The center of gravity of the crypto universe in Asia. Big crypto exchanges and companies operate in Europe and North America. But most users are based in the Asia-Pacific region, as are most of the world’s largest exchanges and mining pools.
There are a lot of reasons why this is the case. However, experts speaking to Cryptonews.com suggest two key explanations for this: legislation and the current financial infrastructure.
But there are other factors at stake, like the fact that Asia benefits from a favorable energy climate for mining and cost-effective IT supplies.
However, these same experts suggest that Asian dominance might soon shift as crypto starts to enjoy more mainstream acceptance. Particularly when one takes into account where leading crypto-asset and blockchain technology companies are located.
Law of Asian traders
There is a lot of evidence to show that most crypto traders are based in Asia. Recently, DEXTF’s chief scientist wrote about Ethereum (ETH) gas prices, which appear to increase during trading hours in much of Asia.
As indicated in the heat map, the gas price is starting to peak at UTC+8, the time zone covering Mainland China, Singapore, Taiwan, and Hong Kong.
According to Binance’s Asia-Pacific VP, Mai Lu, the higher demand for gas from Asian users is likely to result from higher demand for decentralized finance (DeFi).
May Lu says, “Asia has witnessed an increasing number of blockchain start-ups and investors entering the market in recent years. With many projects actively working on DeFi products and services on Ethereum. This could be the reason for rising Ethereum transaction fees during the daytime in Asia.”
Other indicators appear to confirm Asia’s crypto dominance.
CryptoCompare data reveals that tether (USDT) accounts for about 57% of the global bitcoin (BTC) market, while USD for 19% and the Japanese yen for 11%.
Chain analysis research has shown that China has the largest number of USDT users. Also that more trades are carried out here than in any other nation.
Why is there such a high demand for bitcoin among Chinese traders and other Asian traders?
According to Mai Lu, it is the demographics and economic factors, including the Chinese yuan. Some say international trade disputes have weakened it. “If we boil it down, we’ll see that the demand from the user is what drives all of this. Asia has a large population and a lack of financial infrastructure. This creates a huge demand for crypto and contributing to its growth.”
Kunal Barchha, CEO of India’s CoinRecoil Exchange, also believes that population size helps explain why Asia dominates the crypto. “Asia is a largely populated area. As a result, even a few percent increases in users is likely to boost the overall crypto market.”
Regulation, Mining and IT
Barchha maintains that regulation, like Mai Lu, is a major factor in Asia’s position.
“The distribution of crypto traders/users is fundamentally determined by the regulatory environment,” says Lu. “As we can see, the Indian market erupts after the Supreme Court of India lifted a ban on cryptocurrency trading by the country’s central bank.”
According to Lu, this may change in the future, especially since the Chinese government has officially prohibited crypto trading and trading.
He explains that, “Many countries in the APAC region are facing regulatory uncertainties. While the absence of the relevant regulation may support innovation for a limited period of time, it also poses potential threats to the long-term development of the industry.”
Despite the Chinese government’s skeptical attitude to crypto, bitcoin mining is still dominated by China-based pools. This is mainly due to higher production costs in China, as well as lower energy rates.
According to Barchha, Asian nations such as India are also benefiting from a favorable IT climate.
He explains that, “IT resources are very cost-effective here. Furthermore, skilled developers and engineers are plentiful. Down the line, I see Asian countries playing a leading role in new developments concerning blockchain and crypto-assets.”
A chance to change?
In the future, this balance could change. According to Barch and Lu, Europe and North America are the most innovative crypto companies.
“It is interesting to note that many prominent blockchain ventures are based in the United States and Europe, while most of the leading crypto exchanges are in APAC,” says Mai Lu.
He adds that “Blockchain companies in the United States and Europe have a competitive edge in terms of technological development, boasting several innovative technology teams.”
Barchha also claims that, because of potentially restrictive laws, Europe and North America may lead to wider adoption of crypto. “I assume that Europeans and Americans will lead the adoption side of the market, while Asians will mostly serve as traders and investors. This is because Asian countries can adopt regulations that may not recognize crypto as currency but as investment assets.
This will present an obstacle to the adoption of crypto to purchase goods and services, Barchha predicts. However, he continues “to see Asia playing a critical role in financial markets.”
Irrespective of its share, Mai Lu insists that Asia will continue to have a massive impact on how crypto is developing worldwide.
The Asian crypto industry will continue to develop and expand exponentially in the long run because the demand side is substantial. In turn, this will have a huge effect on the global crypto space. It will drive innovation in the sector, fuel massive adoption worldwide, and help the wider industry grow.