Original title: Crypto in South Asia: Key Things to Know

Original author: Ignas | DeFi Research, DeFi researcher

Original translation: Deep Tide TechFlow

As cryptocurrency grows into a global industry, the dominance of KOLs in the West and English-speaking countries may cause us to ignore opportunities outside the West.

For example, in my last blog post on the state of the market, I was surprised to find that OpenSocial has more users than Farcaster or Lens, despite having much less attention on platform X. What is the secret of their success? Indonesia, Vietnam and India account for the majority of the user base.

So, in this blog post, I teamed up with Mai, the brains behind the official Pink Brains X account, to share insights on the South Asian crypto market.

We also interviewed several people from South Asian countries to understand their personal experiences.

South Asia - The Wilds of Crypto

Token2049 Singapore is undoubtedly the biggest crypto event of 2024, and one thing that stood out to us was Andy’s sharing: “The Asian market is still untapped.”

While East Asia — such as South Korea, Hong Kong, Taiwan, China, and Japan — has become a major crypto hub with clear regulatory policies, large institutional and professional investor participation, Central and South Asia and Oceania (CSAO) has taken a different, often overlooked approach to crypto that is not often seen on Western crypto Twitter.

Here is the Chainalysis Global Crypto Adoption Index map for 2024.

According to Chainalysis, the Central & Southern Asia and Oceania (CSAO) region is the third-largest cryptocurrency market, with over $750 billion in inflows between July 2023 and June 2024. That’s 16.6% of the global total. Let that number sink in. Only North America and Western Europe have higher numbers.

The Central & Southern Asia and Oceania region really stands out in the 2024 Global Cryptocurrency Adoption Index, with seven countries from the region making the top 20: India (1), Indonesia (3), Vietnam (5), Philippines (8), Pakistan (9), Thailand (16), and Cambodia (17).

How are people in South Asia adopting cryptocurrencies?

Vietnam

First, let’s look at Vietnam, where most of our DeFi creator studio Pink Brains team are from, and they offer personal experience with the market. According to Triple-A, Vietnam is the country with the second-highest cryptocurrency ownership rate. About 21.2% of the population holds cryptocurrencies, second only to the UAE’s 34.4%.

Vietnam also saw strong profits last year, ranking third globally, with cashed-in cryptocurrency earnings reaching $1.18 billion, according to Chainalysis. That’s double the earnings of Spain and the Philippines, and three times the earnings of Thailand.

One of the reasons for this is the Vietnamese government’s ambiguous stance on cryptocurrencies. While cryptocurrencies aren’t banned, they aren’t allowed in real-world usage, like payments or staking. This makes holding cryptocurrencies attractive, though true adoption still lags behind other Southeast Asian countries.

For most Vietnamese crypto investors, centralized exchanges (CEXs) are the first choice. Binance, Bybit, OKX, and BingX are the most popular exchanges, while Coinbase has a small market share due to language barriers and complex KYC processes. Trading and holding cryptocurrencies on CEXs remains the most common investment strategy.

Airdrops and crypto mining are very popular here. You’ll see a ton of Telegram and Facebook groups sharing tips, “hidden treasure” alerts, and token giveaways. In fact, it’s very easy and cheap to buy cloned accounts, fake KYC, or set up bots with little hassle. This makes Sybil attacks from Vietnamese farmers a big challenge for the protocol. Some of the big airdrops you’ll hear about include Arbitrum, LayerZero, Aptos, and zkSync.

Most investors in Vietnam are not experienced traders. They mainly seek quick profits and see cryptocurrencies as a sideline or life-changing opportunity outside of their main jobs. Experienced investors usually look for low-market-cap tokens on decentralized exchanges (DEXs) while holding large assets on centralized exchanges (CEXs). Meanwhile, new investors since 2022 tend to chase airdrops and rebate rewards. Experienced traders usually lose money in major black swan events (such as FTX or Luna), while newbies often suffer losses from false KOL signals, scams, or excessive leverage.

Vietnam is a top country in international math competitions and a hub for blockchain development talent. You may have heard of well-known figures like Loi Luu (Kyber Network) and Vu Nguyen (Pendle), but there are also some notorious serial scammers here, like the man behind Whale Markets!

