by Karin Chang
7 months ago
The region’s fast-growing economies are well positioned to drive adoption of blockchain and crypto in Southeast Asia. Here, we look at where the different countries stand in the process.
With a total population of 570 million, a young demographic and high Internet connectivity, the region is promising for companies and investors – including those with an interest in blockchain and crypto in Southeast Asia. According to the e-Conomy SEA 2019 survey conducted by Google, Temasek and Bain + Co., there are a total of 360 million Internet users across SEA, of which 90% access the Internet via mobile devices.
As each country competes to stay relevant in the digital age and embrace emerging technology such as blockchain and cryptocurrency, large-scale adoption is the key to success.
As a first-world nation, Singapore certainly leads the way when it comes to adoption of blockchain and crypto in Southeast Asia, with more than 490 FinTech firms in the tiny republic. It is also home to 19 different cryptocurrency foundations and 634 global companies such as Binance, Litecoin, Wanchain, NEO and Tron, which were all incorporated here. The regulatory environment and well informed regulators who are transparent and willing to experiment with technology are among the key factors that spur the growth of blockchain technology and cryptocurrency in Singapore.
The republic has been a favorite location to launch Initial Exchange Offerings (IEO) projects with some of the global top exchanges such as Gate.io, GBX, Latoken, Bittrex and Binance. It continues to be a location of choice thanks to clear guidelines and regulations by its governing bodies. More than US$ 593m has reportedly been raised in such projects so far, which accounts to over a third of the funds raised on global IEO platforms.
As the financial hub for Southeast Asia, Singapore plays a critical role in supporting the region to push forward technologically and financially. According to the Ministry of Manpower Singapore, there are currently 1.4 million foreign workers working in Singapore. With such a sizable foreign workforce, the demand for remittance continues to be strong. In July 2019, Union Bank of the Philippines successfully transferred tokenized fiat using PHX from OCBC Bank in Singapore to an account in Cantilan Bank Surigao del Sur, through the i2i blockchain platform. The project, which runs on Enterprise Ethereum, is decentralized, cost-efficient and helps connect remote banks with domestic financial systems to improve banking access for local citizens.
On the retail front, KOPItech has integrated numerous payment modes including Bitcoin and Ethereum to allow patrons to pay for purchases at the newly renovated Funan Mall food court. This is a step up from the current e-wallet or credit card payment, which is the norm here.
Blockchain has also made an impact on charitable donations. One organization utilizing blockchain to give donors greater autonomy and transparency regarding their money is AID:Tech with the product TraceDonate. AID:Tech hopes to solve the lack of transparency across welfare and aid by providing a platform for banks, government bodies and non-governmental bodies to disburse payment to recipients in a transparent manner.
Apart from that, blockchain is also used to improve liquidity for smallholder livestock farmers. FarmTrek with the use of blockchain allows farmers to use their livestock as collateral to access working capital loans. FarmTrek successfully piloted the project with the Myanmar government last year with plans to expand to Rwanda next.
Further north, Malaysia has witnessed an increased level of awareness when it comes to cryptocurrency and blockchain. Home to global players in the crypto space such as Coingecko and Etherscan, the country has made major strides in the cryptocurrency space with the approval of London-based cryptocurrency exchange, Luno to operate in Malaysia last year.
As a digital asset exchange, Luno offers Malaysians the ability to buy, sell and store cryptocurrency on its platform. It is currently embarking on an aggressive growth plan to onboard Malaysians onto its platform with outdoor advertising and strategic partnerships. The company recently inked a deal to tie up with the nation’s top eCommerce platform, Shopee, and allow Malaysians to purchase Bitcoin at a discounted rate using eVouchers to drive adoption of cryptocurrencies.
Other areas that have witnessed a gradual increase in blockchain adoption include remittance. Early last year, Telenor Microfinance Bank joined hands with Valyou Malaysia to introduce a blockchain-based cross-border remittance service developed by Alipay, which aims to target the underbanked communities in Pakistan. The project aims to use blockchain technology to significantly boost the speed and efficiency of remittances between Malaysia and Pakistan.
In 2018, MoneyMatch made headlines when it completed its first cross-border blockchain transaction with Ripple. The FinTech startup helped retail users convert their Malaysian ringgits to euros at a significantly lower rate than the conventional bank’s telegraphic transfer and significantly reduced the transaction from two days to a few hours. Following the successful cross-border blockchain transaction by MoneyMatch, CIMB Group also entered into a strategic collaboration with Ripple’s network to grow its cross-border payment business. Ripple’s blockchain-based solution has been deployed to enhance CIMB’s proprietary remittance product, SpeedSend. The move will further enhance SpeedSend’s network and open new payment corridors to improve consumer access to cross border remittances in and out of ASEAN countries, driving adoption of crypto in Southeast Asia.
The Securities Commission Malaysia has pioneered a project to test the application of blockchain technology in capital markets. “Project Castor” as it is known, was developed using distributed ledger technology (DLT) to serve as the underlying market infrastructure for unlisted and OTC markets to preserve the distributed, non-standard nature of such markets. The government body used equity crowdfunding (ECF) as the prime use case of an unlisted or OTC market within the pilot project. Two open Ethereum smart contract standards, ERC20 and ERC721, were used to represent tokens and assets.
