Thailand and Vietnam have become the top crypto trading hubs among the 10 members of the Association of Southeast Asian Nations, beating even financial center Singapore, which has been grappling with new legislation to control the nascent sector.
The two ASEAN members recorded over USD 100 billion each in crypto buying and selling values from July 2021 to June 2022, according to numbers published on Wednesday by blockchain data platform Chainalysis.
“Users in lower-middle and upper-middle income countries often rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility,” Chainalysis said. “These countries also tend to lean on bitcoin and stablecoins more than other countries.”
The data company said Thailand and Vietnam saw high traffic to marketplaces for non-fungible tokens that give their owners the deeds to items like virtual art pieces on blockchain, which are decentralized digital ledgers that keep the cryptocurrency industry humming.
Thailand recorded USD 135.9 billion in crypto value transacted over the year, while Vietnam logged USD 112.6 billion. Singapore booked just USD 100.3 billion, as the city-state’s financial regulator is in the process of drawing up rules to tighten scrutiny over retail trading of those tokens, which it frowns upon.
Several crypto players that set up shop in Singapore have been ensnared in a global crypto sell-off earlier this year. In May, the value of TerraUSD—also known as UST then—which was worth nearly USD 19 billion at its peak, and its sister token Luna, crashed spectacularly, rendering them largely worthless.
The tokens, which are stablecoins, fell below par to the dollar at which they were pegged, bringing down other cryptocurrencies and sparking a crisis for several digital asset companies. The slump in the value of these virtual coins set the stage for more caution toward tokens in ASEAN.
Last week, a long-awaited upgrade to Ethereum, the blockchain technology underpinning ether—the world’s second-biggest cryptocurrency after bitcoin—did little to shake up token prices despite the excitement around what had been hailed as a landmark event for virtual assets.
The upgrade saw the network transit to a system which drastically cut energy use for the minting of new coins, which would in theory make investing in Ethereum more palatable to those who had concerns about environmental damage from the crypto industry.
“All risk-on markets are being weighed down by larger macro factors at play such as inflation and interest rates, leading to a potential recession ahead,” said Vijay Ayyar, vice president for corporate development and global expansion at London-based crypto platform Luno.
With soaring prices across the globe on the back of Russia’s invasion of Ukraine this year and the US Federal Reserve on a warpath to rein in rising costs with interest rate hikes, investors have been fleeing from riskier vehicles like crypto.
According to accountancy firm KPMG, corporate backers appear to also be losing appetite for investing in digital token players. KPMG figures showed that cryptocurrency funding in Singapore dipped by more than half its value in a report it issued earlier this month.
Crypto investment inflows tumbled to USD 539.1 million in the first six months of 2022, from USD 1.3 billion in the second half of last year. KPMG noted that crypto deals were also smaller in size and that the sector was undergoing some consolidation with seven exit or merger agreements inked.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.