Original title: Asian Web3 Market Trends: Wrap-up for Q3 2024

Original source: Tiger Research Reports

Original translation: TechFlow

Key points summary:

Asia's Web3 market is growing rapidly, thanks to a tech-savvy population, proactive government policies, and broad corporate participation. Major countries such as South Korea, Japan, and Vietnam are leading the way.

· New regulatory frameworks in South Korea, Indonesia, and Thailand are promoting blockchain innovation, with sandbox regulations encouraging experimentation in real-world assets (RWAs), decentralized finance (DeFi), and digital asset services.

· Emerging markets such as China and Cambodia are full of opportunities as well as risks. Despite regulation, China's unofficial participation remains significant, while Cambodia offers development potential for small and medium-sized enterprises willing to deal with legal complexities.

1. Tiger Research’s Focus on Asia

Source: Chainalysis

At Tiger Research, we focus primarily on the Web3 market in Asia due to its huge potential and rapid growth. Asia stands out due to several factors: 1) a young and tech-savvy population, 2) a high level of technology adoption, 3) a well-developed regulatory framework, and 4) a proactive attitude among businesses. These factors are driving Asia to become a leading force in the global Web3 space. Among the many countries in the region, we are currently focusing on the following major markets:

1. South Korea:Enterprise-level companies are entering the Web3 space, and blockchain game development plays a big role. Major gaming companies are actively preparing for the launch of blockchain games, marking a shift in the industry.

2. Japan: Japanese government-led initiatives are driving the revitalization of the Web3 industry and promoting active participation from businesses. Major companies with global IPs such as Sony and Bandai Namco are expected to make significant contributions.

3. Indonesia:With its large population and fast-growing market, Indonesia has considerable long-term potential. The government's proactive approach, including the launch of a state-owned cryptocurrency exchange, further enhances this prospect.

4. Vietnam:Vietnam is expected to become Asia's "Web3 powerhouse", thanks to its high level of technology adoption among its young population and a competitive developer community.

5. Thailand:Thailand's government, financial sector, and public are all highly involved in the crypto market. Traditional financial institutions are at the forefront of Web3 initiatives.

6. Singapore:Although Singapore has a clear regulatory framework and sandbox projects that promote innovation in ICOs, STOs, RWAs, and payments, it has been challenged by reduced corporate support.

7. India:India has great potential in the Web3 space with its large talent pool and thriving startup ecosystem. Success stories like Polygon highlight India’s ability to drive global Web3 infrastructure projects. These countries are leveraging their unique strengths to shape the future of the Asian Web3 market. Watching the dynamics of these countries in Q3 will provide valuable insights into emerging trends and opportunities in the Asian Web3 space.

2. New Regulatory Framework

2.1. South Korea: Questions about the effectiveness of the bill

South Korea introduced the Virtual Asset User Protection Act on July 19, 2024 to enhance investor protection and ensure market integrity. The main provisions of the bill include: 1) a clearer definition of virtual assets, 2) mandatory interest payments on customer deposits, 3) requiring insurance in the event of an accident, 4) strengthening supervision of unfair trading, and 5) imposing penalties without exception for market manipulation (MM).

One of the most direct impacts is that major exchanges such as Upbit and Bithumb began to compete, offering 2-4% interest rates on customer deposits. In addition, token issuance projects have strengthened internal controls to comply with the requirements of the new regulations.

Source: Bithumb, Gate.io, Tiger Research

However, the $AVAIL case has raised questions about the effectiveness of the bill. Arbitrage trading reportedly generated profits of approximately 1 billion won due to the large price differences between domestic and global exchanges.This highlights ongoing issues such as price manipulation and market interference, but the lack of a thorough investigation has raised questions about the actual impact of the bill.

2.2. Indonesia: Implementation of a Blockchain Technology Sandbox

The Indonesian Financial Supervisory Authority (OJK) introduced the sandbox framework in June 2024, under Regulation No. 3/2024 on Technological Innovation in the Financial Sector (POJK 3/2024).The regulation covers a wide range of blockchain-related technologies and is expected to bring previously unregulated financial services into the official system.

Focus areas include virtual asset services such as staking and stablecoins, which now have the opportunity to be tested within the regulatory framework and potentially gain recognition.

The sandbox is expected to promote the development of new financial services, especially at the intersection of blockchain and traditional finance and the tokenization of real-world assets (RWAs). These innovations are expected to revolutionize Indonesia's financial markets.

This on-site inspection shows that the new regulations are being actively used for market supervision. Going forward, we will continue to evaluate the effectiveness of these regulations and track market reactions to ensure sustainable growth of the Korean virtual asset market.

The sandbox regulations reflect the Indonesian government's proactive attitude to support financial innovation while ensuring consumer protection and market stability. This move is expected to further accelerate the growth of Indonesia's fintech industry.