In addition, Malaysian’s Ministry of Education has introduced E-Skrol, an application built on the NEM blockchain to deal with the issue of fraudulent certification. With E-Skrol, it is now possible to verify the authenticity of Malaysian educational degrees for both public and private universities in the country.
The Securities Commission Malaysia has played a major role in the push for greater blockchain adoption in the country. Early this year, the regulatory body released the latest guidelines for the issuance of digital token offerings through IEO. The latest framework incorporated the feedback from various industry players and stakeholders and is scheduled to come into effect within the second half of 2020.
It is estimated that 10% of the Thai population own some form of cryptocurrency. The numbers are expected to grow in the coming months, after the Land of Smiles made headway in the crypto world through the launch of its first regulated ICO portal, SE Digital. The portal, which is a subsidiary of major financial services firm Seamico Securities, obtained the approval from Thai Securities and Exchange Commissions (SEC) to launch Thailand’s first investment token with a target transaction size of 2 to 3 billion baht. The company also plans to provide an extensive list of services for ICOs, including primary issuance, strategic advisory, secondary market access and compliance to spur greater growth. SE Digital aims to target Thai retail investors, institutional investors, venture capital firms and private equity funds. To date, Thailand has four approved digital asset exchanges – Bitcoin Exchange Co., Bitkub Online Co, Satang Corporation and Coins TH.
In 2017, the State Railway of Thailand (SRT) and Thailand Post announced they would start using blockchain in railway management and postal services. Blockchain was used to develop a dedicated communications system to increase the accuracy of the railway itinerary, while Thailand Post used it to improve the security of its high-value parcels shipped through its logistics network.
Last year, Thailand’s National Electronics and Computer Technology Center (NECTEC) announced it had completed the development of a blockchain-based voting system. The voting system, which will be applied to national, provincial and community elections, will eliminate the need to travel to polling stations and allow Thai citizens to vote through an email similar to an online survey. After the voting is completed, the results will be tabulated immediately and the data will be sent to the election controller, where candidates can view the results electronically. This helps prevent fraud and saves time and labor.
The Thai government is also exploring the possibility of developing a national digital identity platform to complement the use of blockchain-based electronic voting in the country. The Electronic Transactions Development Agency (ETDA), the government body responsible for carrying out the project, aims to use blockchain-based timestamping to authenticate and verify the digital identities of every Thai citizen.
Efforts are also underway to incorporate distributed ledger technology in agriculture. In November last year, the Trade Policy and Strategy Office (TPSO) announced a pilot project to use blockchain to track agricultural produce and monitor the quality of exports.
In terms of cross-border exchange and remittance, Ripple has made significant progress in crypto in Southeast Asia with the announcement of its latest partnership with Siam Commercial Bank to create a mobile application powered by blockchain to deliver lightning-fast, cheap and instant cross-border payments. The application will enable fast cross-border payment using QR (quick response) code for Siam Bank. Tourists coming to Thailand are also able to use their home country mobile application to scan for payment within 40 seconds, eliminating the need to convert to local currency in the future.
An island country of Southeast Asia in the western Pacific Ocean, Philippines has recorded a sharp increase in crypto adoption over the years. Coins.ph, a leading cryptocurrency exchange in the Philippines, has reportedly acquired over five million users to its platform. Established in 2014, the digital wallet and payment application provider allows the nation’s predominantly unbanked population access to financial services. With 7 out of 10 people without a bank account in the Philippines, the situation offers the perfect opportunity for cryptocurrency to thrive. Customers can manage myriad of online payments through its mobile app to pay for utility bills, earn instant rewards, reload their SIM cards as well as earn a 10% rebate with every purchase.
Remittance remains one of the largest use cases in blockchain for the Philippines. The successful pilot project by Union Bank of the Philippines and OCBC Bank, Singapore marks the first use of blockchain technology for bank-to-bank cross-border remittance to promote financial inclusion, especially in underserved areas. Currently, rural banks in the Philippines have limited access to financial networks and overseas remittances can take up to seven days for the transaction to clear. The success of this pilot project is definitely a step in the right direction.
Back in 2018, the Indonesian government issued a bold move to ban all cryptocurrencies in the country. Today, the nation, with a population of 260 million, is poised to make a significant impact in the blockchain and cryptocurrency space.
In a progressive move, the Indonesian government announced last year it will create legal frameworks in which cryptocurrencies and digital asset futures will be classified as trading commodities. The announcement came months after Indonesia used blockchain verification for nearly 13 percent of the 193 million votes cast in President Joko Widodo’s reelection campaign. The announcement was followed by the government’s multimillion dollar partnership with Singapore-based blockchain firm PLMP Fintech to improve the logistics industry using blockchain technology.
