Asian Web3 Market Trends: Wrap-up for Q3 2024
A Look Ahead to the End of 2024
TL;DR
Asia's Web3 market is rapidly growing, driven by tech-savvy populations, proactive governments, and enterprise involvement. Key players like South Korea, Japan, and Vietnam are leading the charge.
New regulatory frameworks in South Korea, Indonesia, and Thailand are facilitating blockchain innovation, with sandbox regulations encouraging experimentation in real-world assets (RWAs), DeFi, and digital asset services.
Emerging markets like China and Cambodia present both opportunities and risks. China’s unofficial involvement remains significant despite regulations, while Cambodia offers potential for small and medium-sized businesses willing to navigate legal complexities.
1. Tiger Research's Focus on Asia
At Tiger Research, our primary focus is on the Asian Web3 market, given its vast potential and dynamic growth. Asia stands out due to its 1) young tech-savvy populations, 2) strong tech adoption, 3) mature regulatory frameworks, and 4) the proactive approach of enterprises. These factors are positioning Asia to become a leading force in the global Web3 landscape. Among the many countries in the region, we are currently highlighting the following key markets:
South Korea: Enterprise-level companies are entering the Web3 space, with blockchain game development taking a prominent role. Large gaming firms are actively preparing for blockchain game launches, signifying a shift in the sector.
Japan: Government-led initiatives to revitalize the Web3 industry are driving significant corporate involvement. Major players with global IP, such as Sony and Bandai Namco, are expected to make notable contributions.
Indonesia: With a large population and a rapidly growing market, Indonesia holds considerable long-term potential. The government’s proactive stance, including the launch of a state-owned cryptocurrency exchange, further strengthens this outlook.
Vietnam: Positioned to become Asia's "Web3 powerhouse," Vietnam benefits from high rate of technology adoption among its young population and a competitive pool of developers.
Thailand: The government, financial sector, and public are all highly engaged with the crypto market. Traditional finance institutions are taking the lead on Web3 initiatives.
Singapore: Despite its clear regulatory framework and innovation-driving sandbox projects in ICOs, STOs, RWAs, and payments, Singapore faces challenges as corporate support has recently declined.
India: With a large talent pool and a thriving startup ecosystem, India has great potential in the Web3 space. Success stories like Polygon highlight the country's capacity to drive global Web3 infrastructure projects.
Each of these countries is leveraging its unique strengths to shape the future of the Asian Web3 market. Tracking the news from these countries throughout Q3 will provide valuable insights into the emerging trends and opportunities in Asia's Web3 landscape.
2. New Regulatory Frameworks
2.1. South Korea: Questions About the Effectiveness of the Act
On July 19, 2024, South Korea introduced the Virtual Asset User Protection Act, aimed at enhancing investor protection and ensuring market integrity. Key provisions of the Act include 1) defining virtual assets more clearly, 2) mandating interest payments on customer deposits, 3) requiring insurance coverage in case of accidents, 4) tightening regulations on unfair trading, and 5) enforcement of market manipulation (MM) penalties without exception.
One of the most immediate impacts was the competition among major exchanges like Upbit and Bithumb, which began offering interest rates of 2-4% on customer deposits. Additionally, token issuance projects responded by strengthening internal controls to comply with the new regulations.
However, the $AVAIL case raised concerns about the Act's effectiveness. An estimated 1 billion KRW in profits were reportedly generated through arbitrage trading due to significant price discrepancies between domestic and global exchanges. This highlighted ongoing issues such as price manipulation and market disruption, but the lack of a thorough investigation has sparked questions about the Act's actual impact.
On September 11, the Financial Supervisory Service (FSS) notified Bithumb of an upcoming on-site inspection as part of its "Operation Plan for the Inspection of Virtual Asset Businesses in the Second Half of the Year." This follows the FSS announcement on September 2, which outlined plans to audit two KRW market exchanges. The sharp price increase of $AVAIL is expected to be a central focus of the investigation.
This on-site inspection demonstrates that the new regulations are being actively applied to market supervision. Moving forward, we will continue to assess the effectiveness of these regulations and track market responses to ensure the sustainable growth of South Korea's virtual asset market.
2.2. Indonesia: Implementing a Sandbox for Blockchain Technology
As part of Regulation No. 3/2024 on technological innovation in the financial sector (POJK 3/2024), Indonesia's Financial Supervisory Authority (OJK) introduced a sandbox framework in June 2024. This regulation covers a broad spectrum of blockchain-related technologies and is expected to bring previously unregulated financial services into the official system.
Key areas of focus include virtual asset services, such as staking and stablecoins, which now have the opportunity to be tested and potentially recognized within the regulatory framework. The sandbox will likely foster the development of new financial services, particularly at the intersection of blockchain and traditional finance and the tokenization of real-world assets (RWAs).. These innovations are poised to revolutionize the Indonesian financial market.
The sandbox regulation reflects the Indonesian government's proactive approach in supporting financial innovation while ensuring consumer protection and market stability. This initiative is anticipated to further accelerate growth in Indonesia's fintech industry.