Participating companies must meet specific criteria, such as demonstrating innovative and unique services for Indonesian consumers and businesses. In addition, they must submit the necessary documents to the OJK during the application process. Approved companies will have one year to test their services and, after passing the evaluation, will have six months to obtain a full license. This balanced approach provides companies with the flexibility to enter the market quickly while ensuring sufficient time to experiment and optimize their services.

2.3. Thailand: Sandbox regulations extend to real-world asset markets

The Securities and Exchange Commission (SEC) of Thailand has taken significant steps to foster innovation in the digital asset and Web3 sectors. In August 2024, the SEC launched a digital asset sandbox to complement its existing detailed licensing framework. This sandbox allows for testing of key initiatives that are in line with emerging market trends.

The sandbox provides space for experiments in multiple areas such as tokenization of real-world assets (RWA), payment systems, security protocols, decentralized finance (DeFi), etc. Bitkub Academy, a subsidiary of cryptocurrency exchange Bitkub, is optimistic about this, believing that it is a good opportunity for entrepreneurs to test innovative ideas within the legal framework.

This move is also expected to directly benefit users, allowing them to experience new features and products in the field of digital assets and Web3. A typical example is RealX, as Thailand's first tokenized real-world asset, which was listed on the Bitkub exchange due to the SEC's open attitude towards innovation.

Looking forward, more breakthrough projects are expected to emerge as new possibilities emerge in Thailand's digital asset market. At the same time, the formulation of clear and comprehensive laws and regulations is expected to enhance the stability of the market. Thailand's positive attitude will play a key 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 launched the National Blockchain Framework (NBF), marking a major step in the country’s digital transformation strategy.NBF is more than just technology adoption; it represents an ambitious plan to create a more secure and efficient digital infrastructure by addressing the limitations of legacy systems in India’s rapid digitalization.

Several key objectives of NBF include: enhancing transparency in the public sector, fighting corruption, promoting technological innovation, and driving economic growth. In addition, the initiative aims to improve citizen-centric services. By leveraging the immutability and transparency of blockchain, NBF aims to improve the reliability of government transactions and records. The goal is to make data manipulation more difficult and increase citizen trust in government systems

Praamaanik, Source: NBF-brochure

The key components of NBF include:

· Vishvasya Blockchain Technology Stack: As a Blockchain-as-a-Service (BaaS) solution, it provides decentralized infrastructure that enables startups and enterprises to quickly develop new blockchain-based services. By leveraging government data, the technology stack aims to accelerate the adoption of blockchain in both the public and private sectors.

· NBFLite: This is a lightweight blockchain platform designed for startups and academia that supports rapid prototyping, research and education, aiming to drive blockchain innovation and talent development in India.

· Praamaanik: This is a blockchain solution for mobile app origin verification, which enhances the security of India's mobile ecosystem by preventing the spread of malicious or fake apps, thereby improving user trust and system integrity.

· National Blockchain Portal: This comprehensive platform provides the latest information on blockchain technology, including news, events and educational resources. Its goal is to raise public awareness and increase access to blockchain knowledge.

India's NBF is one of the few state-led initiatives in the world to support blockchain technology across multiple industries. It regards blockchain as critical infrastructure and is expected to transform the country's digital landscape. If successful, NBF will serve as a model for other countries to show how blockchain can be integrated into national infrastructure.

4. Enterprise-driven market

4.1. Japan: Blockchain ecosystem dominated by the financial sector

As mentioned in previous reports, Japan's blockchain ecosystem is still influenced by the financial sector. A recent notable development is that Sony has partnered with blockchain company StarTale to launch a new Ethereum Layer 2 solution, Soneium, and officially entered the blockchain field.Soneium was released in August 2024 and aims to leverage Sony's extensive global influence and user base to provide scalable infrastructure for Web3 applications.

Source: Soneium

Sony has also launched an incubation program called Soneium Spark, which provides developers with infrastructure, mentorship, industry partnerships, and up to $100,000 in funding. This move comes hot on the heels of Sony Bank announcing plans to launch a yen-backed stablecoin, further demonstrating Sony's growing involvement in the Web3 ecosystem and its active exploration of new opportunities in blockchain technology.

Currently in a testnet phase called Minato, Soneium is expected to launch on the mainnet in the first quarter of 2025. The platform has attracted much attention, with more than 50 projects reportedly in development or planning to deploy on Soneium. This marks a significant step for major tech giants to enter the blockchain space, especially in a context where financial firms have primarily created blockchains on their own. Soneium's success could be a key step in the wider adoption and promotion of blockchain technology by large enterprises.