Note: My team is very disgusted with this person. Please see the discussion above to understand how he is undermining the interests of investors. Mai also told me that retail banking and non-cash payments in Vietnam are developing rapidly. Vietnam is moving along a similar path to China, with digital wallets, banking apps and credit cards gradually replacing cash, especially in large cities. This change is good news for Web3, creating conditions for the popularization of crypto payments, just like Singapore is currently doing. More and more large companies are beginning to integrate blockchain technology into their businesses.

We have seen some initial tests in the banking industry, such as the first live blockchain experiment for L/C payments conducted by HSBC Vietnam. These attempts show that Vietnamese companies are very interested in blockchain technology.

But it still needs to wait for the legal framework to be further opened to cryptocurrencies.

India

Despite India's changing regulations and taxes, the country remains a major player in the global crypto market. India taxes crypto gains up to 30% and imposes a 1% tax on all transactions, which has led some investors to look for international exchanges with fewer restrictions. Despite these obstacles, cryptocurrencies are growing rapidly in India. The rise of innovative crypto startups in India shows that more favorable tax policies and clearer regulations are needed to maintain this momentum.

I asked Hitesh on X.eth what makes India unique. In addition to his unique insights into crypto, Hitesh is also developing a platform (DYOR) to help people understand crypto basics more easily. India has the largest group of unemployed youth who are eager to work for incentives. If done right, applications can channel these incentives in the form of tokens and points, as we have seen in the past with Axie. In terms of infrastructure, India has some of the best developer resources at a much lower cost than in the EU and the US.

“More than 50% of community-related positions are held by Indians, and many more are eager to join the space,” he said. “But the temporary nature of crypto and high aspirations” has led to some problems, as shown by some airdrops in the past, creating a false impression of Indians. However, this perception should not be generalized as it is more case-specific than representative.”

Indonesia is one of the fastest growing markets in terms of trading volume.

According to a product manager at Indonesian cryptocurrency exchange Pintu, the growth in crypto activity is mainly driven by speculation. “Many still see crypto as a way to make a quick profit,” he said. “Now, a lot of traders turn to Telegram groups for signals, just like they used to do stock trading, but the activity in the crypto space is even more intense because new tokens are constantly emerging.” He also said that stricter rules on the Indonesian stock exchange may be driving people towards cryptocurrencies. “As new full-bid auction measures make stock trading more stringent, some investors are looking for alternatives like cryptocurrencies.”

Indonesia stands out in decentralized exchange (DEX) and decentralized finance (DeFi) activity compared to regional and global averages.

This was confirmed by Eli5DeFi on X, who said: “Many Indonesians participate in crypto trading, usually starting with meme coins or airdrops because they are simpler and more attractive. Airdrops, in particular, usually only require time and effort to participate.”

“We have mainly used the TON app recently, and some people even set up their own communities to mine and farm $DOGS, $NOT, and $HAMSTER,” he added.

As Indonesians become more savvy in crypto, yield farming, staking, and decentralized finance (DeFi) projects are growing in popularity. This growth has formed a new community of “crypto enthusiasts,” with more than half of investors being millennials and Gen Z who seek emerging technology and quick profits.

DeFi is also on the rise, there are many DeFi builders from Indonesia - Eli5DeFi

To give a few famous examples:

· @0x_eunice - Monad co-founder

· @Mariobern - Pyth co-founder

· @bradydonut - HawkFi co-founder

· @BrianLimiardi - Copra Co-Founder

· @smsunarto - Founder of Argus Labs

· @bizyugo - No. 1, Debank

· @mathdroid - Pandora

· @PatriaAbditiar - Sociocat

Singapore

While countries like Indonesia and Vietnam have seen cryptocurrency adoption driven by “crypto-degradation” and the promise of quick gains, things are different in Singapore.

Saprolings (Web3 Incubator)’s Ronald Chan told me that Singapore has seen a surge in crypto companies following the shutdown of crypto companies in China. They chose Singapore for the following reasons:

1. Geographical proximity to China

2. Deep Chinese culture

3. Relaxed political environment

4. Low tax rates

5. Large Chinese-speaking community

6. Free flow of capital (including Bitcoin)

7. Strong legal system (this is very important)

8. Well-educated people to run businesses

9. Strong financial center in the region

10. Few other options in the region

“We protect ourselves by becoming the leading bank in our neighboring countries.” - Ronald Chan

Secondly, regulatory progress and merchant services show that cryptocurrencies have greater potential than just trading and investing. Ronald noted that Singapore "grants banking licenses to both local and foreign banks to level the playing field, unlike many other countries."

