From South Korea and the Philippines to Hong Kong and Australia, retail traders are betting on cryptocurrencies in unique ways.

By Claire Ballentine

Translated by: Luffy, Foresight News

Even after the recent pullback, cryptocurrencies remain one of the best-performing assets this year, with demand from retail investors in the Asia-Pacific region being a key driver of the cryptocurrency rally.

A lot is happening in the Asia-Pacific region. Hong Kong has just listed a batch of cryptocurrency exchange-traded funds (ETFs), and Australia plans to introduce these products to its largest stock market. Meanwhile, Singapore is vying to become a cryptocurrency hub, and Web3 blockchain technology is rapidly gaining popularity in other areas.

In January of this year, US regulators approved a Bitcoin ETF, boosting the credibility of cryptocurrencies globally. This decision helped the cryptocurrency asset class regain vitality after the "crypto winter" of 2022, during which a series of scandals and bankruptcies caused the price of Bitcoin to drop by 64%. However, the cryptocurrency market has not been without its fluctuations this year. In March, the frenzy sparked by the US Bitcoin ETF drove Bitcoin to a historical high of nearly $74,000, followed by a nearly 16% drop in April.

Some investors in Asia have been long-time enthusiasts of cryptocurrencies, having experienced the ups and downs, while others have only recently joined the space. Retail traders in places like South Korea, the Philippines, and Australia have established unique ecosystems.

Leah Callon-Butler, director of the Philippines Web3 consulting firm Emfarsis, said, "The region has always been an early adopter of Web3 technology and has a strong sense of identity with Web3 technology. Outsiders often lump 'Asia' into a homogeneous region, and it's a big mistake if you really want to understand how and why cryptocurrencies are rising here."

Here are the cryptocurrency trends in various parts of Asia:

South Korea

Traders in South Korea are one of the most enthusiastic cryptocurrency trading groups in the world. In fact, the South Korean won has just replaced the US dollar as the most commonly used currency in cryptocurrency trading. According to data from CryptoQuant, smaller tokens (known as altcoins) are particularly popular, accounting for 80% of the trading volume on South Korean exchanges, compared to around 50% on global platforms.

Retail investors are also known for their love of cryptocurrency-based esports games, which reward players with cryptocurrencies or non-fungible tokens (NFTs). Charles Pyo, founder and CEO of AI3, said that this year, South Korean gaming companies such as Nexon Games Co. and NCSoft Corp. plan to launch new "play-to-earn" games. AI3 is a Seoul-based company dedicated to promoting the adoption of Web3 and artificial intelligence by enterprises.

After the collapse of the cryptocurrency Luna and UST created by Do Kwon, co-founder of Terraform Labs, South Korean regulators have strengthened their scrutiny of the industry. Last year, the country's parliament passed a law to enhance investor protection, allowing officials to oversee cryptocurrency operators and asset custodians.

The Philippines

In recent years, Web3 games such as Axie Infinity and Pixels have become very popular in the Philippines. For example, "guilds" or groups playing games together can earn NFTs and other rewards. Internet cafes have also emerged, allowing these groups to gather in real life.

A gaming guild called Yield Guild Games has grown and is now transitioning to building Web3 protocols and helping other guilds around the world.

Callon-Butler of Emfarsis said, "The Philippines is the center of global blockchain gaming applications. Guilds have become unique communities on top of all other games, and they transfer between games."

The Philippines allows cryptocurrency trading but does not consider cryptocurrencies as legal tender. The Philippine central bank has established a sandbox mechanism to encourage innovation but with regulation. The central bank is also conducting trials for a central bank digital currency.

Hong Kong

Patrick Pan, CEO of digital asset platform OSL, explained that retail traders in the financial center are keen on using leverage in trading. He said they have a high risk appetite and a greater interest in alternative investment products. They are also heavily influenced by social media and cryptocurrency field key opinion leaders (KOLs).

Chun Ho Chow, a 23-year-old retail investor who also works at a Web3 startup, said he is confident in trading that others consider too risky.

"Many young people hope to 'get rich quick' by trading volatile assets with leverage. Many have become millionaires through such trading and post messages on social media," he said, although he knows survivorship bias exists, he believes he can do the same.

Hong Kong only started allowing retail investors to legally invest in cryptocurrencies last year and has since implemented a regulatory framework for cryptocurrency exchanges and related entities. Regulators claim that their approach places a high emphasis on consumer protection, but some are concerned that this may reduce Hong Kong's attractiveness to companies that can profit more from activities such as staking and derivatives.

On April 30, Hong Kong allowed the listing of three ETFs directly investing in cryptocurrencies. The demand for these funds will help determine whether Hong Kong's efforts to become a strictly regulated digital asset center are making progress.

In mainland China, all cryptocurrency activities, including cryptocurrency-based financing, exchange trading, and Bitcoin mining, are banned. However, the enforcement has always been a question mark.

