Originally published on: September 23, 2024
Eastern Asia is witnessing a revolution in currency as stablecoins and cryptocurrencies gain ground, challenging the dominance of traditional fiat money. The region emerged as a major player in the global crypto economy in 2024, receiving over 8.9% of global cryptocurrency value, according to a recent report by Chainalysis.
The shift towards crypto and stablecoins is fueled by countries facing devaluation of fiat currencies and high inflation rates. Digital stablecoins like Deenar, backed by physical gold, are offering a cheaper and faster alternative to traditional bank transfers, particularly for cross-border transactions. In 2024, remittance fees accounted for an average of 7.34% of transfers, making stablecoins an attractive option for emerging economies.
Institutional and professional investors are driving much of the cryptocurrency activity in Eastern Asia. The Chainalysis report indicates that institutional investors are leading the way, with most of the increased activity coming from this segment. While institutional investors prefer decentralized exchanges (DEXs) and decentralized finance (DeFi) services, professional investors tend to stick to centralized exchanges (CEXs).
Hong Kong, in particular, is positioning itself as a global cryptocurrency hub, with a significant uptick in digital asset activity. The region saw over 85.6% growth in cryptocurrency adoption, the highest among Eastern Asian countries, followed closely by South Korea. Stablecoins play a crucial role in this growth, accounting for over 40% of the total value received in Hong Kong.
However, with the increasing usage of stablecoins comes the need for regulatory oversight. In response to this development, regulators in Hong Kong introduced a proposal for a new stablecoin licensing regime for fiat-backed stablecoin issuers in July 2024.
As stablecoins and crypto continue to disrupt the traditional financial landscape in Eastern Asia, the region is poised for further growth and innovation in the emerging digital economy.
