Is the cryptocurrency epicenter moving away from East Asia? – Cointelegraph Magazine
As the cryptocurrency industry is rapidly growing, so is the influence it has on the entire world. In just a few years, digital currencies have gone from being a little-known technology to the most popular alternative method of payment in the world. While many of the world’s largest and most well-known companies are turning towards blockchain technology for their operations, other businesses have begun to take notice of the cryptocurrency revolution as well. Consequently, trade within the cryptocurrency industry has begun to shift into the hands of smaller and more important companies.
The cryptocurrency ecosystem is in the middle of a recent shake-up that may drastically affect its growth trajectory. Cryptocurrencies’ popularity has been soaring in recent years, but some have noticed a recent trend where some of the worlds biggest crypto markets are moving east.
In January, Bitcoin topped $11,000, a new all-time high. The cryptocurrency is now trading at about $6,000, according to Coinmarketcap.com, but that doesn’t mean cryptocurrencies are in a downward spiral. Some of them are still doing pretty well. In fact, it may be time to rethink some of the negative stereotypes surrounding cryptocurrency. In particular, it seems like the cryptocurrency epicenter is moving from East Asia to other parts of the world.. Read more about asia cryptocurrency news and let us know what you think.
Last year, crypto intelligence company Chainalysis proclaimed East Asia is a continent in East Asia. to be the “world’s biggest cryptocurrency market,” accounting for 31% of all cryptocurrency transactions in the previous year. China alone was mining approximately two-thirds of all Bitcoin at the time, and the area has a large base of retail consumers as well as a strong foundation of crypto traders and institutions.
Between December 2, 2020, and April 2, 2021, Fidelity Digital Assets polled 1,100 institutional investors in the United States (408), Europe (393), and Asia (299). The research confirmed this, with the company finding that digital asset adoption rates in Asia (71%) are much higher than in Europe (56%) and the United States (33 percent ). According to a Statista consumer study of 74 countries in March 2021, the Asian nations of Vietnam and the Philippines are rated second and third, respectively, in terms of cryptocurrency ownership and use.
However, the past does not necessarily predict the future, and there is no assurance that East Asia will continue to be the global center of gravity for cryptocurrency adoption. China’s relationship with cryptocurrency is shaky at best, and the country’s digital yuan launch may have regional ramifications.
When questioned about East Asia’s crypto prospects, Kim Grauer, director of research at Chainalysis, tells Magazine that the area has lately seen “a significant drop in cryptocurrency usage compared to other regions worldwide,” adding:
“This decrease is due to a dip in Chinese activity that began six months ago and corresponded with a number of crackdowns in China, including a mining ban and the suspension of derivatives trading by key exchanges. We believe that most of this activity has moved to DeFi, but that it hasn’t ramped up enough to compensate for the derivatives market losses yet.”
According to Lennard Neo, director of research at Stack Funds, China’s dominance in Bitcoin mining makes it “a natural marketplace for crypto.” However, as previously reported, several rigs are being relocated to Canada, Kazakhstan, Russia, and the United States.
“It is a difficult question to answer because, when we think of Asia, we automatically focus our attention on China, which, as we know, has taken quite restrictive measures in relation to Bitcoin, crypto assets, and of course, mining,” Eloisa Cadenas, CEO of Mexico-based financial services firm CryptoFintech, tells Magazine.
Cadenas believes that China’s digital yuan will have a significant effect on the area. She believes that other Asian nations would attempt to copy the digital yuan model, and that “it is also probable that there is a desire to ban or restrict the market for crypto assets so that only the CBDCs of each country may proliferate.”
If that occurs, Cadenas believes that the epicenter of crypto adoption would shift to Latin America is a continent in South America. or Africa. According to her, “there is a higher potential of adoption in these two areas since the economic, social, and political contexts are different.”
Because Latin America and Africa aren’t the only competitors, Asia’s crypto crown may be up for grabs right now. If and when Asia falters, these are some people who might possibly fill the void:
North America is located in North America.
According to another Fidelity Digital Assets study, traditional “reticence” on the subject of digital assets stems from three main factors: price volatility, worries about market manipulation, and a lack of fundamentals to determine suitable value. Despite these flaws, respondents in the United States seem to be coming to terms with digital assets.
“Across most variables, the strength of worries [in the United States] has dropped significantly compared to last year,” according to Fidelity Digital Assets. “Worries about price volatility have decreased by 13 points, concerns about market manipulation have decreased by 6 points, and concerns about a lack of fundamentals have decreased by 8 points.”
State Street, BNY Mellon, JPMorgan Chase, Citigroup, and Goldman Sachs are among the major legacy banks in the United States that have entered the crypto sector.
