Stablecoins and crypto are threatening the dominance of fiat money in East Asia.
Stablecoins and cryptocurrencies are starting to replace fiat currency in some East Asian countries, showing their importance in developing economies.
East Asia emerged as the sixth largest crypto economy by 2024, accounting for more than 8.9% of global cryptocurrency value received between June 2024 and July 2023, according to a September 17 Chainalysis report.
The growing adoption of crypto and stablecoins is driven in part by persistent devaluation of fiat currencies and countries with high inflation, said Maruf Yusupov, founder of Dinar, a digital stable coin backed by physical gold.
Yusupov wrote in a statement shared with Cointelegraph.
“In most emerging markets, stablecoins will gradually replace fiat due to low barriers to entry, low costs, and ease of use. If current adoption trends continue, the asset could result in less support for traditional banks than we have today.”
In East Asia, the value of cryptocurrency has been adopted. Source: Chain analysis
Stablecoins are emerging as a cheaper and faster alternative to traditional bank transfers, especially cross-border transactions, which can be expensive for developing economies. On average, remittance fees associated with bank account transfers will cost an average of 7.34 percent in 2024, Statista said.
East Asia will achieve over $400 billion in onchain value between June 2024 and July 2023.
RELATED: Investors say Tether's $118B reserves could face audit and liquidity risk
East Asian crypto activity is driven by institutional and professional investors.
Much of the cryptocurrency activity in the East Asian region is likely to be driven by institutional and professional investors.
Much of the increased activity was driven by institutions, based on a larger average digital asset turnover rate, according to Chainalysis, which wrote:
“In particular, East Asia accounts for the largest share of professional-level transfers compared to the regions studied in this report.”
Regional transaction value at transfer rate. Source: Chain analysis
However, institutional investors mainly used decentralized exchanges (DEXs) and other decentralized finance (DeFi) services, while professional investors continued to prefer centralized exchanges (CEXs).
Transfer volume by transfer rate and service type. Source: Chain analysis
The report stated that DEXs offer “more arbitrage opportunities than CXs” due to their different asset coverage.
Related: Ethereum is a ‘contrarian bet' in 2025, says Bitwise exec
Hong Kong's dream of a crypto hub is coming true.
Hong Kong's efforts to become a global cryptocurrency hub are starting to pick up steam in line with the region's growing digital asset activity.
In terms of cryptocurrency adoption, Hong Kong has seen growth of over 85.6%, the fastest year-over-year growth among East Asian countries, followed by South Korea.
Crypto adoption, high developing countries. Source: Chain analysis
Stablecoins are an important part of this boom, accounting for more than 40% of the total value received in Hong Kong.
However, the growing use of Stalkcoin invites further regulatory oversight, Yusupov added.
“Central banks will do what they can to limit the impact of stablecoins on fiat dominance. Also, new fraud models may emerge due to the growth of stablecoin use globally. While innovators are tuned into stablecoin revolutionary tendencies, preparation for headwinds must go hand in hand.”
The growing activity may be due to regulatory developments. In the year In July 2024, Hong Kong regulators proposed a new stablecoin licensing system for fiat-backed stablecoin issuers.
Magazine: Chinese Tether Laundromat, Bhutan Soon Enjoys Bitcoin Boost: Asia Express
