Overview of the Asian Crypto Market
The report, written in collaboration with Foresight News, CoinNess, and BlockTempo, covers mainland China, South Korea, and Taiwan.
Original title: “A Primer of Asia's Crypto Landscape”
Compiled by Frank, Foresight News
Foresight News sorted out the original text of the report and published a Chinese guided version summarizing the main opinions of this report for the benefit of readers (the full English report can be viewed by clicking on the “source link”).
The report summarizes regulatory trends, crypto market size, talent and developer status, and infrastructure adoption in mainland China, South Korea, and Taiwan, and collected a sample survey of more than 5,000 people across various cities and age groups in mainland China and another sample survey of more than 1,000 people targeting cryptocurrency holders. At the same time, CoinNess and BlockTempo conducted corresponding sample surveys in Korea and Taiwan, respectively. The Crypto adoption status and trends showed that the Asia-Pacific region is expected to become An important driver of the cryptocurrency industry's growth over the next 3-5 years.
custodialPRC
Mainland China inAn initial coin offering (ICO) was declared an illegal fund-raising activity in September 2017, a mining ban was issued in May 2021, and all cryptocurrency transactions were banned in September 2021。
Meanwhile, the Hong Kong region of China carried out a number of crypto-related regulatory actions in 2023, with two major policies in particular:
Foreign exchange policy. In February 2023, the Hong Kong Securities Regulatory Commission issued a consultation document detailing the recommended guidelines for exchange licenses (virtual asset trading platforms).All centralized exchange businesses marketing to Hong Kong investors require a license to operate, the system will take effect on June 1, 2023;
Stablecoin policy. Hong Kong's Proposed Stablecoin Regulatory RequirementsThe issuer has a locally registered entity, and the stablecoin must be fully backed by high-quality liquid assets, and can be exchanged for fiat currency anchored to it at face value;
The Hong Kong region of China can be seen as a potential sandbox for future crypto regulation in mainland China, and Hong Kong will be a bridge for mainland China to expand globally.
Korea
Most of the cryptocurrency trading volume in South Korea takes place on 5 exchanges (UpBit, Bithumb, CoinOne, Korbit, and Gopax) authorized to have bank accounts, and banks allow them to convert KRW fiat into cryptocurrencies, soSouth Korea's CEX's stablecoin pairs are very limited in trading(For example, USDT accounts for less than 1% of Upbit's trading volume).
Furthermore, South Korea is enacting relevant regulations on securities token issuance (STO).
Taiwan region
Regulators such as Taiwan's Financial Supervisory and Regulatory Commission (FSC) classify cryptocurrencies as speculative commodities.
The FTX incident caused Taiwan to lose $1.7 billion to $2.1 billion, and more than 23.1 million Taiwanese users were affected.
Currently, the division of labor among the three major virtual asset regulators in Taiwan is as follows:
Taiwan Financial Supervisory and Regulatory Commission (FSC): responsible for overseeing investment and payment platforms, CEX, and asset management platforms;
Central Bank of Taiwan: Manages stablecoin transactions involving fiat currency exchange;
Taiwan Digital Development Department: Responsible for crypto-related projects not covered by the other two regulators, such as NFTs and Web3 on-chain projects;
Market Size and Crypto Penetration
According to a sample survey of more than 5,000 people across multiple cities and age groups in mainland China + another sample survey of more than 1,000 people of cryptocurrency holders, it was foundOnly 2.6% of people aged 15 and over in mainland China own cryptocurrencies (86.0% have experience trading crypto derivatives such as futures and options)。
Compared to around 10% of developed countries such as the US, South Korea, and Taiwan, China still has a lot of room for growth in the total number of cryptocurrency users.
The Korean cryptocurrency market is largely driven by retail transactions, and the trading volume is mainly concentrated on 3 exchanges — Upbit, Bithumb, and Coinone. Among them, Upbit's market share on the Korea Exchange is 82.24%, andAltcoins (i.e. cryptocurrencies that do not include BTC and ETH) account for 92.9% of total crypto trading volume in South Korea.
Taiwan's crypto trading volume is growing at an annual rate of 31.5%, second only to Japan and Mongolia, and nearly half (around $30 billion) of the cryptocurrencies received by CEX are DeFi tokens.