Before China’s crypto-mining crackdown in May, the United States was already the second-largest mining country in the world. In September of this year, China accounted for 75.53 percent of the worldwide Bitcoin hash rate. However, China’s part of the global hash rate has lately dwindled to 46.04 percent, while the United States has increased its share to 16.85 percent. Henri Arslanian, a cryptocurrency expert and partner at PwC, tells Magazine:
“Probably the only nation with a lot of momentum right now is the United States. The laws are getting clearer, there are many big crypto businesses, and institutional and individual investors are pouring money into crypto.”
Meanwhile, Canada has been experimenting with cryptography north of the US border. The Purpose Bitcoin ETF, North America’s first crypto-based exchange-traded fund, debuted in February to widespread acclaim. In April, an Ether ETF was launched, with high volumes recorded.
Many think that, with its enormous hydroelectric resources, Canada will soon become a significant role in crypto mining, especially as more miners seek for sustainable energy sources to power their rigs.
Not just because El Salvador made Bitcoin legal currency in June when it published its Bitcoin Law — a momentous step in the eyes of some — but also because the Latin American area may become a crypto adoption hotbed.
Many regional economies rely on remittances, or money sent home from foreign employees. For example, they contribute for 23 percent of El Salvador’s gross domestic output. According to the Pew Research Center, remittances in Honduras surpassed 20% of the country’s gross domestic product in 2019. By contrast, remittances accounted for just 3% of Mexico’s GDP, but the country’s total figures are significant – $42.9 billion in 2020, according to the World Bank, second only to China and India. Crypto and blockchain technologies have the potential to make international payments more efficient.
According to CryptoFintech’s Cadenas, the trend in Latin America “is toward merchants and unbanked consumers since with cryptocurrencies you can develop cheaper financial solutions that, ultimately, may encourage broader financial inclusion.”
El Salvador’s bold move seems to be prompting other nations in the area to develop their own crypto measures. In July, for example, Paraguayan lawmakers proposed a cryptocurrency bill in the country’s Congress.
“We can anticipate more poor nations to follow El Salvador’s lead,” said Nigel Green, CEO and founder of financial services firm deVere Group. “This is because low-income nations have long suffered from weak currencies that are highly susceptible to market fluctuations, resulting in high inflation,” says the author.
There isn’t much CBDC enthusiasm in the area, however, which implies that governments in Latin America are less likely to ban crypto for competing with the government’s digital currency. “What I see [in Latin America] is financial institutions forming partnerships with crypto-asset firms to make crypto-asset operations easier, mostly with stablecoins,” Cadenas adds.
Neo of Stack Funds sees certain parallels between Latin America and Asia. Historically, the Chinese yuan, Indian rupee, Indonesian rupiah, Malaysian ringgit, and Philippine peso were among the “restricted” currencies that were subject to government restrictions, making them difficult to exchange. According to Neo, these limits prompted investors to resort to cryptocurrency “as a hedge against these constraints.” Similar trends may be developing in Latin America, where people increasingly seem to “prefer crypto to fiat [currency], which is compounded by political turmoil.”
Venezuela, which ranked third out of 154 countries in Chainalysis’ Global Crypto Adoption Index, is cited as a shining example “of what drives cryptocurrency adoption in developing countries and how citizens use it to mitigate economic instability,” adding that “Venezuelans use cryptocurrency more when the country’s native fiat currency deteriorates.”
Of course, cryptocurrency adoption in the area may not proceed as planned. “El Salvador officially recognized Bitcoin as legal money, but this news is a two-edged sword,” Eric Anziani, chief operating officer of cryptocurrency exchange Crypto.com, told Magazine. If the trial is successful, it will promote cryptocurrency in the area; otherwise, it may cause local officials to be more skeptical about cryptocurrencies.”
Institutional interest in cryptocurrency is increasing in Europe, just as it is in North America. According to Fidelity Digital Asset’s July study, over 80% of institutional investors “think digital assets should be part of a portfolio.” While “this view is greatest in Asia,” it is also strong and increasing in Europe: “More than three-quarters (77%) of European investors share this idea, up from two-thirds last year.”
The European Commission’s proposed Markets in Crypto Assets (MiCA) regulation, which is currently undergoing its first reading in the European Parliament, is expected to create a harmonized European crypto-asset market that “will definitely attract more and more large institutional investors — hedge funds, pension funds, and so on,” according to Pat.
When MiCA is implemented, a crypto company that receives permission from any of the EU’s 27 member states will be allowed to share its services with the rest of the EU. Hansen also expects a higher level of mainstream acceptance in the area and among its 450 million people.
