The Hong Kong Web3 Carnival is approaching, reflecting on the current state of development in the Asian crypto market

Author: Web3traveler

The highly anticipated Hong Kong Web3 Festival 2023 will kick off this week. The event is co-organized by Wanxiang Blockchain Lab and Hashkey, and will gather hundreds of leading Web3 projects. Guests including the Financial Secretary of the Hong Kong Special Administrative Region Government, the founder of Binance, and the president of OKX will make significant appearances. Meanwhile, projects like IOST and Bybit have timely announced the establishment of offices in Hong Kong, reflecting a proactive approach to embracing policies and building, leading to a thriving market in the Chinese region, spearheaded by Hong Kong.

The recent prosperity of the Hong Kong market is not the only dynamic in the Asian market. A recent article from CoinMarketCap mentioned several key regional trends: Japan embracing CBDC, Hong Kong vying for cryptocurrency capital status, Singapore establishing innovation sandboxes, and India's complex and changing regulations. In this article, we will analyze the policies of each region and recommend effective reference methods for projects to expand their user base.

Current Situation Analysis

1) Japanese Yen Bitcoin Trading Volume Ranks Second Globally

Japan's crypto market is regulated, but this does not hinder its activity. According to a survey by Coinhills, in February 2023, the Japanese yen ranked second in Bitcoin trading volume, only behind the strong US dollar.

https://www.coinhills.com/market/currency/

Japan is actively exploring the potential of CBDC. The Bank of Japan (BOJ) has been experimenting with CBDC since April 2021. The BOJ aims to test the feasibility and functionality of CBDC in various use cases, such as payments, settlements, remittances, and digital identity.
In terms of crypto taxation, Japan is not very friendly. Users are required to pay taxes of up to 55% on cryptocurrency profits, which is more than double the stock tax rate of 20%. However, Japan is also one of the few countries with clear and comprehensive guidelines on how to tax cryptocurrencies. Recently, the ruling Liberal Democratic Party's Web3 project team released a white paper containing recommendations to expand the industry in the country, which has been incorporated into the national strategy by Prime Minister Fumio Kishida's government.

2) China's Bitcoin Hash Rate Ranks Second Only to the US, Accounting for 21% of the Global Total

China was once the center of BTC mining, but subsequent bans forced it to move operations overseas or sell equipment at a loss. However, China's crypto mining is showing signs of rebound. According to CCAF data, China's Bitcoin hash rate reached a global share of 21% in January 2022.

China has always maintained an embracing attitude towards digital currencies. The digital yuan aims to become a fiat currency fully supported by the People's Bank of China (PBOC) and pegged to the renminbi, having partnered with platforms like WeChat Pay.

Not only internet companies, but many traditional enterprises in China are also exploring Web3. Supported by the government, CONFLUX is actively laying out plans and partnering with traditional industry leader XCMG to enter the international Web3 space. Unlike the PFP and traditional brand entry models into Web3, XCMG stated it will center on "hardcore machinery" culture, encouraging and supporting creator communities and young artists to build a creative IP cultural space. They have also launched a unique limited NFT whitelist activity through the Web3 task platform TaskOn.

https://twitter.com/Conflux_Network/status/1641426123299979265

This is undoubtedly a groundbreaking development for the previously quiet Chinese market, breaking the boundaries between the traditional and virtual worlds. It is believed that more established companies will gradually join the Web3 ranks.

3) Hong Kong Becomes One of the Most Crypto-Friendly Jurisdictions in Asia

Hong Kong currently has a supportive regulatory environment and a vibrant community of cryptocurrency developers and exchanges. However, following the closure of two major crypto-friendly banks, Silvergate Bank and Signature Bank, it has become difficult to open local bank accounts or maintain existing ones.

In February 2023, the Hong Kong government proposed allowing retail investors to trade cryptocurrencies and cryptocurrency exchange-traded funds (ETFs). It is expected that by June 2023, Hong Kong will officially legalize cryptocurrency purchases for all citizens.
The CEO of Hashkey Capital has stated that the potential legalization of crypto in Hong Kong could serve as a compass for China. "In the future, if it proves successful, it may become a model for policy-making in other regions (China), and Web3 and crypto businesses may ultimately adopt more compliant daily operational methods." The upcoming Web3 Hong Kong Blockchain Carnival is also likely to release more information.

