Meanwhile in Asia: Cryptotechnologies and Economies

Cryptoeconomy becomes more and more entwined with the traditional one. Beginning as a crypto-anarchist utopia, the ecosystem keeps on evolving, and currently it starts influencing what happens in the big financial world. In this brief overview, we’ll attempt to show how it happens in Asia.

China

It would hardly be an exaggeration to say that China is the Bitcoin hegemon of Asia, or even of the entire world, if Mike Hearn‘s opinion is to be counted. Currently, there are about 20 major companies involved in cryptocurrency operations, with about 800,000 customer base, not to mention smaller startups that emerge every now and then. Chinese exchanges handle about 70% of the world’s total bitcoin trading volume. Notably, as opposed to USD-based platforms, yuan-based ones do not charge any transaction fees, so CNY trading volumes may look even greater than actual investment involved.

Back in January 2016, the governor of the People’s Bank of China Zhou Xiaochuan stated that the central bank did not consider banning digital currencies.

The popularity of Bitcoin as a financial tool has significantly increased in the aftermath of the measures assumed by the government. Seeking to slow down the capital outflow and consequent depression in the economy, the government implied moderately severe restrictions on foreign transactions for everyday users willing to invest abroad. This allegedly resulted in growth of bitcoin demand.

As yuan continues weakening, local investors also turn their glance to Bitcoin. After the government devalued the national currency last August, the move towards cryptocurrency became evident. However, when compared to their western counterparts, Chinese exchanges offer Bitcoin at higher prices than elsewhere.

Bobby Lee, CEO of BTCC, commented:

“The investment spree is well-founded because of the rarity of bitcoins. The increasing need for hedging against the yuan’s depreciation and the central banks’ continued printing of money have convinced investors’ of the bitcoin’s investment value.”

The Philippines

Meanwhile in the Philippines, local Central Bank announced it would impose stricter control over local bitcoin exchanges. Following the recent instances of hacking SWIFT and the Federal Reserve, the regulator deemed it necessary to reinforce security measures in finance. For that purpose, it established a dedicated division to monitor and tackle external threats. Such threats definitely include money laundering, so the Central Bank concedes regulating all bitcoin-related businesses.

The regulator was vocal about its non-acceptance of cryptocurrencies citing one of the most popular reasons for such attitude, being the impossibility to exercise consumer protection. However, as early as October 2015, the Central Bank recognized that blockchain technology had a great potential.

Meanwhile, bitcoin becomes more and more popular in the country. According to some data, monthly turnover of local bitcoin exchanges comprises around $3 million. The Philippines are the world’s third receiver of money remittances. In 2015, the overall amount of incoming remittances comprised $30 billion, which is equal to 10% of the country’s GDP.

Korea

While the Philippines do their best to make it to the list of the world’s best Russia impersonators, the Korean government has announced it would support startups engaged in fintech and blockchain, in particular, by supporting venture investors intending to use their money in this area.

Local fintech isn’t dormant altogether. For instance, earlier this year, the Korean Exchange (KRX) has announced it will develop a trading platform using distributed ledger technology in order to get rid of intermediate players. The platform in question uses bitcoin-based code.

Even though the system is far from being released, the exchange has already stated that once it goes online, traders will be spending much less on their transactions.

Japan

Japan seemingly aspires to become one of the world’s leading nations in fintech, similar to how it had already happened with just tech. Japan’s FSA has announced its plans to cancel limitations on fintech companies. This May, the country’s National Assembly has passed a law  developed by the FSA regulating cryptocurrency exchanges.

Cryptocurrency exchange operators are now subject to licensing and audits by the FSA, which is entitled to control their work. However, most importantly, the law recognizes that cryptocurrencies are essentially similar to real-life money. The new rules are expected to make the country’s economy a friendly environment for foreign investors and companies.

Currently, such foreign investors are moving in the opposite direction, which is caused by their disappointment of the government’s traditional economy efforts. However, when it comes to fintech, the situation looks way more pleasant.

Thus, Japan-based SBI Holdings announced its intent to become a key player in fintech by creating a network of startups. SBI Investment, the investment wing of the conglomerate, plans to raise $275 million to support companies engaged in fintech, internet of things, AI and Big Data.

Meanwhile, Japan’s biggest bank Bank of Tokyo-Mitsubishi UFJ (MUFG) partnered with blockchain startup Chain to create prototypes of bonds trading platform, right after starting to develop its own cryptocurrency.

Finally, local bitcoin startups bitFlyer and Zaif have raised $33 mln collectively, with much more to be expected later.

What can I say. Ganbatte kudasai.

by Jenny Aysgarth