Crypto

Institutional crypto adoption in Asia is growing as the US market remains a question mark

Comment

One red line with arrow head breaking out from a business or finance growth chart canvas.
Image Credits: twomeows (opens in a new window) / Getty Images

The institutional adoption of digital assets in Asia is heating up. South Korea, Hong Kong, Japan and Singapore are all looking for more opportunities in the space, thanks to more regulatory clarity in the region, people told TechCrunch+ during Korea Blockchain Week.

After multiple industry-changing events crippled the industry’s advancement last year, like the collapse of Terra/LUNA (who’s founder Do Kwon is from South Korea) and FTX filing for bankruptcy (the crypto exchange was once based out of Hong Kong), the positive shift is welcome, according to several industry players in the region.

Even with the crypto bear market continuing and prices coming down from all-time highs, there’s still sufficient global interest, said Jason Atkins, chief commercial officer of global algorithmic trading and market making firm Auros. “Crypto is addressing a lot of questions for existing financial institutions and banks,” he told TechCrunch+.

Institutional adoption is better in Asia compared to the U.S. and Europe because Asian companies are more willing to listen and educate themselves on the industry, said Justin Kim, head of Korea at Ava Labs. Other regions “cross their arms and want to wait and see,” he said.

And regulators are “giving green lights to more and more [crypto companies] in Asia,” said Charles d’Haussy, CEO of the dYdX Foundation. As that happens, institutions are moving quickly and “the appetite is growing very fast.”

Bitmain co-founder welcomes crypto regulation to restore market confidence

Hong Kong has become “super friendly” toward crypto regulation, d’Haussy said. “Eventually, I think Hong Kong will win the race; the financial industry is bigger in Hong Kong than Singapore. The totals of traditional finance there and addressable markets is massive and connective to the floor of mainland China.”

Differing adoption in Asia

Asian countries “sit in separate bubbles” when it comes to institutional adoption, Atkins said. “Singapore was fast and first to move in terms of institutional international adoption,” before Three Arrows Capital, a Singapore-based crypto hedge fund, collapsed. “Korea and Japan also went quickly, but Singapore did it when the last bull market was in full swing.” Japan instituted crypto regulatory frameworks after Mt. Gox, one of the once-largest crypto exchanges based in Tokyo, shut down in 2014 after filing for bankruptcy.

South Korea has capital control currencies for foreign exchange, which is “less friendly toward market makers and liquidity providers,” making it a very regulated space for Korean citizens, Atkins said.

Demand in South Korea is big. “Large institutions and enterprises came to the realization that blockchain can be part of the solution [to help businesses],” Kim said.

Bitcoin spot ETF could bring in mass adoption

The top three items institutions are looking at is getting access to licensed custodians, deep pool liquidity and managing counterparty risk.

From a product standpoint, the focus from institutions is on a bitcoin spot ETF approval in the U.S. “That will drive a wave of adoption [and is] what people will be investing in and looking forward to” in the next 12 months, Eric Anziani, president and COO of Crypto.com, said.

D’Haussy said that “upcoming” bitcoin spot ETF and possibly an Ethereum spot ETF could bring more attention to the market as big institutions see trading opportunities and other avenues to get into the space long-term. “Allocators are very bullish right now, they’re not active investors, but with a bitcoin ETF and Ethereum ETF coming up, it’s just going to help these allocators and traders to come in and leverage inefficiencies.”

Though a regulated U.S. bitcoin spot ETF could open up the gates for adoption, Atkins said he doesn’t think it will necessarily lead to people participating in innovating in the crypto industry. Regardless, “a wave of institutional adoption is coming,” he said. “Hong Kong is taking advantage of it at the moment and pushing hard.”

In general, there’s increased demand from institutions, Anziani said. “It was a choppy market last year, but there’s more confidence this year.”

And that pressure is likely to build. Family offices are embracing digital assets in Asia, with younger generations taking an interest in allocating parts of their capital toward the market. “It takes a lot longer to influence institutions with boards, but it’s already there with family offices in Asia,” Atkins said.

Bouncing back

In early 2022, there was greater clarity and support from institutions, but incidents like Terra/LUNA and bankruptcy filings from a handful of centralized crypto firms like FTX, BlockFi, Voyager and Celsius, paused growth. But that might be turning around. “Regulators came in, and now it’s coming back.”

The infrastructure today in the digital asset market has become extremely strong, too. Last month, PayPal launched its stablecoin, PYUSD, for payments and transfers for U.S. customers.

Binance CEO sees positive progress for crypto regulation, but it will be a ‘long process’

In the U.S., however, many market players view the crypto regulatory environment as unfavorable. “The U.S. is being pushed down by regulators,” d’Haussy said. “It is still a massive market regardless of regulators, but the clampdown on the U.S. has given Europe and Asia an opportunity to become local champions as they have more clarity on regulations.”

Compared to the U.S., there’s more regulatory clarity in Asia. “The U.S. is still in flux, but hopefully down the road there’s clarity from lawmakers [because] clarity by enforcement isn’t something most industry players welcome,” Anziani said. “The feeling in the [Asian] region is that we’ve passed the lowest point of the bear market and people are finding ways to come back in. We’re not out [of the bear market], so the macro environment is still challenging but there’s more optimism.”

But the wave of bitcoin spot ETF applications have a lot of institutions looking at the crypto space. Many market players view ETFs as a big way to get mainstream access for traditional players who have been waiting on the sidelines.

“This is where you’re going to get new markets with new competition. If crypto is competing with TradFi it’s going to cap its potential, but if it’s going to create new markets, then it will bring in new innovation and the future,” d’Haussy said.

