Circle, the issuer of the USDC stablecoin, has been sharpening its focus on Asia as it sees an opportunity for stablecoins to be a part of and bolster the evolving payments ecosystem in the region.
“We’re looking at how to grow a web3 business and support the broader web3 ecosystem, so Asia was a natural place to be,” Yam Ki Chan, Circle’s vice president for strategy and policy, told TechCrunch+ at Korea Blockchain Week last Wednesday.
The company forayed into the region with Singapore, where it received an in-principle approval to operate its payments business last year, and this June, it received a full license to offer digital payment and token services both domestically and internationally. “That’s our Asia hub to start, and then we’re looking more broadly in Asia — we’re considering what it looks like, who the players are, how we can work with them and what their needs are,” Chan said.
Previously known for its more friendly stance toward crypto, Singapore has recently become a bit more cautious about the web3 space after a number of scandals rocked the industry in 2022. But despite its more measured approach, the country is still moving faster than many others both in the region and globally, making it an attractive hub for startups to flock to. In fact, a number of crypto startups I spoke with at the conference noted that while they had Korea-based founders, their companies operated out of Singapore thanks to the country’s more friendly regulatory landscape. It’s similar to how many U.S. founders are based in the States but operate out of the Cayman Islands, which is more friendly to crypto businesses.
In general, Chan thinks the U.S. dollar, or digital dollars, has a great product-market fit in Asia. “As an economist by training, one thing I looked at was, if you look at the trade-to-GDP ratio, Asian economies are much higher than the United States or Europe or intra-Europe trade.”
That makes a lot of sense. It’s easy to buy and sell goods within the EU since its member countries accept a common currency. The U.S. is similar, as you can buy a product in one state and sell it in another. Sure, there might be some discrepancies, like different taxes and local regulations, but it’s pretty easy to transfer funds and not have to worry about exchange rates and the like.
“But it’s different in Asia,” Chan said. “You’re going to have a small, local business started in Seoul and their customer is in Osaka or Kyoto and they’re getting yen in revenue, but their vendors are maybe in Ho Chi Minh or Bangkok and they’re paying [Vietnamese] dong or Thai baht.”
These are all costs that Asian businesses, especially smaller firms, have to carry, which makes it more expensive for them to do cross-border trade compared to their European or U.S. counterparts.
So the big question is, how can Asian businesses send and receive payments in a cheaper way, while also increasing speed and security? Chan thinks the answer may come from blockchain technology and stablecoins, like USDC.
For merchants conducting businesses internationally, and for small ones that might not have the time or resources, using stablecoins could provide a new opportunity, Chan said.
When looking at Asia, Circle is thinking broadly about how a stablecoin would work in different jurisdictions and what’s appropriate for certain areas, he noted. “What’s interesting in Asia is that it has actually been at the forefront of payments. For a long time, there’s been real-time growth in the last decade. In the U.S., we still don’t have it.”
Indeed, the payments landscape has evolved rapidly in Asia, thanks to government initiatives as well as startups innovating new business models. India has the UPI mobile payments system, which lets citizens and businesses transfer money to each other’s bank accounts instantly with just a phone number, and Singapore’s PayNow works similarly. Both countries earlier this year linked the systems to facilitate cross-border payments, too.
Malaysia, Singapore, Indonesia, Thailand and the Philippines last year signed a deal to bring together their QR code payments system. China has the Internet Banking Payment System, and the Alipay+ mobile wallet network has integrated the Philippines’ GCash, Korea’s KakaoPay, Malaysia’s Touch ’n Go, as well as other systems in Hong Kong, Indonesia, Macau, Taiwan and Thailand.
Circle isn’t the only one making moves to be a part of this growing ecosystem in Asia. Coinbase expanded in the region earlier this year after adding support for UPI and IMPS (immediate payment service) in India, making its crypto exchange more functional in the world’s second largest internet market.
While these may seem like clear reasons to continue using the financial infrastructure that exists, Chan believes they are also different forms of walled gardens that are hard to cross over from country to country in Asia. “The case for stablecoins and the case for blockchain is that it’s interoperable, so coming back to this cross-border [use case], its scalability is getting much easier.”
For Circle, the biggest advantage of expanding in Asia is the large, growing population, the sheer number of developers, and businesses that are ready to enter the web3 world, Chan said.
There’s also more regulatory clarity in a handful of Asian countries, which only adds to the appeal. “Demographic forces, talent forces and businesses that want to make a transition will drive the next phase.”
Regulation incoming
Chan thinks 2023 is the year when the industry will transition into a “regulatory crypto spring” that may improve the outlook for the industry.
“If you told people a year ago you’d have legislation in the U.S. on stablecoins, laws passed in Europe on crypto, and multiple frameworks in play in Asia, people would have thought you were crazy. But that’s the state today,” Chan said. “Regulators haven’t been absent; they’ve been working. Over the last couple months, that work has come to fruition. Policymakers in Asia are thinking hard about this and are actively rolling out regulation to take advantage of the next evolution.”
There’s also cultural differences between Asia and the Western world that are affecting adoption in other areas like web3 gaming. Robbie Ferguson, president and co-founder of web3 gaming company Immutable, previously told TechCrunch+ that gaming companies in Asia are on the front lines of web3 gaming development due to the “very strong genre-fit” between web3 gaming and a lot of the existing popular games in Asia that are already highly driven by collectibles.
Going forward
In the next six to 12 months, Circle is going to launch on a number of new blockchains, so its stablecoin USDC will be available to users on those networks. It will also build its web3 services, like its cross-chain transfer protocol to be available more broadly.
As the company improves its footing in countries like Singapore, it is looking to approach other economies in the near future — both in Asia and elsewhere.
Earlier this year, Circle’s venture arm participated in a $10 million funding round raised by an offshore Chinese yuan-backed stablecoin project, CNHC. On Thursday, Circle partnered with Grab, a super app in Southeast Asia, to pilot web3 customer experiences in Singapore through its web3 services platform.
Over the long-term, Circle wants to build a large and sustainable business in the region. “We believe in the possibility of web3, and for us, it’s not just about stablecoins but the transition from web2 to web3. That’s why we have these services to help create those transitions,” Chan said.
“We’re encouraged by the persistent ecosystem that exists in each of these economies,” Chan said. “There’s an ecosystem that’s persistent and active. With regulatory clarity, publicly listed companies are having conversations with us on how they are evolving their web3 strategies and how we can help.”