In addition, Singapore "has a nationwide QR code scanning system similar to China's WeChat Pay and Alipay (called Paynow QR), which most people use. Mastercard and Visa are available everywhere, but users and merchants are not happy because both sides have to pay extra fees."

What's more, Grab, the super app that many people use for ride-hailing, food delivery, and other services, began allowing users to top up their e-wallets with cryptocurrencies. Users can now pay with Bitcoin, Ethereum, XSGD (Singapore's local stablecoin), Circle USD, and Tether.

In the second quarter of 2024, crypto payments for merchant services in Singapore reached nearly $1 billion, a two-year high.

This is an interesting shift, especially in a market where traditional payment systems are already efficient, and it shows that cryptocurrencies are gradually becoming a common asset for more people.

At the same time, more than 75% of XSGD transfers were $1 million or less, with nearly 25% of transfers being under $10,000, a clear indication that the base of retail users in the local crypto market is growing.

The reason for the success is clear regulation, which has enhanced trust in stablecoins.

In 2023, the Monetary Authority of Singapore (MAS) laid out guidelines for stablecoins, while in 2024, it introduced rules for cryptocurrency custody and licensing.

This demonstrates the positive impact of clear regulation on cryptocurrency adoption in the U.S.

Case Study: TON’s Successful Entry into South Asian Markets

TON’s click-to-earn games are surprisingly popular in South Asia. Personally, I tried it, but the rewards I received were not worth it for me.

You may underestimate TON because of its over-distributed airdrops and “mindless” click-to-earn games, but it is actually consistent with their goal of bringing cryptocurrency into everyone’s pocket.

By getting free tokens, a new wave of users can start learning how to trade on decentralized exchanges (DEXs), add liquidity, do staking, and gradually explore other aspects of the ecosystem.

Do you know where these users are mainly from? CIS countries and South Asia.

Notcoin’s website (notco.in) receives over 66% of its visits from CIS countries. This is followed by Asian countries like Indonesia, Vietnam, China, and India. Getgems.io and Hamster Kombat show similar trends, in line with Telegram’s user base.

The Telegram Mini Bot project that offers free tokens is similar to the rise of Axie Infinity in the Philippines.

The success of the TON blockchain comes down to two areas of high adoption: free airdrops and dot-to-dot games.

Free Airdrop Area

Everyone is tired of points-for-airdrops. That’s what makes Telegram’s free airdrop scenario unique. It leverages Telegram’s 900 million users to distribute tokens like DOGS. DOGS started out as a meme and gained traction for its fair distribution and lack of a presale. This attracted new users to the blockchain and made DOGS different from typical crypto tokens.

DOGS was soon listed on major centralized exchanges (CEXs) like Binance. Airdrop amounts ranged from $10 to $60 per wallet. For many Western investors, this may not sound like much, but users can leverage multiple accounts. For many people in developing countries, these airdrops provide a new source of income during economic difficulties.

Click-and-earn games

Click-and-earn games, like Hamster Kombat, are growing fast in South Asian countries. In just three months, it reached 239 million registrations, making it one of the most popular click-and-earn games.

It also achieved over 10 million YouTube subscribers in just one week. That's crazy. That's an unprecedented number in many Western countries.

According to Bitget Premarket data, the total market value of its tokens is $920 million, which means the value of the airdrop could be around $550 million.

Due to simple game mechanics, referral campaigns, and good social reach, click-and-earn games like Hamster Kombat have quickly attracted a lot of attention among crypto influencers in Southeast Asia.

These influencers are also very popular on TikTok and X, sharing referral links and spreading the word about this type of game.

Summary

South and Southeast Asia is one of the most populous regions in the world, with a young and tech-savvy population, making it a key market for cryptocurrency businesses. It is now the third most important market after the United States and Western Europe.

However, it is difficult for businesses to develop a strategy for each country because the countries in the region vary significantly in terms of income, government regulations, and economic conditions.

Ton seems to be doing well with its strategy targeting the speculator market, and the acceptance of crypto payments is also rising.

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