Developing countries are often the most enthusiastic about adopting cryptocurrencies. In these regions, the idea of financial inclusion carried by cryptocurrencies appeals to a good part of the population. Indeed, in countries like Vietnam, a large part of the population does not have access to banking services.
Southeast Asia, a fertile ground for cryptocurrencies
If we take for granted that Satoshi Nakamoto is Japanese, cryptocurrency may well have originated in a G7 country. However, it is the developing countries that have most warmly welcomed bitcoin. This trend is easily explained. Indeed, the promise to decentralize the currency has a strong appeal in countries where a large part of the population does not have access to certain banking services.
It is no coincidence that China and India crack down on cryptocurrencies. Both countries see in Nakamoto’s invention the potential to overshadow national currencies. On the other side, in Southeast Asia, cryptocurrencies are widely adopted by local people.
Indeed, about 70% of the Vietnamese population has no no access to the banking system. In Indonesia, more than 66% of the population does not have access to the financial system. Thus, it is not surprising that regulators in these countries are less quick than their Chinese and Indian counterparts to restrict access to cryptocurrencies.
India and Indonesia face the crypto industry
In Vietnam, despite being slow to adopt specific regulations, the possession of cryptocurrency has progressed a lot. In the country, cryptocurrency has found space to thrive. According to a Chainalysis report from March 2023, almost 17% of the 97 million Vietnamese own cryptocurrencies. Bitcoin is the most popular cryptocurrency in the country.
In Indonesia, cryptocurrency is generally supported as an investment class, but not for payments. Nevertheless, the country plans to set up a crypto exchange aimed at crypto.
Given the potential benefits in terms of financial inclusion, it is possible that regulators in Southeast Asia will establish measures to legalize cryptos. Thus, Vietnam and Indonesia could finally raise ban on payments cryptocurrencies.
Outlook for the Philippines
The Philippines is the most cryptocurrency-friendly country in Southeast Asia. It is supported by a regulatory tolerance linked to the digitization goals of the country’s central bank.
For example, UnionBank launched a payments-focused stablecoin, backed by the Philippine peso, to “promote financial inclusion”. The project aims to link the main banks in the country with rural banks and provide financial access to less banked regions of the country.
Moreover, like Vietnam, the Philippines has a huge remittance market. Thus, the digital payments firm Strike extended its activities to the Philippines last January.
Given the recent adoption of the MiCA law in Europe, the use of stablecoins could become popular. If that turns out to be the case, Vietnam and Indonesia could finally lift their bans on cryptocurrency payments. But that is the future that will tell us.
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