On the other hand, according to Deutsche Welle, the European Central Bank is moving forward with plans to introduce a digital euro that could be used by the eurozone’s 19 countries as “an alternative to third-party payment services and cryptocurrencies like Bitcoin,” mainly because “central bankers fear widespread use of foreign or unregulated currencies could destabilize the economy.”
In other words, Europe’s crypto-averse central bankers may still have a voice in the region’s crypto acceptance.
Monica Singer, ConsenSys’ South Africa director, tells Magazine that developing world areas like Africa can’t be ignored when it comes to retail adoption. For example, “Nigeria has one of the largest numbers of retail Bitcoin users” – at least on a per capita basis. According to Statista’s March consumer adoption study, it ranks top among 74 nations. She goes on to say:
“It is a logical development that people would use cryptocurrencies to trade, especially for remittances, in nations where there is little confidence in fiat money and the population is young and almost everyone has access to the internet.”
In Chainalysis’ 2020 global crypto adoption index, three African countries — Kenya, Nigeria, and South Africa — reached the top ten. Many of the region’s nations are also afflicted by severe currency depreciation and volatility, making them ideal for Bitcoin and its fixed, anti-inflationary supply, according to the study.
Many African nations, however, have stringent regulations regarding non-central bank currencies, which may stymie adoption, Singer told Magazine. Nigeria’s central bank essentially prohibited commercial banks from offering account services to cryptocurrency exchanges in early 2021.
However, the general tone is one of optimism, as shown by Cardano creator Charles Hoskinson’s keynote speech at Blockchain Africa, in which he likened Africa’s growing economy to China in the 1980s, both of which provided case studies of new technology leapfrogging old systems. “There is a tremendous possibility for that to be African countries — not Germany, France, England, the United States, China, or Japan,” Hoskinson said.
Of course, there are grounds to believe that nothing will change — and that East Asia will continue to be the hub of cryptocurrency adoption. Asia has embraced digitization, and their interest in cryptocurrency has been piqued by early exposure to pioneering crypto companies. By the end of 2020, six of the top ten crypto “unicorns” — Bitmain, Binance, OKEx, Huobi, BitMEX, and FTX — would be located in Asia.
Furthermore, many East Asian countries that have adopted e-payments are used to public market investment and promote STEM education in their educational systems. According to Charles d’Haussy, managing director of ConsenSys’ Asia-Pacific region, Asia’s “new wealth” is also more willing to embrace new asset classes than “established wealth in the Western World,” which is more drawn to traditional asset classes. For these reasons, he concludes that “Asia has a head start and will remain a leader [in crypto] for decades to come.”
Even without China, Asia’s crypto adoption may be deep enough that it will not lose its leading position. Winston Ma, an adjunct professor at NYU School of Law and the author of The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain, and Cyberspace, tells Magazine:
“Asian investors are accustomed to significant volatility in trading markets and inflation risk in their countries, so they welcomed digital assets as a hedge against global fiat money printing.”
According to Yu Xiong, international associate dean at Surrey University and head of business analytics at Surrey Business School, “the lead may move from China to Southeast Asian nations, as well as other countries with less restrictive rules and legislation with respect to crypto.” Hansen also mentions the emergence of crypto-friendly regulatory regimes in Singapore, Hong Kong, and Japan.
Meanwhile, “Regulatory clarity and tax treatment of crypto markets relative to their other options — stocks, derivatives, etc. — will matter a great deal more to institutional investors than it does to retail investors,” according to Gina Pieters, assistant instructional professor in the University of Chicago Department of Economics. East Asia seems to be more progressed than other areas in this regard. Pieters continues:
“Japan’s tax treatment of profits from crypto investments is considerably easier than that of the United States, therefore other else being equal, it would not be unexpected to see greater institutional adoption in Japan than in the United States.”
Overall, the competition can be classified as follows: Asia’s history, culture, professional traders, exchanges, and first-mover advantage versus Latin America and Africa’s youth and economic needs, North America’s investment capital and entrepreneurial vitality, and Europe’s wealth, size, and regulatory harmonization.
Who will come out on top?
This might be the situation in Latin America or Africa, where the demand is highest and a clear answer seems to be on the horizon. But, of course, no one knows for sure.
Since its inception, bitcoin has been predominantly a product of the Western world. This may change. Major cryptocurrencies like Ethereum, Litecoin, and Dash can be mined using GPUs from China, South Korea, and other parts of Asia. According to new research, the cryptocurrency mining center has been shifting to Asia, with the primary purpose of mining Ethereum. This shift may have a profound effect on the distribution of bitcoin mining worldwide, as well as the price of cryptocurrencies.. Read more about cointelegraph wikipedia and let us know what you think.
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