s best chance of matching Asia would be to push for crypto education among its own youth and increase access to it.
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