To participate, companies must meet specific criteria such as showcasing innovative and unique services tailored to Indonesian consumers and businesses. Additionally, they must submit the required documentation to the OJK as part of the application process. Approved companies will have one year to test their services, with a six-month window to obtain a full license if they pass the assessment. This balanced approach provides companies with the flexibility to enter the market quickly while ensuring enough time to experiment and refine their services.
2.3. Thailand: Sandbox Regulation Expands into RWA Markets
Thailand's Securities and Exchange Commission (SEC) has made a significant move to foster innovation in the digital asset and Web3 sectors. In August 2024, the SEC introduced a digital asset sandbox, complementing its existing detailed licensing framework. This sandbox allows for the testing of key initiatives that align with emerging market trends.
The sandbox provides a space for experimentation in various areas, including real-world asset (RWA) tokenization, payment systems, security protocols, decentralized finance (DeFi), and more. Bitkub Academy, a subsidiary of the cryptocurrency exchange Bitkub, has expressed optimism about the move, viewing it as an opportunity for entrepreneurs to test innovative ideas while working within a legally consistent framework.
This initiative is also expected to directly benefit users, who will gain access to new features and products within the digital asset and Web3 space. A notable example is RealX, Thailand's first tokenized RWA, which was listed on the Bitkub exchange due to the SEC's open approach to innovation.
Looking ahead, more groundbreaking projects are likely to emerge as new possibilities unfold within Thailand's digital asset market. At the same time, the development of clear and comprehensive laws and regulations is expected to enhance market stability. Thailand's proactive stance is set to play a pivotal role in shaping the future of the country's digital asset ecosystem.
3. New Government Initiatives
3.1. India: National Blockchain Framework (NBF)
On September 4, 2024, the Indian government unveiled the National Blockchain Framework (NBF). This marks a major step in the country’s digital transformation strategy. The NBF is not just about technology adoption—it represents an ambitious plan to create a more secure and efficient digital infrastructure by addressing the limitations of legacy systems that have surfaced during India’s rapid digitalization.
The NBF has several key objectives: enhancing transparency in the public sector, fighting corruption, fostering technological innovation, and driving economic growth. Additionally, the initiative aims to improve citizen-centered services. By leveraging blockchain’s immutability and transparency, the NBF seeks to increase the reliability of government transactions and records. The goal is to make it significantly harder to manipulate data and boost citizen trust in government systems.
Key components of the NBF include:
Vishvasya Blockchain Technology Stack: This blockchain-as-a-service (BaaS) offering provides a decentralized infrastructure that enables startups and enterprises to quickly develop new blockchain-based services. By utilizing government data, the stack aims to accelerate blockchain adoption across both public and private sectors.
NBFLite: A lightweight blockchain platform designed for startups and academia, NBFLite supports rapid prototyping, research, and education. It is intended to drive blockchain innovation and talent development across India.
Praamaanik: A blockchain-based solution for mobile app provenance verification, Praamaanik enhances the security of India’s mobile ecosystem by preventing the spread of malicious or counterfeit apps, thereby improving user trust and system integrity.
National Blockchain Portal: This comprehensive platform offers the latest information on blockchain technology, including news, events, and educational resources. The portal’s goal is to raise public awareness and increase accessibility to blockchain knowledge.
India's NBF is one of the few examples globally of a state-led initiative aimed at supporting blockchain technology across multiple industries. It views blockchain as critical infrastructure and is expected to transform the country’s digital landscape. If successful, the NBF could serve as a model for other nations by illustrating how blockchain can be integrated into national infrastructure.
4. Enterprise-Driven Markets
4.1. Japan: Blockchain Ecosystem Organized Around the Financial Sector
As outlined in previous reports, Japan's blockchain ecosystem continues to be shaped by the financial sector. A recent notable development is Sony's entry into the blockchain space with its new Ethereum Layer 2 solution, Soneium, created in partnership with blockchain company StarTale. Announced in August 2024, Soneium aims to provide scalable infrastructure for Web3 applications by leveraging Sony's extensive global presence and user base.
Sony has also introduced an incubation program, Soneium Spark. The program supports developers by offering access to infrastructure, mentorship, industry partnerships, and funding opportunities of up to $100,000. This move follows Sony Bank's announcement of plans to launch a yen-backed stablecoin, further indicating Sony's growing involvement in the Web3 ecosystem and its efforts to explore new opportunities in blockchain technology.
Currently, Soneium is in its testnet phase, named Minato, with the mainnet launch anticipated for Q1 2025. Interest in the platform is high, with more than 50 projects reportedly in development or planning to deploy on Soneium. This marks a significant step for a major tech giant entering the blockchain space, especially as financial companies have mainly been the ones creating their own chains. The success of Soneium could be a key milestone in the broader adoption and popularization of blockchain technology by major enterprises.
On the political front, Japan is also experiencing significant shifts. Ishiba, who is expected to be the next prime minister, comes from the same Liberal Democratic Party as current Prime Minister Kishida. However, his stance on the blockchain market remains uncertain. Although Ishiba's policy proposal includes plans to use blockchain and NFT technology to revitalize rural areas, this initiative is primarily focused on regional development rather than advancing the broader blockchain industry. It remains to be seen how his policies will impact Japan’s blockchain sector once his cabinet is formed.