More TechCrunch

Meesho, a leading e-commerce startup in India with about 150 million transacting users, has secured $275 million in a new funding round, it disclosed in a securities filing. The new…

Meesho, an Indian social commerce with 150M transacting users, secures $275M in new funding

Some Indian government websites have allowed scammers to plant advertisements capable of redirecting visitors to online betting platforms. TechCrunch discovered around four dozen “gov.in” website links associated with Indian states,…

Scammers found planting online betting ads on Indian government websites

Around 550 employees across autonomous vehicle company Motional have been laid off, according to information taken from WARN notice filings and sources at the company.  Earlier this week, TechCrunch reported…

Motional cut about 550 employees, around 40%, in recent restructuring, sources say

The deck included some redacted numbers, but there was still enough data to get a good picture.

Pitch Deck Teardown: Cloudsmith’s $15M Series A deck

The company is describing the event as “a chance to demo some ChatGPT and GPT-4 updates.”

OpenAI’s ChatGPT announcement: What we know so far

Unlike ChatGPT, Claude did not become a new App Store hit.

Anthropic’s Claude sees tepid reception on iOS compared with ChatGPT’s debut

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Look,…

Startups Weekly: Trouble in EV land and Peloton is circling the drain

Scarcely five months after its founding, hard tech startup Layup Parts has landed a $9 million round of financing led by Founders Fund to transform composites manufacturing. Lux Capital and Haystack…

Founders Fund leads financing of composites startup Layup Parts

AI startup Anthropic is changing its policies to allow minors to use its generative AI systems — in certain circumstances, at least.  Announced in a post on the company’s official…

Anthropic now lets kids use its AI tech — within limits

Zeekr’s market hype is noteworthy and may indicate that investors see value in the high-quality, low-price offerings of Chinese automakers.

The buzziest EV IPO of the year is a Chinese automaker

Venture capital has been hit hard by souring macroeconomic conditions over the past few years and it’s not yet clear how the market downturn affected VC fund performance. But recent…

VC fund performance is down sharply — but it may have already hit its lowest point

The person who claims to have 49 million Dell customer records told TechCrunch that he brute-forced an online company portal and scraped customer data, including physical addresses, directly from Dell’s…

Threat actor says he scraped 49M Dell customer addresses before the company found out

The social network has announced an updated version of its app that lets you offer feedback about its algorithmic feed so you can better customize it.

Bluesky now lets you personalize main Discover feed using new controls

Microsoft will launch its own mobile game store in July, the company announced at the Bloomberg Technology Summit on Thursday. Xbox president Sarah Bond shared that the company plans to…

Microsoft is launching its mobile game store in July

Smart ring maker Oura is launching two new features focused on heart health, the company announced on Friday. The first claims to help users get an idea of their cardiovascular…

Oura launches two new heart health features

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI considers allowing AI porn

Garena is quietly developing new India-themed games even though Free Fire, its biggest title, has still not made a comeback to the country.

Garena is quietly making India-themed games even as Free Fire’s relaunch remains doubtful

The U.S.’ NHTSA has opened a fourth investigation into the Fisker Ocean SUV, spurred by multiple claims of “inadvertent Automatic Emergency Braking.”

Fisker Ocean faces fourth federal safety probe

CoreWeave has formally opened an office in London that will serve as its European headquarters and home to two new data centers.

CoreWeave, a $19B AI compute provider, opens European HQ in London with plans for 2 UK data centers

The Series C funding, which brings its total raise to around $95 million, will go toward mass production of the startup’s inaugural products

AI chip startup DEEPX secures $80M Series C at a $529M valuation 

A dust-up between Evolve Bank & Trust, Mercury and Synapse has led TabaPay to abandon its acquisition plans of troubled banking-as-a-service startup Synapse.

Infighting among fintech players has caused TabaPay to ‘pull out’ from buying bankrupt Synapse

The problem is not the media, but the message.

Apple’s ‘Crush’ ad is disgusting

The Twitter for Android client was “a demo app that Google had created and gave to us,” says Particle co-founder and ex-Twitter employee Sara Beykpour.

Google built some of the first social apps for Android, including Twitter and others

WhatsApp is updating its mobile apps for a fresh and more streamlined look, while also introducing a new “darker dark mode,” the company announced on Thursday. The messaging app says…

WhatsApp’s latest update streamlines navigation and adds a ‘darker dark mode’

Plinky lets you solve the problem of saving and organizing links from anywhere with a focus on simplicity and customization.

Plinky is an app for you to collect and organize links easily

The keynote kicks off at 10 a.m. PT on Tuesday and will offer glimpses into the latest versions of Android, Wear OS and Android TV.

Google I/O 2024: How to watch

For cancer patients, medicines administered in clinical trials can help save or extend lives. But despite thousands of trials in the United States each year, only 3% to 5% of…

Triomics raises $15M Series A to automate cancer clinical trials matching

Welcome back to TechCrunch Mobility — your central hub for news and insights on the future of transportation. Sign up here for free — just click TechCrunch Mobility! Tap, tap.…

Tesla drives Luminar lidar sales and Motional pauses robotaxi plans

The newly announced “Public Content Policy” will now join Reddit’s existing privacy policy and content policy to guide how Reddit’s data is being accessed and used by commercial entities and…

Reddit locks down its public data in new content policy, says use now requires a contract

Eva Ho plans to step away from her position as general partner at Fika Ventures, the Los Angeles-based seed firm she co-founded in 2016. Fika told LPs of Ho’s intention…

Fika Ventures co-founder Eva Ho will step back from the firm after its current fund is deployed