23-6-2023 (HONG KONG) The cryptocurrency market is experiencing a shift towards Asia, as billions of dollars of trading volumes have migrated to the region. The move comes as US regulators sue three major crypto exchanges this year, and market makers and exchanges move resources to a region where several jurisdictions have introduced regulatory frameworks and are vying for digital asset traders. Investors and marketplaces are flocking to Singapore, Japan and South Korea, and more recently Hong Kong, which has introduced a new regulatory regime for crypto.
Data compiled by CryptoQuant shows that Bitcoin trading activity in predominantly Asian hours has risen this year, even as it slumped in US and European hours, accounting for almost half of crypto’s total market value. The resilience in Asian crypto volumes is underpinned by institutional investors who perceive the regulatory environment there as less risky, according to several market participants interviewed by Bloomberg.
“The base for new users in Asia is huge,” said Chuan Jin “CJ” Fong, head of sales for Asia-Pacific and Europe, the Middle East and Africa at crypto market maker GSR Markets. Fong said he expects trading to continue to shift from the US and Europe to Asia.
The pivot toward Asia was underway even before the US Securities and Exchange Commission under Chair Gary Gensler launched a wide-reaching clampdown this year. Reserves of Bitcoin and Ether, an indicator of where traders are moving their assets, plunged at US-based exchanges following the collapse of FTX in November.
While Europe has been making strides in crypto regulation, the EU-wide Markets in Cryptoassets regime will not come into effect until starting in 2024. The UK, which is formulating its own rules for crypto assets, this month said it would ban the “refer a friend” bonuses that are popular in the industry as part of stricter regulations around marketing digital assets.
The shifting tides have sparked a rush by exchanges and other market participants to expand in Asia, even as they downsize in the US. Since November, Binance has entered Japan and South Korea through acquisitions. Its joint venture in Thailand, Gulf Binance, received local licenses last month and will start operating in the fourth quarter. Gemini, which has sought to dismiss the lawsuit the SEC filed in January, on Monday said Singapore will be its hub for the Asia-Pacific region and announced plans to boost headcount in the city-state to more than 100 in the next 12 months. FalconX, a San Mateo-based digital-asset prime broker, plans to expand in Asia and has applied for a license in Singapore, said Matt Long, the firm’s general manager for APAC.
The pivot toward Asia could accelerate as market makers and exchanges move resources to the region. With several jurisdictions introducing regulatory frameworks and vying for digital asset traders, Asia is fast becoming the new center of gravity for cryptocurrency markets.