4.2. Vietnam: Education and Industry Synergize to Grow the Blockchain Ecosystem
Vietnam’s blockchain ecosystem is experiencing rapid growth, driven by a strategic alignment of education and industry development. Central to this progress are the efforts of the Vietnam Blockchain Association (VBA) and the Academy of Blockchain and AI Innovation (ABAII).
VBA has partnered with Tether to host educational conferences in major cities across Vietnam. In addition, VBA has collaborated with ABAII to offer blockchain education to university students through its UniTour program, a series of university visits aimed at fostering interest in blockchain technology. Beyond education, VBA is also playing a pivotal role in helping students and young professionals transition into the blockchain industry. One notable initiative is the SwitchUp Accelerator program, which provides mentorship, support, and investment for Web3 startups and projects.
Since its official launch on January 10, 2024, ABAII has embarked on an aggressive educational campaign. Certified by the Ministry of Science and Technology and backed by the VBA, ABAII aspires to become a leading hub for blockchain research, development, and application in Vietnam. Its long-term goal is to provide blockchain education to 1 million Vietnamese citizens by 2030. In the short term, ABAII plans to train 100,000 students across 30 universities.
This coordinated approach, integrating education and startup incubation, is creating a robust foundation for the sustainable growth of Vietnam's blockchain industry. With a clear strategy in place, Vietnam is positioning itself to become a major player in the global blockchain market.
5. New Countries to Watch in the Blockchain Market
5.1. China: Will the Market Open Up?
Despite strict regulatory crackdowns in 2017 and 2021, China’s cryptocurrency market remains active behind the scenes. Although the official stance toward opening up the market is not favorable, there is significant movement and enthusiasm among builders and investors.
Chinese entrepreneurs continue to find ways to participate in the global blockchain ecosystem such as by engaging in international projects and setting up overseas subsidiaries. Big capital from China also remains a powerful force in the market, despite not being reflected in official statistics. Chinese investors are still actively involved, contributing to the growth of the crypto market.
The presence of a gray market is another notable aspect. Despite the government ban, trading continues through peer-to-peer transactions and offshore exchanges. This phenomenon demonstrates that regulatory efforts alone have not entirely halted activity.
While it is unlikely that China will officially reopen its cryptocurrency market in the near future, the country’s technological prowess and capital influence on the global blockchain ecosystem cannot be ignored. If China were to open its market, the impact would be monumental. However, even without an official market, China is already playing a major role in shaping the global crypto landscape.
Monitoring China's regulatory changes and market dynamics will be crucial, as China-related developments are likely to remain a key factor in the evolution of the global blockchain industry.
5.2. Cambodia: A Market of Risk and Opportunity
The Cambodian cryptocurrency market has recently garnered attention, but not for positive reasons. In August 2024, it was shaken by a major scandal involving Huione Guarantee, a company accused of illegal transactions worth $49 billion. As a result, much of the news surrounding Cambodia's crypto market has been dominated by crime and fraud.
However, Cambodia's blockchain story is not solely defined by this recent turmoil. Until 2022, the Cambodian government had been actively exploring cryptocurrency adoption. The central bank, for instance, developed a blockchain-based payment system called Bakong, highlighting early efforts to embrace digital finance.
At present, the Cambodian market appears somewhat stagnant. But this status presents opportunities, particularly for businesses that recognize the potential for growth. Recent industry trends indicate a growing movement to leverage blockchain technology in Cambodia, signaling that entrepreneurial activity is on the rise.
Cambodia is a market worth watching. Despite its chaotic state, companies that engage proactively with the government and take calculated risks could find success. However, this is not a market for large global corporations—rather, it is one where small and medium-sized enterprises (SMEs) can thrive by being aggressive and adaptable.
For SMEs willing to navigate the volatile regulatory environment, Cambodia offers a first-mover advantage. Close communication with government agencies and a deep understanding of local regulations will be key to mitigating risk and capitalizing on opportunities. Nevertheless, caution is essential. Legal risks and market instability remain significant concerns.
Ultimately, Cambodia's cryptocurrency market is a "double-edged sword", offering both risk and reward. Companies with strong risk management capabilities and a willingness to adapt to local conditions may find promising opportunities in this dynamic and evolving market.
6. Closing Thoughts
While African markets, including Nigeria, are gaining momentum in the cryptocurrency space, Asia remains the fastest-moving region. Thus far, much of the change in Asia has been driven by governments, large institutions, and enterprises, with mass-market services for everyday consumers still in the early stages of development. Nevertheless, these developments represent critical steps toward the future.
The Asian cryptocurrency market is evolving at a rapid pace, fueled by proactive government policies, significant corporate investments, and strong interest from younger generations. Although mass adoption is still down the road, the current period is crucial for laying the necessary groundwork. As the market continues to mature, we will maintain our focus on Asia. The region's key role in shaping the future of the global blockchain industry is unmistakable.
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