To demonstrate commitment to the adoption of blockchain technology in the country, Tokocrypto became the first regulated cryptocurrency exchange approved by Indonesian authorities when it obtained official permission from the Commodity Futures Trading Regulatory Agency (BAPPEBTI), the governing body to oversee crypto asset trading. The platform enables investors to legally buy and sell digital assets in the country.
The Indonesian government is also actively pushing for adoption in the private and public sector by engaging with the Indonesian Regional Banks Association to study the possibilities of using blockchain to prevent fraud. Meanwhile, UAE based Halal Chain has announced plans aimed to tap into the large unbanked population in Indonesia with offerings of blockchain-based Islamic financial services that will comply with Sharia principles.
On the ecommerce front, Havy Store has announced it hopes to establish a decentralized marketplace for online businesses to operate in a more productive, straightforward and dependable manner. As for retail, PundiX, a company that was set up in Indonesia, became the first company to implement blockchain-based point of sale systems in the region to allow the acceptance of cryptocurrencies as a mode of payment.
The cryptocurrency and blockchain space continues to grow in Indonesia, with a total of 15 exchanges opening in a span of 24 months.
Vietnam, one of the fastest-growing economies in Southeast Asia, has been working relentlessly toward implementing Industry 4.0. The Vietnamese government has passed a resolution to develop a complete e-government platform to improve the effectiveness and efficiency of the state’s administrative apparatus and the quality of service rendered. It aims to increase the ranking of its e-government to be among the top four ASEAN countries by 2025.
In November 2019, Ho Chi Minh City authorities announced that they will develop a blockchain infrastructure to power smart city construction initiatives, mitigate risk and streamline processes. This news was followed by an announcement from Ho Chi Minh City’s High Tech Park incubator, which sealed a deal with South Korean firm CBA Ventures to provide tech support and blockchain training. Despite the lack of a regulatory framework in Vietnam, authorities are not curbing the proliferation of blockchain and cryptocurrency in the country, a good sign for adoption of crypto in Southeast Asia.
When it comes to human resources management, verifying the credentials and the certification obtained by a candidate is often a challenging task. Aversafe, a Ho Chi Minh City-based startup is already combating this issue by providing a decentralized credential verification service to stakeholders, jobseekers, employers and educational institutions. Verifications of certifications are automated through Aversafe’s blockchain network and these records are updated in real time, removing any doubt as to the veracity of the jobseeker’s claim.
Similarly, blockchain has also enabled local Vietnamese manufacturers to trace each stage of their processes, from production to processing and distribution of a particular item. The movement along the supply chain can be traced (backwards) and tracked (forward) in a tamper-proof manner. Companies such as WowTrace, have successfully deployed their technology to track and trace mangoes and other agricultural products from source to the end users.
Similar to the Philippines, remittance remains one of the strong use cases for Vietnam when it comes to blockchain. With more than 4.5 million Vietnamese working abroad, the traditional remittance channels are not only slow and expensive but also very cumbersome. Vietnam received a huge boost when SBI Ripple Asia, a joint venture company between SBI Holdings, blockchain startup Ripple and SBI Remit, an international money transfer service business operator, announced the launch of their first money transfer service between Japan and Vietnam using distributed ledger technology. This will further propel the adoption of blockchain in the country.
Cambodia has raced past its Southeast Asian neighbors to become the first nation to launch its own digital currency known as “Bakong.” In a move the speaks clearly in favor of adoption of crypto in Southeast Asia, the central bank digital currency (CBDC) was launched on a trial basis in Cambodia last year.
Early this month, the Cambodia Blockchain platform was steadily rolled out with the support of 11 commercial banks and the National Bank of Cambodia. This is the first central bank to put a blockchain-based payment system to widespread use. This platform will serve as the national payment gateway for Cambodia and aims to unite all the players in the payment space – from e-wallets, mobile payments to online banking and other financial applications – into one easy to user interface in Cambodia. It will also allow individuals to track their transactions and request money through personalized QR code and facilitate cross-border payments in the future.
With so many initiatives running concurrently in each of these Southeast Asian nations, what does the future hold for blockchain technology and cryptocurrency in region?
Blockchain and crypto in Southeast Asia have certainly come of age compared to the years when the concept was seen as a speculative commodity or a passing fad. Chronologically, in 2016 the focus was on everything blockchain. In 2017, it was all about initial coin offerings (ICOs) while 2018 was the year of stablecoins. Last year, decentralized finance (DeFi) became the talk of town. This year, with the increasing spotlight on China’s Digital Currency Electronic Payment (DCEP) and Cambodia’s “Project Bakong,” government-backed coins and corporate coins are expected to dominate and take center stage.
Judging from the initiatives in each of these countries, it is clear the Southeast Asian financial industry will be among the first to embrace cryptocurrency and blockchain technology, particularly in the areas of remittances and cross-border payments.
About the author
Karin Chang is a marketing consultant by day and a blockchain and cryptocurrency enthusiast by night. When she is not found working on her Mac, she loves having intellectual conversations with inspiring entrepreneurs and thought leaders. If you have any interesting personalities or breaking news that deserved to be featured on Blocks99, send her a tweet @karindailygrind. She promises not to bite!