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Bitcoin is Bigger in Asia with U.S. Supply Dropping 11% This Year

Last Updated June 26, 2023 9:34 AM
Teuta Franjkovic
Last Updated June 26, 2023 9:34 AM
Key Takeaways
  • The amount of Bitcoin held by US entities has decreased by 11%
  • Almost all of this supply has gone to Asia
  • Asian regulators could use SEC’s lawsuit as a point of reference 

According to on-chain data, Asia has surpassed the United States in terms of active capital in Bitcoin and crypto markets.

Glassnode, an on-chain analytics service, announced on June 5 that the gap between US and Asia Bitcoin supplies held or transacted had grown.

According to Glassnode, the year-over-year change in BTC supply by geographical region shows a notable disparity. The US entities’ extreme dominance in 2020-21 has obviously reversed, with US supply dominance declining by 11% since mid-2022. Also, over the last year, European markets have been rather neutral, whereas Asian trading hours have seen a major increase in supply dominance.

The gap has grown wider as America becomes more hostile to Bitcoin and overall cryptocurrency sector while Asia opens up. “This is a distinct reversal from the 2020-21 bull cycle,” Glassnode observed.

The United States’ supremacy began to decline in 2021 and switched negative in mid-2022. This occurred at the same time as the Terra/Luna ecology collapsed and regulatory pressure increased. Since then, the government and federal officials have been on a mission to put an end to the industry through regulatory action.

Glassnode also noticed significant changes in stablecoin supply. Since the beginning of the year, the aggregate stablecoin supply from the top five issuers has decreased by 7.5%, or $10 billion.

A substantial chunk of this fall can be attributed to Circle’s USDC , which was once favored by US financial institutions. In 2023, the USDC supply has fallen by $15.7 billion, or 35%. Circle was also severely harmed as a result of its exposure to the now-defunct Silicon Valley Bank.

Why Is Southeast Asia a Crypto-Friendly Region?

Although cryptocurrency may have started in the G7 (if presumed that Satoshi Nakamoto is Japanese), underdeveloped countries have often been the most enthusiastic about adopting decentralized virtual currencies. The explanation is simple: the promise of financial democratization offered by cryptocurrency has a tremendous appeal in nations where huge segments of the population lack access to key banking services.

It is no coincidence that Asia’s two greatest developing countries, China and India, have imposed severe sanctions on cryptocurrency while rising Southeast Asia has not. Approximately 80% of individuals in both nations have bank accounts.

In comparison, up to 70% of Vietnamese, 66% of Indonesians, and 44% of Filipinos are unbanked . Regulators in these countries are, predictably, slower to restrict access to cryptocurrencies than their colleagues in China and India.

Also, this month, Hong Kong began enabling exchanges to facilitate trading, while in the West, legal proceedings against key exchanges in the United States represented a watershed moment for the industry.

Brian Armstrong, CEO of Coinbase, one of the targets of the SECs legal action, cautioned in an opinion article  for MarketWatch that weak regulation would harm the United States.

“In the 1990s and early 2000s, smart—and tailored—regulation enabled the United States to define the Internet Age,” he wrote.

Regarding Hong Kong, Armstrong stated that China’s drive for the crypto story was “no surprise.”

Be it as it may,  some people familiar with the situation believe that US regulatory action against two big cryptocurrency exchanges, Coinbase and Binance, may serve as a model for Hong Kong and Singapore as they seek to combine expansion with investor safety.

The revelation has rattled investor confidence just as Hong Kong is attempting to position itself as a trading hub alongside Singapore, which already has such a framework in place.

US Actions May Be Used as Point of Reference

According to experts, the two cities may use the US action as a reference point, which might mean greater inspection of Bitcoin and crypto trades in Asia.

Anndy Lian, Singapore-based author of the book “NFT: From Zero to Hero” said  that there would be a fallout for sure. 

“Hong Kong and Singapore are taking measures to regulate the cryptocurrency industry by proposing new licensing regimes for virtual asset trading platforms,” he said .

The Securities and Futures Commission (SFC) in Hong Kong has asked for an evaluation of a proposal that would urge crypto trading platform operators to get the same licenses as securities traders.

According to Lian, other firms that were not applying had been asked to prepare for an orderly closure as well.

Securities, unlike other financial assets, are heavily regulated and require extensive disclosures to notify investors of potential dangers.

“These developments indicate that cryptocurrency exchanges seeking approval in Hong Kong and Singapore will have to adhere to new regulatory requirements and may be subject to increased scrutiny from regulators,” Lian concluded.

 Julian Hosp, the CEO and co-founder of Cake Group, a fast-growing Southeast Asia’s digital assets innovator, asserted that the war that the US is waging on cryptocurrencies “shows no signs of abating, and it will only intensify as time wears on.” 

He went on to say that the regulator’s action is part of a bigger trend that would most likely continue through the 2024 presidential election.

Rajagopal Menon, vice-president of WazirX stressed that the SEC’s lawsuit primarily focuses on actions that have taken place in the United States and their impact on American citizens. However, he warned that for regulators in Hong Kong, such as the Securities and Futures Commission, and Dubai’s Virtual Asset Regulatory Authority, the SEC’s lawsuit could serve as a point of reference or information.