The Asia-Pacific region is expected to be an important driver of the cryptocurrency industry's growth over the next 3-5 years.
infrastructuresPRC
The People's Bank of China began testing the digital yuan in 2019, and the public beta was officially launched in April 2021. As the penetration rate of digital payments in China has always been very high, the digital yuan has not been widely adopted by the mainstream until now.
Korea
South Korea's crypto infrastructure is very mature:
Major commercial banks provide bank accounts to crypto exchanges to allow deposits and withdrawals of virtual assets (NH Bank, Korea's second-ranked bank, etc.);
Officials are introducing various licensing systems such as information security management systems (ISMS) and virtual asset service providers (VASP) to cryptographic companies to help cryptographic companies operate their business lawfully;
However, South Korea is not mature in terms of crypto futures ETFs, etc., and has yet to allow custodial and compliant institutional tools.
Taiwan region
Taiwan's crypto infrastructure is still under construction, including its central bank digital currency (CBDC), which is being evaluated and is not expected to be launched until 2026.
Currently, local exchanges in Taiwan cannot trade derivatives such as perpetual contracts.Most users are on international exchanges (Binance, FTX before the bankruptcy, etc.) are traded, and local exchanges are mainly used as fiat currency deposit and withdrawal channels;
talentsPRC
China's crypto talent mostly comes from top universitiesAmong the top 100 universities in blockchain in 2022 published by CoinDesk, there are 6 universities in mainland China, including Peking University (PKU Blockchain), Tsinghua University (THUBA), Shanghai Jiao Tong University, Zhejiang University, Sun Yat-sen University, and Fudan University.
Korea
Most Korean blockchain talents enter the industry after studying blockchain-related majors at the university/graduate level(such as Korea University, Sogang University, Hanyang University, Korea Institute of Science and Technology), andEntering the industry through a boot camp(such as Codestates, Learnfree).
Taiwan region
Most schools in Taiwan lack blockchain professional education, and only a few universities provide related programs, courses, and student group activities.The blockchain talent pool mainly comes from top universities in TaiwanFor example, OurChain, a public chain being developed by National Taiwan University, National Chengchi University is a major research center for Ethereum in Taiwan, National Tsinghua University established the first professional blockchain law and policy research center in Asia, etc.
Investment institutionsPRC
Hashkey Capital: Established in 2015, it is one of the earliest institutional participants in the blockchain field, with a special focus on the Ethereum ecosystem. In addition to investing in Cosmos, Polkadot, Coinlist and other related projects, it is also active in fields such as CeFi and general Web3 infrastructure;
Dragonfly: Established in 2018, it currently includes three branches: Dragonfly Ventures (VC), Dragonfly Liquid (LP), and Metastable (Hedge Fund). The investment fields cover DeFi, CeFi, infrastructure, NFTs, and L1/L2;
Foresight Ventures: Established in 2021, it is committed to discovering alpha investment opportunities in the market, making good use of various investment strategies, and empowering investment enterprises throughout the life cycle;
Korea
Alphanonce: Established in 2018, it provides full-stack solutions for various customers and counterparties, covering accelerators, investment, liquidity provision and trading;
hashed: Headquartered in Seoul and Silicon Valley, focusing on the primary market;
100&100 Venture Capital: It began investing in blockchain projects in 2017 and is currently operating a $38 million Web3 game investment fund;
Developers and operatorsPRC
By the end of 2021, there were over 73 million developers in China, second only to the US, with Java developers accounting for 50%, 76% of programmers earning more than $1,200 a month, and 20.5% of developers earning between $2,500 and $4,500 per month.
The main reasons preventing developers from entering the Web3 industry includeLack of basic understanding of cryptocurrencies, lack of a systematic approach to access the Web3 industry, concerns about unstable or illegal jobs in the Web3 industry in Chinaetc.
China's crypto projects coverDeFi, infrastructure,GameFi, metaverse, etc. in almost all fields, such asLoopring, Stepn,Lifeform、X2Y2, spaceID,Conflux、Alchemy Pay、Animoca Brands, Certik etc.
Korea
South Korea's crypto projects are mainly driven by two big tech companies (Kakao, Naver) and large Web2 gaming companies (WEMIX, etc.).
Taiwan region
The Taipei Ethereum Meetup (TEM) is the largest developer community in Taiwan with over 6000 members. Furthermore, in terms of the DeFi ecosystem, there is Perpetual Protocol; the wallet side has Blocto, etc.; the NFT platform is developed by Oursong and Lootex; and some startup communities such as Bu Zhi DAO and government participation organizations such as g0v.