Source: Ishiba

Japan is also going through major changes on a political level. Ishiba is expected to become the next prime minister, and he belongs to the same Liberal Democratic Party as the current prime minister, Kishida. However, his attitude towards the blockchain market is still unclear. Although Ishiba's policy proposals include plans to use blockchain and NFT technology to revitalize rural areas, this initiative is mainly focused on regional development rather than promoting the broader blockchain industry. Once Ishiba forms a cabinet, it remains to be seen how his policies will affect Japan's blockchain industry.

4.2. Vietnam: Education and industry work together to develop the blockchain ecosystem

Vietnam's blockchain ecosystem is growing rapidly, thanks to the strategic synergy between education and industry development. At the heart of this progress lies the efforts of the Vietnam Blockchain Association (VBA) and the Blockchain and AI Innovation Institute (ABAII).

Source: ABAII

The VBA has partnered with Tether to host educational conferences in major cities across Vietnam. Additionally, the VBA has partnered with ABAII to provide blockchain education to university students through its UniTour program, a series of university visits designed to spark interest in blockchain technology. In addition to education, the VBA has played a key role in helping students and young professionals enter the blockchain industry. One notable initiative is the SwitchUp accelerator program, which provides mentorship, support, and investment to Web3 startups and projects.

Since its official launch on January 10, 2024, ABAII has embarked on an aggressive educational outreach campaign. Accredited by the Ministry of Science and Technology and supported by the VBA, ABAII is committed to becoming a leading center for blockchain research, development, and application in Vietnam. Its long-term goal is to provide blockchain education to 1 million Vietnamese by 2030. In the short term, ABAII plans to train 100,000 students in 30 universities.

This coordinated approach, combining education with startup incubation, lays a solid foundation for the sustainable growth of Vietnam's blockchain industry. With a clear strategy, Vietnam is striving 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?

Source: X @justinsuntron

Despite strict regulatory crackdowns in 2017 and 2021, China's cryptocurrency market is still secretly active.Despite the official attitude towards opening the market, there is still a lot of activity and enthusiasm among builders and investors.

Chinese entrepreneurs continue to find ways to participate in the global blockchain ecosystem, such as participating in international projects and setting up overseas subsidiaries. Big capital from China remains a powerful force in the market, although this is not reflected in official statistics. Chinese investors are still actively involved and contribute to the growth of the crypto market.

The existence of a gray market is another notable feature. Despite the government ban, transactions are still conducted through peer-to-peer and offshore exchanges. This phenomenon shows that regulatory measures alone have not completely stopped activity.

While China is unlikely to officially reopen its cryptocurrency market in the short term, China's technological strength and capital influence in the global blockchain ecosystem cannot be ignored. If China opens its market, the impact will be far-reaching. However, even without an official market, China has already played an important role in shaping the global cryptocurrency landscape.

It is crucial to keep a close eye on China's regulatory changes and market dynamics, as China-related developments may still be a key factor in the evolution of the global blockchain industry.

5.2. Cambodia: A market with both risks and opportunities

Cambodia's cryptocurrency market has recently attracted much attention, but for bad reasons. In August 2024, Huione Guarantee was involved in a major scandal and was accused of being involved in illegal transactions worth US$49 billion. As a result, reports on Cambodia's cryptocurrency market are mostly about crime and fraud.

Source: Soramitsu

However, Cambodia’s blockchain development is not defined solely by recent turmoil. Until 2022, the Cambodian government has been actively exploring the application of cryptocurrencies. For example, the central bank developed a blockchain payment system called Bakong, showing early efforts to accept digital finance.

At present, the Cambodian market may seem somewhat stagnant, but this state also brings opportunities, especially for businesses that see the potential for growth. Recent industry trends show that the trend of utilizing blockchain technology is emerging in Cambodia, indicating that entrepreneurial activity is increasing.

Cambodia is a market worth watching. Despite the market chaos, companies that actively work with the government and take well-thought-out risks may succeed. However, this is not a market for large multinational companies, but a place where SMEs can thrive through a proactive and flexible approach.

For SMEs willing to operate in a turbulent regulatory environment, Cambodia offers a first-mover advantage. Maintaining close communication with government agencies and having a deep understanding of local regulations are key to reducing risks and seizing opportunities. However, caution is essential, and legal risks and market instability remain significant concerns.

Overall, Cambodia's cryptocurrency market is a "double-edged sword" with both risks and rewards. 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. Conclusion

While African markets, including Nigeria, are gaining momentum in the cryptocurrency space, Asia remains the fastest-growing region. To date, most of the changes in Asia have been driven by governments, large institutions, and corporations, while mass-market services for ordinary consumers are still in their early stages. Nonetheless, these developments mark an important step towards the future.

Asia’s cryptocurrency market is developing rapidly, thanks to proactive government policies, huge corporate investments, and strong interest from the younger generation. While mass adoption will take time, the current stage is critical to laying the necessary foundations. We will continue to monitor Asia as the market continues to mature. The region’s key role in shaping the future of the global blockchain industry is clear.

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