Asia’s banks and crypto-native firms are exploring how they can take their offerings to the next level, whether that means through collaboration or competition.
Asia is no stranger to leading the way in innovation. The new frontier is crypto, and banks and non-financial institutions alike are eager to claim their space. The question is how the crypto environment will develop across Asia, as differing approaches are being taken across the continent.
The ban on cryptocurrency transactions by the People’s Bank of China in September 2021 brought the country’s extensive crypto-mining operations to a halt. However, it did not end people’s interest in crypto assets, as many simply moved jurisdictions. While this was bad for crypto in China, it has been a boon across the region as expertise developed in other countries.
Banks have also been exploring crypto and its applications for both themselves and their customers. With a wealth of expertise, banks could be ideally placed to expand crypto services beyond the vanilla offerings seen currently. They have the scope to explore possibilities among their first-mover clients and find what will work best before rolling services out to their retail client base. They are also well-placed to lead the way on devising ways to securely hold digital assets.
As the crypto scene continues to evolve, the question is whether specialised fintechs will work with or against the traditional banks. Crypto service providers have the advantage of being both native to their market and nimble in response to developments, unencumbered by the legacy systems that hold banks back. However, they are small and lack the brand awareness, as well as the trust levels, that banks have spent decades establishing, which would help them bring crypto into the mainstream.
Regardless of what the banks and the crypto firms want to achieve, the regulators may well have the final say. As already seen in China, the authorities can move to completely block the use of crypto. But others are aiming to create an encouraging environment that will open up new economic and financial opportunities. See interview with Monetary Authority of Singapore’s Ravi Menon.
The development of crypto in Asia will be explored in greater detail in the July issue.
