Think of Southeast Asia and the usual tourist tropes may spring to mind for many: idyllic palm-fringed beaches, tasty street food accompanied by colorful sights and sounds, and the year-round steamy heat. But for one of the world's fastest-growing economic regions with a 678 million population and burgeoning middle class, Southeast Asia also has the distinction of being among the most crypto-friendly.
Awareness levels are high in this region: An OECD report notes almost 4 in 5 people are aware of cryptocurrencies, with Malaysia leading at 84% followed closely by Vietnam at 82%. Research by Statista shows Vietnam and the Philippines have the second-and third-highest crypto usage globally in 2020, respectively. More than 21% of respondents from Vietnam say they use or own crypto, a level nearly on par with the Philippines (20%). The 2021 Chainalysis Global Crypto Adoption Index similarly named Vietnam as the leader in crypto adoption among 154 countries, in a year when global crypto adoption grew by a staggering 881%.
What accounts for Southeast Asia's active participation or more pertinently its lead in global crypto adoption?
First, there is a high level of Internet penetration in Southeast Asia, where more than 75% of the population in six of the region's largest economies have access to the Internet. With Southeast Asia's digital economy forecast to reach $1 trillion by 2030, the region's large young population, rapid urbanization, and rising smartphone usage are fueling a mass market for crypto. It's a winning formula for what are essentially digital assets that can only be traded online.
With more than 290 million unbanked in Southeast Asia due to the lack of proximity to banking facilities in rural areas, inadequate transport, or poverty, cryptocurrencies have also emerged as an alternate means of financial inclusion when it comes to investments. With just an entry-level smartphone and an Internet connection, people can buy and sell digital tokens at a far lower threshold compared with traditional financial institutions.
In a region where remittances can account for up to 9.7% of GDP (in the case of the Philippines), cryptocurrencies have proven to be a lifeline for overseas nationals sending money home by speeding up transactions at far lower costs. Traditional methods of remittance may involve cross-border bank payments that take up to five business days to clear and cost an average of 6.3% of the amount sent. With cryptocurrencies, it is possible to send payments from anywhere in the world in just minutes or even seconds, for a fee that can be as low as a few cents depending on the blockchain used.
Growth of Crypto Exchanges
In 2021, a year where meme coins and NFTs became trending topics, cryptocurrency exchanges worldwide saw trading volume surge more than six-fold from the previous year to exceed $14 trillion. A significant volume of web traffic to their P2P platforms came from regions with emerging economies such as Southeast Asia, outstripping traffic from larger economies in Western Europe and East Asia.
As one of the first crypto exchanges to operate in Southeast Asia, Huobi Global has seen similar growth in the region. In terms of new user sign-ups and trading volume, its markets in Southeast Asia rank among the fastest-growing in the world with the outlook remaining bright. The company is focusing on user education and product innovation to improve the trading experience and is also committed to working with local governments to further grow the market.
As cryptocurrencies finally go mainstream after over a decade in existence, their acceptance and adoption will very likely rise in tandem with growing awareness in the population driven by the boom in decentralized finance, GameFi, and the metaverse. Regulation, already underway in many markets, will further lend legitimacy and accelerate the growth of the industry in the long term.
As a fast-rising economic powerhouse with a large tech-savvy market, Southeast Asia is on the cusp of becoming the next focal point in the global crypto market. Perhaps in the not-too-distant future, there may come a day when the region even evokes "global blockchain capital" as readily as its hard-earned reputation as a backpacker haven and land of exotic cultures.
This article is contributed by Du Jun, Co-Founder of Huobi Group