Australia

Retail investors in Australia are renowned for their interest in Ethereum, with some even completely abandoning Bitcoin in favor of its alternative currencies. According to a survey by the cryptocurrency exchange Kraken, Ethereum accounts for 59.4% of the wallets of Australians, while Bitcoin accounts for 17.7%. In comparison, globally, Ethereum accounts for 34.5% of investor wallets, and Bitcoin accounts for 29.9%.

Kurtis Dawe, a 33-year-old trader from Sydney, is bullish on Ethereum rather than Bitcoin, as the price of Ethereum has not risen as much as Bitcoin, and many alternative currencies use the Ethereum blockchain.

"I think it has more room for growth than Bitcoin," Dawe said, having recently sold all his Bitcoin positions. He is also optimistic that Ethereum exchange-traded funds will be listed soon, further boosting its price.

Japan

As part of a broad plan to strengthen the economy, the Japanese government is trying to develop Web3 companies. It has begun to relax cryptocurrency rules related to listing and taxation and allows venture capital firms and other investment funds to directly hold cryptocurrencies. Nomura Holdings and other financial companies are also promoting the development of the Japanese security token market (a type of token representing real-world assets), converting corporate bonds, securitized real estate, and other financial products into tokens.

However, overall, regulations remain strict. For example, mutual funds cannot hold cryptocurrencies, including Bitcoin ETFs.

Masamichi Matsushima, a cryptocurrency analyst at Monex Group Inc., said that Japanese financial companies are still slow to engage in cryptocurrency activities such as custody services because they tend to avoid any activities without explicit approval from regulatory officials.

India

Cryptocurrency investors in India are very interested in the US Bitcoin ETF. Through a program called "Liberalized Remittance Scheme" by the Reserve Bank of India, investors can remit up to $250,000 annually to purchase foreign securities. Meanwhile, startups are expanding their product offerings as they see increasing demand from investors for cryptocurrency derivatives.

The situation has changed compared to last year. Cryptocurrency trading in India has dried up after the implementation of a burdensome tax regime in 2022. The government has proposed this as a way to formalize cryptocurrency assets, but the side effect is that it has made trading too costly.

Officials have recently cracked down on offshore exchanges not registered locally, while also promoting their own central bank digital currency. Various trials are currently underway.

Singapore

Singapore is largely an institutional market for cryptocurrency investors due to its relatively small population, partly because the Monetary Authority of Singapore has repeatedly warned residents against engaging in cryptocurrency trading. Singapore prohibits cryptocurrency companies from public advertising, which is an important tool for such entities to promote their products.

However, for institutions, Singapore encourages the use of blockchain for tokenization, cross-border remittances, digital bonds, and similar initiatives, which can often speed up payment processing and reduce costs. The "Guardian Program" implemented by the Monetary Authority of Singapore is one such initiative.

Taiwan

In Taiwan, the new US Bitcoin ETF is a major topic of discussion. Initially, cryptocurrency investors could purchase the Bitcoin ETF through secondary brokerage services provided by brokers, but in January, the Financial Supervisory Commission of Taiwan instructed domestic brokers to stop accepting client orders to "protect investors."

The Financial Services Commission of Taiwan subsequently added that it would negotiate with brokers and may reopen Bitcoin ETF services in April, but this has not yet happened.

Thailand

The sharp drop in cryptocurrency prices in 2022 dealt a heavy blow to retail investors in Thailand, especially when the local exchange Zipmex collapsed. This prompted regulators to strengthen supervision. However, the government of Prime Minister Srettha Thavisin, who took office at the end of last year, is vigorously promoting Thailand as a digital asset trading center in Southeast Asia. He has exempted some taxes on cryptocurrency and digital asset trading, and traders are now allowed to invest in overseas cryptocurrency ETFs.

Additionally, with the participation of Binance and one of the country's major commercial banks, Kiatnakin Bank, competition in Thailand's cryptocurrency trading business is becoming increasingly fierce. Binance has partnered with Gulf Energy Development Pcl, the country's largest privately-owned power company controlled by Thailand's second richest man, to launch a new cryptocurrency exchange. Recently, regulators have allowed mutual funds to directly invest in cryptocurrencies for the first time.

Vietnam

Many Web3 games are developed in Vietnam, including Sky Mavis, the developer of Axie Infinity. Another game called Sipher also comes from Vietnamese developers.

Giap Van Dai, founder and CEO of the Nami Foundation, which provides a cryptocurrency trading platform, said that local investors are seeking cryptocurrencies for higher returns.

He said, "Vietnam has not yet established regulations related to cryptocurrencies and blockchain, providing a so-called sandbox for developers, investors, and market growth."

Vietnamese law does not prohibit cryptocurrency-related businesses, but cryptocurrencies are not considered legal tender. Issuing cryptocurrencies and using them as a means of payment technically violates the law. The central bank has warned that engaging in cryptocurrency trading carries risks, and victims of fraud will not be legally protected. Earlier this year, the government requested the Ministry of Finance to complete a cryptocurrency legal framework by May of next year to combat money laundering.

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