Who Loves Crypto the Most?
Some people like crypto more than others but, on a macro level, some nations like it more than others too.
The reasons for this are not always hard to see. Take, for example, the countries in emerging Southeast Asia that have warmed to digital assets in recent years. In Vietnam, 70% of people don’t have a bank account, while, in Indonesia, it’s 66% and, in Philippines, 44%. Crypto assets tempt strongly in these places with their prospect of undiscriminating financial services. By contrast, if we look at the Asian countries that have lashed out at crypto in recent times – China and India – we see that a healthy four out of five citizens do enjoy the use of banks.
In a Chainalysis survey done last year, it was found that Vietnam and Philippines topped the charts in terms of crypto adoption, followed by other countries classified as “lower middle income” by the World Bank, including Thailand, India, and Ukraine. The report explained that these nations “rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility and fulfill other financial needs unique to their economies”. Indeed, at the time, a hefty 9.6% of Philippines’ GDP was made up by remittances (cross-border money transfers) from locals working abroad.
And yet, the potential benefits for developing economies should be viewed against the backdrop of El Salvador’s move to make Bitcoin legal tender in 2021. The IMF (International Monetary Fund) have repeatedly criticized President Bukele’s decision to send national funds into volatile digital currency, especially after Bitcoin’s value was cut in half in January 2022, and then reduced by one-fifth in May. Public debt has rocketed so high that it could equal 95% of national GDP by 2026, and several street protests have given vent to domestic discontent on the issue.
Join us now as we investigate the extent to which crypto trading and banking has become normalized in lower income nations, and also consider if this is likely to continue into the future.
Philippines
Philippines’ central bank has shown a distinctly welcoming attitude to digital assets. Their twin aims are to provide financial services to 70% of citizens, and to convert half the retail transactions into digital ones by the end of next year. Cryptocurrency has what it takes to help them achieve both goals. By late last year, data indicated that a huge 20% of the population owned crypto, with the most common reasons being remittances and play-to-earn games, which have generated higher-than-average salaries for many locals. Crypto gaming startups have kept popping up in the past year, encouraged by the success of the Axie Infinity game. As to crypto trading, by mid-May 2023, as much as 6% of Filipinos were actively involved.
Vietnam
People have taken to play-to-earn games with equal enthusiasm in Vietnam, where a considerable 23% of the population were gaming by October last year. You can’t use crypto as legal tender in Vietnam but, by March 2023, 17% of locals owned it. Vietnamese expatriates send home over $3 billion every year, and traditional payment options tend to charge high fees, which makes digital payment methods much more attractive.
Thailand
Thailand have wanted to be the Southeast Asian hub for crypto trading, but “The collapse of digital-asset prices has wiped out a vast amount of wealth among Thai investors”, says Karin Boonlertvanich of Kasikornbank Pcl. Public sentiment was also soured when the local SEC (Securities and Exchange Commission) fined a major crypto exchange for insider trading last year. In spite of all this, Thai power company Gulf Energy Development plans to partner up with Binance Holdings to form a new crypto exchange.
Indonesia
Indonesians can look forward to trading on their central bank’s own crypto exchange this year. Official control over digital assets is passing into the hands of the Financial Services Authority, who want crypto to enjoy the same status as any other trading instrument. In the crypto bull run of 2021, Indonesian trading volume shot up by a massive 1,000%. Add to this the following statistic: 41% of Indonesians between 18- and 75-years-of-age own cryptocurrency.
Wrapping Up
After Russia invaded Ukraine last year, inflation surged in both countries, which led to a big increase in crypto transfers. In addition, about $212 million in crypto has been sent from foreign addresses to help in Ukraine’s war effort, specifically to buy medicines, helmets, and radios. Ukraine secured the number three spot in Chainalysis’s Global Crypto Adoption Index in 2022, with Russia coming in at number nine. Watch out for the role of crypto in the continuing hostilities in Ukraine.
Otherwise, it’s left for time to tell how durable the Southeast Asian attachment to cryptocurrency really is, especially in the light of the recent bear market that floored the FTX crypto exchange. In the meanwhile, there are plenty of reasons motivating locals to keep a hand in digital assets.
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