Southeast Asia - A Booming Destination For Crypto Entrepreneurs
With an expanding population and rising income, Southeast Asia is emerging as a popular destination for crypto entrepreneurs. It is also a sought after location for investors to find investment opportunities on high-growth startup companies in the crypto space. Today, Southeast Asia is home to over 600 crypto/blockchain company’s headquarters.Venture investment firm White Star Capital has issued a new report illustrating that much of the recent rise in venture capital funding in this location originated from crypto, blockchain and web3 startups. The $1.45 billion total for 2021 looks set to be exceeded in 2022, having already seen almost $1 billion so far this year.
According to the report, world-wide investors, with the U.S., China and Singapore being at the forefront, are attracted by the dynamic web3 environment there. However Amy Zhao, lead at crypto investment fund Ocular, said that although America is still seen as the base for the primary research and infrastructure development in the realms of blockchain. Southeast Asia is the perfect seedbed for web3 start-ups due to its differing population composition, which is one of the reasons why it is growing so fast.
The demographics of Southeast Asia are very favorable for web3 because of its young populations.There is a new generation of people who inherently understand the technology and are more willing to try new things. Plus the fact that Southeast Asia is made up of mostly developing economies, so the financial aspect of crypto provides a lot of incentives for people to participate.
PROVIDING A SOLUTION TO THOSE WITH LIMITED ACCESS TO BANKING SERVICES
Southeast Asia is amongst the fastest growing populations in the world, with almost 700 million residents. Over 68% of whom are active internet users with even more to be coming online soon. In little under two decades it is thought that Asia will make up half of the global GDP and an estimated 40% of the world’s consumption, the majority of this emanating from the 10 strong member countries of the Association of Southeast Asian Nations (ASEAN), a report by Pinebridge Investments found.
Like many other developing countries, a large number of the population in Southeast Asia still only has limited access to banking services. With more than 70% having little or no access, being “underbanked” or “unbanked”. Even with major improvements having been made over the last decade, according to a 2019 report from Bain & Company. Resulting in an opportunity for alternatives spaces, such as crypto-related finance, to emerge and grow in order to provide THE solution for this major problem. With the lack of reliance on the traditional banking systems, decentralized finance, or DeFi, has thrived. DeFi allows its users to derive returns and access capital despite the lack of a centralized system, instead of utilizing distributed ledger technologies for transaction processing.
GETTING PAID TO PLAY THROUGH P2E CRYPTO GAMES
An opportunity for players to earn in-game assets which can be exchanged for cryptocurrencies. Who wouldn’t want this?!
Meanwhile in Southeast Asia, blockchain games, known as GameFi, are also gaining ground rapidly. With games like the Vietnam-based Sky Mavis’s Axie Infinity becoming very popular in the Philippines and Indonesia. Or the Philippines-based Yield Guild Games (YGG), a gaming guild decentralized autonomous organization that invests in NFTs used in blockchain-based games and virtual worlds, popular because of its unique play to earn model, in other words, get PAID to play!
SEA IS LEADING THE WAY WITH CRYPTO ADOPTION / USE
While Singapore leads the way with crypto uptake rates, having 10% of it’s population owning some, the average across Southeast Asia stands at 3.56%, behind America whose rate stands at 8.3%, according to White Star Capital, whereas, when it came to DeFi takeup, Vietnam and Thailand were only second and third respectively to America in 2021 Chainalysis found. Crazy yet amazing, right?!
Every country had its own niche within the circles of crypto.
- The Philippines, for example, has theirs in the realms of entertainment.
- Vietnam have their ‘hardcore engineers’.
- Singapore, known for being an international hub, a forerunner in SaaS.
- Thailand has its lively financial market.
The opportunities offered by the region's web3 usage have not gone unnoticed by those outside the area. The crypto exchange Gemini of New York publicized their ambition for the area last year. Coinbase of San Francisco were all set to concentrate their recruitment drive within Southeast Asia before a freeze in recruitment due to the current market downturn.
Part of the draw for entrepreneurs to countries such as Singapore, as well as the consumer demand, is the lack of conservatism towards crypto, with China having criminalized it and America becoming increasingly wary.
“Singapore has always been very pragmatic. The regulations might not seem to be as lenient as say Dubai, which has attracted a lot of large exchanges to move there from Singapore. But Singapore’s approach has been to build up more trust in the long run to protect consumers here,” Zhao reckoned. “And in terms of innovation, it’s very supportive, such as setting out regulatory sandboxes,” the investor added.
As an example, MAS collaborated with the industry itself to create a blockchain-based payments network. Temasek, the sovereign wealth fund of Singapore, has been a major player in investing in crypto startups, backing companies like crypto asset management unicorn Amber.
Regulators in Southeast Asia will most likely continue to develop their regulatory frameworks that govern digital assets in the coming years. And the best part is that as the digital asset adoption continues to rise, the ‘Sudden-stop’ regulations look less likely by the day. Mainly because it would put brakes on a vibrant sector with future prospects. And this isn’t just us voicing our opinion but it is a written report by White Star Capital.
The future for Southeast Asia as a crypto economy hub looks very promising.