Southeast Asia and Blockchain Situational Analysis

South East Asia is one of the most dynamic area concerning fintech. This is especially the case when talking about blockchain and crypto-assets. Indeed, through Asia Pacific start-ups are more and more testing the blockchain potential.

Why Southeast Asia is a blockchain technology hub?

First of all, it is important to understand Southeast Asia’s predisposition for fintech and blockchain.

With millions of people that do not have banks (only 27% of the 655 million Southeast Asians)[1] and a growing access to internet services (internet penetration for the region was 54% in 2016), Southeast Asia is an ideal candidate for fintech, especially concerning blockchain innovations.

Furthermore, in Asia the overall adoption rate in 2016 for smartphone reached 51%[2] (with 83% in Singapore, 81% in Hong Kong, 80% in South Korea, 71% in China…) and drive mobile and digital payment in Southeast Asia, especially when taking into account the low banking services of the region.

Finally, a study showed that Asians are willing to spend between $10,000 and $100,000 in crypto-assets whereas US people are only willing to invest up to $1,000[3].

But what make today Southeast Asia a blockchain hub and an interesting space to invest in?

The region has 4 main characteristics that allow it to have a fantastic blockchain ecosystem: regulation, ICOs and start-ups development, miners and users.

Governments in the region have been careful about what aspects they regulate in order for blockchain related companies and investors to operate in a healthy environment. For example, Singapore has an open policy and forward-oriented economic outlook and Japan legalized bitcoin to be used as a legal method of payment. Even South Korea that banned ICOs from their soil in September 2017 are drafting new industry classification standards that recognize crypto exchanges as regulated financial institutions.

In addition to this environment, numerous incentives concerning blockchain related companies have been set up, e.g in Singapore with the launch of a 1,339sq. meter hub or the OmiseGo hub in Tokyo in 2018, driving blockchain related start-ups development, or through direct financing of companies as the $1.5bn Nanjing public fund dedicated to blockchain in China. Moreover, Singapore is the 3rd most important country for ICO funding and Hong Kong the 10th (with South Korea and China banning ICOs on their soil since September 2017). Which means the potential of Southeast Asia is very high with infrastructures, more and more funding vehicles dedicated to blockchain and an important space for ICOs with the possibility of ICOs ban lift in South Korea and maybe China.

In the mining ecosystem Southeast Asia is leading the dance by far, especially in China and despite recent policies from the local government to reduce mining in their countries. Their cheap electricity and manufacturing skills make them the world leader when speaking about mining. Miners also create demand for hardware to scale up their farms overtime and this give an additional advantage to the Southeast Asia tech community and related ecosystem.

When looking at the amount of money flowing through crypto-currencies, Japan and Korean currencies represent 74%[4] of the total market, furthermore, a study showed that in terms of crypto-currency awareness among people Korea and Japan are the most important countries[5]. Meaning crypto-currencies investment and adoption are higher in Southeast Asia than in the rest of the world.

Southeast Asia is clearly fast for embracing Blockchain and crypto-assets, and will surely continue to keep its advantage as one of the most important blockchain hub. With the increasing use of the technology in the near future, more investments will be needed, which makes Southeast Asia a place of choice for investors, which would take advantage of the unique opportunities offered by this region.

[1] https://home.kpmg.com/xx/en/home/insights/2016/04/fintech-opening-the-door-to-the-unbanked-and-underbanked-in-southeast-asia.html

[2] https://www.mobileworldlive.com/asia/asia-news/smartphone-adoption-in-asia-tops-50/

[3] https://www.fxempire.com/education/article/asia-taking-over-the-world-economy-with-blockchain-515972

[4] https://www.coinhills.com/market/currency/

[5] https://www.cryptoninjas.net/2018/05/09/how-many-people-actually-own-cryptocurrency/