What explains the dominance of Asia in the field of cryptocurrencies?

 

Today, Asia is the dominant force in the cryptocurrency market.

Asia accounts for 42% of the total market value of the top 20 cryptocurrencies.

In fact, Asian companies dominate the futures space as well, accounting for 98% of Ethereum futures trading volumes and 94% of Bitcoin futures trading volumes.

Why does Asia have such a dominant power?

According to Mira Cristanto, a research analyst at Messari, this has to do with the legal regulations and culture around the crypto market in the region.

Cristanto highlighted the aforementioned opinions in a recent interview with Laura Chen on the podcast “Unchained”.

According to analyst Cristanto, many large crypto companies such as BitMEX have established their platforms for the first time in Hong Kong, where regulations facilitate the work of crypto projects until November 2020.

The loose legal regulations allowed crypto companies to lead the way in terms of innovation and creativity and helped the emergence of many products that all contributed greatly to the growth of the crypto space.

Analyst "Cristanto" indicated that BitMEX was the first to create an automatic debt cancellation product.

More recently, FTX was the first to introduce the token stocks to the crypto market and many other innovations.

Cristanto also noted that while the Securities and Futures Commission (SFC) in Hong Kong has moved since then to regulate cryptocurrency companies in the region, it has done so in a way that does not negate the foundation laid by these companies.

"Cristanto" went on, explaining:

Hong Kong has done something different by taking the existing financial framework and actually injecting the cryptocurrency market.

According to the same speaker, there is an interesting divergence in trading behavior between East and West traders, as she pointed to this point by saying:

In Europe and the United States, there is a lot of activity in regard to DeFi.

However, when compared to the Asian regions, for example in China, the decentralized financing market is declining, unlike what it does in Western countries.

According to Cristanto, this is due to cultural differences. Unlike in the West, bankers and politicians are better viewed in the East.

Messari went on to highlight something more interesting when she said:

In Asia, people are more comfortable with centralization.

While this may be the case, a common misconception among many is that bitcoin mining operations are becoming increasingly centralized, with China controlling more than 65% of the market.

According to Cristanto, this is a far cry from reality, given that individual mining pools are competitive entities that are unlikely to work together.