4) Singapore Faces Competitive Incentives and Challenges

Singapore is attractive for cryptocurrencies due to its low tax rates, supportive government policies, strong reputation as a financial center, and proximity to other Asian markets. Some notable crypto players in Singapore include Coinbase, Crypto.com, and Kraken.

In this relatively open environment, Singaporean authorities have also implemented strict regulations on crypto service providers. For example, under the Payment Services Act (PSA), any entity providing DPT services must obtain a license from the Monetary Authority of Singapore, or face fines or imprisonment.

Singapore's crypto industry is also facing increasing competition from other regions. For instance, Hong Kong's recent supportive crypto policies have attracted some crypto companies to leave Singapore. Other countries, such as the UAE, are positioning themselves as attractive destinations for crypto businesses by offering favorable tax incentives and legal frameworks.

5) India Considers CBDC but Bans Crypto Advertising Sponsorships

India is known as the "reluctant giant," with a large pool of industry talent and an active community. However, in terms of policy, the Reserve Bank of India (RBI) effectively cut off banking channels for many crypto businesses and users with its 2018 ban. It even enacted strict anti-money laundering laws and preemptively banned crypto advertising and sponsorships in local women's cricket leagues.

6) Vietnam Has One of the Highest Cryptocurrency Adoption Rates in the World

In August 2022, Huobi Global's subsidiary Huobi Research revealed in its annual report that 13.7% of Americans use cryptocurrencies, while Vietnam leads with 20.3% among the 15 surveyed countries.

7) Cryptocurrency Trading is Legal in Thailand, with Four Currencies Allowed as Trading Assets

On September 9, 2021, the Bank of Thailand (BOT) announced it would regulate foreign currency-backed, asset-backed, and algorithmic stablecoins. On the other hand, the BOT is also developing a retail central bank digital currency (CBDC) to meet public demand, improve service efficiency in the business sector, and increase accessibility to financial services.

8) South Korea Protects Legal Crypto Trading Under Regulation

Cryptocurrency is legal in South Korea. However, authorities have not yet officially declared it as a means of payment. The law supports individuals in owning and trading cryptocurrencies. Authorities impose a 20% tax on all crypto transactions. However, the enforcement of this regulation has been extended to 2025.

Our Thoughts

The Asian market has always attracted global attention due to its nearly 4 billion population base. Based on the current developments mentioned above, the overall trend is positive, and the potential of the Asian market has not yet been fully realized. Recent policy support further aids projects in exploring more possibilities here.

Projects can embrace this trend through several directions.

1. Hiring and Setting Up Offices

Establishing local offices is undoubtedly an excellent way to expand into local markets. Local employees have a better understanding of cultural backgrounds and market conditions, giving them a significant advantage in external collaborations.

At the same time, this action will also provide investors and users with more confidence and trust.

2. Targeted Advertising in Specific Areas

SEO, advertising, and other forms from Web2 continue to be effective in Web3, making them one of the simplest, most direct, and efficient conversion methods.

Web2 media agencies like PR Newswire offer advertising services targeting specific regions, allowing projects to promote more effectively. Selecting regions in the Web3 market environment is particularly important; on one hand, due to cultural background, customized airdrops and other marketing activities are more aligned with local conditions, helping to attract users strongly. On the other hand, influenced by the complex regulatory policies of different countries, projects should also fully consider policy factors when providing rewards such as tokens, NFTs, and whitelists, making settings convenient and beneficial for users.

For example, some Web3 task platforms have launched user demand targeting specific regions, allowing projects to launch more targeted activities. The system will verify users' regional qualifications.

3. Actively Participate in Local Events

Participating in events not only allows access to local and even global projects but, more importantly, facilitates deep connections with local media, laying the foundation for increased visibility and deeper user impressions. Beyond blockchain weeks and other events focused on speeches and exposure, many local hackathons are also excellent choices, potentially attracting outstanding local developers.

4. Establish Local DAO Organizations

Local communities have always been an important way to facilitate the globalization of projects. Having core local members is beneficial for achieving long-term stable development, building a global map for the project, and supporting the continuous growth of local users.

Conclusion

The development of cryptocurrencies in the Asian and global markets has become an unstoppable trend. What we need to do is find methods in the rapidly changing market environment, continue to strike, and discover effective ways that benefit the long-term development of projects, integrating into the global trend of crypto globalization.