Can The Asia Region Lead the DeFI Space?
The DeFI Space continues to define expectations over the years and in 2024 it is slowly crawling back into its all-time best. Every growth needs a pioneer and leader that can push it into a new direction and in 2021 the DeFI Space saw countries from the EU and America region shot to popularity but will it be Asia for now? The Asia Region has slowly gained momentum throughout 2023 and 2024 with countries such as Vietnam and UAE becoming home for the DeFI Institutions and Enthusiast. Let’s look at the growth of the DeFI Space within the Asia Region and explore its enormous potential to lead the space for years to come.
Asia — A Growing Presence Within The DeFI Space
Growth has been the name of the game within the DeFI Space this year with Bitcoin and many other digital assets getting back to where they belong but while the excitement worldwide has been high, much of the attention has been placed on the United States. With the United States being the world reserve country, it is easy to understand that the pending crypto regulation and the recent approval of the Spot ETF carry so much weight within the DeFI Space across this couple of months.
While the uncertainty within the United States still looms large, Asia has slowly been the “knight in shining armor” in the growth we have experienced lately. The Asia region has continued to show its potential to develop and embrace the adoption of digital assets but continues to be marked “Unrealized Opportunity” within the DeFI Space. The countries within the Asia region have also been instrumental in the development of the regulatory framework for the DeFI Space and growing institutional adoption.
Asia with its enormous potential was unfortunate during the previous Bitcoin Boom which happened amid the Pandemic as the region was heavily affected. The pandemic brought many developing countries within the region to its knees due to the lockdown and therefore went missing from the spotlight as the DeFI Space was on an unexpected high. Despite the circumstances, it is widely known that it is not going to be easy to keep Asia with the largest population in the world away from the spotlight within the DeFI Space.
China in a short period has managed to become the global leader in Bitcoin Mining at the time the pandemic was around but unfortunately, the regulation to ban any crypto-related activities hamper any growth from happening. The potential was clearly there as between July 2020 and June 2021, the transaction within the DeFI Space in Central and South Asia experienced 706% growth which equals to a value of $572.5 billion, equal to 14% of the global transactions’ value.
Asia’s growing dominance with the DeFI Space was also helped by the large presence of Gen Y and Gen Z within its huge population and is expected to occupy more than 50% of the region by 2025. These young tech-savvy populations within countries such as India, South Korea, and Japan are accelerating the adoption rate within the region. According to the 2023 Global Crypto Adoption Index by Chainalysis, Central and Southern Asia dominate the adoption space with 6 of the top ten countries situated within the region.
Asia also seems to dominate the trading space of Digital Assets with many of the younger generations seeking to maximize the opportunity as the cryptocurrency trading volume within February 2024 stands at $212.18 billion, accounting for 70.57% of the total global trading volume. The Cryptocurrency Market in Asia is also projected to grow by 7.68% (2024–2028) resulting in a market volume of US$11.1bn in 2028 and this should be expected to grow as these young populations embark on the later stage of their career.
Of course, while much of the attention has been placed on the developed countries within the regions such as India or China, great unrealized opportunity stands in the developing countries within the region. Vietnam is a country consistently topping the Global Adoption Index and currently ranked 3rd with a phenomenal 21 Million individual adopted digital assets within the country. Despite the lack of clarity on the regulatory framework, Vietnam crypto adoption continues to grow due to the large unbanked population and inflations which now represent a whopping 21% of the country’s population.
Other countries within the Southeast Asia region seem to follow in the same trajectory with Malaysia, Indonesia, and Thailand recently popping up within the spotlight. Indonesia being the 5th largest population is presenting a wonderful case to support the growth of the DeFI Space within the region. Currently less than 20 Million or 9% of the population adopt digital assets but this number continues to grow exponentially as the excitement of 2024 starts to grow.
There is also a growing presence of the Asia region in terms of regulation with Singapore being the pioneer to develop a concrete regulatory framework back in 2020. Singapore also presented The Guidelines to Digital Payment Token (DPT) Service Providers which continues to be an example for many regulations after it. The United Arab Emirates (UAE) also provides a strong case as a Hub for many Institutions within the DeFI Space with the release of the “Crypto Friendly ‘’ regulatory framework in 2023.
Institutional adoption has also been a major growth in Asia with greater focus being placed on expanding the DeFI market to new territories. Bhutan recently invested more than $500 million to develop Bitcoin mining facilities within the countries while Hong Kong is pushing its regulatory framework to establish itself as the leader in the Web3 space. With every growth within the region, there is always a strange potential like Pakistan which banned trading and mining of virtual currencies back in 2018 but ranks sixth in the Global Crypto Adoption Index as of 2023 with an estimated 4.1% of its population.
Its Enormous Potential
The Asia region continues to forge a unique pathway to increase financial inclusion of the individuals within the region and DeFI can certainly help in establishing that goal. It certainly holds a significant advantage in terms of natural resources and global population which makes it easy to understand why the Global Superpower in 2050 will be dominated by countries within the region. This aspect makes the growth of the DeFI Space important and sought after for the region moving forward.
The region’s potential continues to shine despite China being the largest economy missing from the DeFI Space since its decision to outlaw digital assets in 2021. Countries like Indonesia, Thailand, and the Philippines continue to be mesmerizing opportunities for DeFI to enhance financial inclusion with more than 50% unbanked population within the countries. This clearly presents much room for DeFI to continue growing within the region as we head into a fascinating year in 2024.
The Asia region as a whole also is brimming with potential in its Tech sector with plenty of innovations and startups going around which should serve as a good catalyst for DeFI to grow. Its dominance continues to grow with 6 out of the top ten crypto exchanges either registered or operating within the region. Bybit, the 3rd largest crypto exchange according to CoinMarketCap, has its headquarters in Singapore with many of its users in Asia.
All in All, the Asia region continues to grow in prominence amongst the DeFI Space and the outlook certainly looks bright for the countries within the region to lead the DeFI Space ahead. With blockchain and DeFI remaining a key industry moving forward, Asia as a region must develop the right regulatory framework to maintain sustainable growth. Asia will continue its growth to the top over the coming years but the question remains, which breakthrough innovation will propel the region to the next level?
We at Nagaya Technologies certainly believe that there is a huge potential to be found in the DeFI space. We hope that the development going around the world will be able to help nurture growth for the rest of 2023 and beyond. That is also why we created the world’s first hybrid digital assets called Nagaya which will soon be a part of the revolution needed for sustainable Digital Assets for the Global DeFI space. Intrigued to know more about Nagaya, you can visit our website at www.nagaya.co
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