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Crypto firms should look East for growth opportunities as USD dominance wavers

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Below is a guest post from BTSE CEO Henry Liu.

A new headline seems to emerge every day highlighting the declining dominance of the US dollar as the world’s reserve currency. At the same time, US regulators have made it clear that USD-pegged stablecoins are not welcome in the world’s largest economy. With the future of both fiat and cryptocurrencies looking uncertain, cryptocurrency companies are starting to look especially overseas to hedge bets and even escape scrutiny.

This creates a unique opportunity for Asia to step into the gap. The region is leading the development of globally competitive cryptocurrency regulations, not to mention building a globally competitive economy. It offers a well-developed and highly diverse environment for currency companies to thrive. If not already, crypto companies should look east for their next growth opportunity.

US dollar’s declining dominance in global trade

Official US dollar reserves have been shrinking for some time.as seen in BIS Second Quarter Review In 2022, the US dollar will account for less than 60% of official foreign exchange reserves, the lowest share in the last 20 years.

The US dollar is also losing popularity as a currency for international payments, allowing other currencies to narrow the gap in global usage. announced that it will support payments in Chinese yuan. Saudi Arabia For the first time in 48 years, it has announced that it will be open to trading in currencies other than the US dollar, such as the yuan, the euro, and the rupee.Saudi Arabia also spoke openly India Possibility to launch rupee-rial trading as part of efforts to strengthen economic ties between countries. And that’s not to mention rumors of a new BRICS currency, possibly central bank denominated currency. Did.

The dollar remains the world’s reserve currency. And the US economy is somehow the largest market in the world. However, there is payments innovation picking up pace on the fringes, which appears to be paving the way for a more multi-polar payments ecosystem. And crypto companies are thinking about alternatives on the table.

“Operation Chokepoint”

At the same time, the US has yet to grasp its stance on crypto regulation. Lack of regulatory clarity has not only slowed mainstream adoption of new technologies, but also slowed innovation in digital payment options. This could cut consumers and businesses away from more competitive payment services.

Crypto commentators are calling the latest scrutiny by regulators “Operational Chokepoint 2.0.” This is reminiscent of the previous crackdown on fraud and money laundering in US banks. The recent purge of stablecoins by the SEC has proven potentially lethal to cryptocurrency companies.

For example, the lawsuits against Paxos and Binance USD have effectively put the coin out of production altogether. And that goes without saying that the CFTC is in a separate dispute with Binance itself over alleged violations of trading and derivatives laws. Kraken has been charged with failing to register for its crypto-as-a-service program, causing the program to shut down. Additionally, the SEC is now suing Tron founder and his Huobi backer Justin Sun for allegedly selling unregistered securities and airdropping, fraud and market manipulation.

There is also increasing regulatory pressure on banks involved in the cryptocurrency business. Several recent cryptocurrency and startup-friendly bank failures have “Controlled Demolition” Instigated by regulators, I take the theory with a pinch of salt.

Given the global nature of the freewheeling crypto industry, it’s no surprise that these incidents are prompting Web3 projects and companies to consider moving elsewhere. His CEO of Ripple, Brad Garlinghouse, has his own legal battle with the SEC. Said The crypto industry has already started moving out of the United States. Meanwhile, another SEC target, Coinbase, Identified The EU as its own escape route from perceived US hostilities.

With widespread adoption of Web3 and a matching investment scene, I argue that Asia will become a major new competitor. In fact, it has already attracted cryptocurrency companies looking for a friendlier base to call home.

Asia’s Increasingly Competitive Crypto Hub

Asia offers a clearer regulatory framework, a precedent for successful government-public-private partnerships, and the capital to support the influx of such Web3 projects.

Currently, 98% of stablecoins are denominated in USD, but I predict that will change as Asian countries provide clearer regulations in this regard. For example, the Hong Kong financial authority has introduced a mandatory licensing regime for stablecoin issuers. Meanwhile, Japan has promised to start accepting stablecoins in the near future.Already 3 domestic banks announced Plans to issue compliant stablecoins under the framework.Monetary Authority of Singapore Proposed Stablecoin rules dating back to October 2022.

In addition to the explicit regulations, or at least the promise of future frameworks, there are additional steps Asian governments are taking to support Web3 development. For example, Japan’s national strategy includes her Web3 componentand the South Korean government is equal Invest $200 million in the Metaverse ecosystem.Hong Kong is also vocally committed to establishing itself as a regional and even global cryptocurrency hubdrives many crypto companies to investigate, including mine Obtaining a Virtual Asset License in the city.

Asian Opportunities Shaping the Future of Crypto Finance

Ultimately, these examples show how Asia is opening up opportunities to shape the future standards of stablecoins and cryptocurrencies in general. While the region may have strict compliance requirements, clarifying regulations is the best way to improve customer protection and prevent fraud. In general, an approach to regulation that encapsulates a willingness to cooperate, listen and work to protect customers without stifling innovation is key. Asia seems to have got that balance right. And that message is already spreading.

Disclaimer: BTSE is an investor in CryptoSlate.

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