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Although the United States is often seen as a leader in financial and technological advancement, it has clearly struggled in recent years to establish clear (and consistent) regulatory frameworks for crypto.
This lack of clarity has allowed other countries, particularly in the Middle East and Asia, to take the lead. High-growth economies in these regions are creating frameworks suited to digital assets, which are often more efficient than those in Western countries. These regulations provide a model for the rest of the world to follow. If the West does not catch up, it risks being left behind as the crypto industry shifts its center of gravity.
The United States should not be the model for regulation
Over the past few years, the United States has struggled to regulate the crypto industry, with regulatory entities such as the SEC often taking hostile and inconsistent actions.
High-profile lawsuits against Ripple and Coinbase made headlines around the world, casting a shadow over innovation and pushing some crypto companies to move to friendlier countries. The lack of clear guidelines from the SEC has left founders and investors walking on eggshells, unsure whether their next move could land them in legal trouble.
One of the main problems is that the United States is trying to integrate digital assets into existing laws (e.g. securities and commodities regulations), which were never designed for crypto.
Although the newly elected crypto-friendly U.S. Congress offers hope for progress, the country has a lot of catching up to do. Waiting for the United States to set the standard is no longer viable when others are already leading.
Emerging markets are the hidden gem of regulation
At the same time, high-growth markets such as Indonesia and Malaysia have introduced a new way of approaching cryptocurrency regulation, understanding that digital assets are not enemies but must be regulated like any other asset.
While the US SEC has spent years trying to classify cryptocurrencies, such as Ethereum (ETH), as securities, the Indonesian Commodity Futures Trading Regulatory Agency (known as name of BAPPEBTI) officially classified all digital assets as commodities as of 2019.
In Malaysia, the Securities Commission has created a comprehensive framework for crypto exchanges with high standards for licensing, investor protection and anti-money laundering. This has also been implemented in Indonesia, which has implemented clearer rules for exchanges, such as mandatory segregation of customer funds, strict security requirements, and token listing requirements. In both countries, these measures have reduced fraud and improved trust in the entire system, making the use of crypto safer for everyone (and more attractive!).
This is the level of clarity and commitment we need as we move towards wider adoption of Web3 globally.
As a result, the Asian crypto market is booming. The Indonesian crypto market surpassed $30 billion in transactions between January and October 2024, an increase of 350% from the previous year. It is now the third country in the world in cryptocurrency adoption, just ahead of the United States. In fact, in this index, seven of the top 20 countries are in Central and South Asia and Oceania, indicating that the crypto world is a multipolar industry. .
Emerging Markets Leads Crypto Utilities
But why do high-growth markets seem more advanced when it comes to crypto regulation? This is because in these markets, the crypto utility shines brighter than anywhere else.
Crypto solves several pitfalls, such as high transfer costs and limited access to asset ownership and investment. On average, transfer fees are around 6.65% of the amount sent, which can reduce much of what workers send home. In the Philippines, remittances represent almost 10% of the country’s GDP, which shows how important they are.
Digital assets also serve as a hedge against inflation. In Asia and the Middle East, gold has traditionally been a safe and reliable asset that has retained its value over the years. However, access to owning physical gold is complicated, with high entry fees, storage issues, and a lack of accessibility for ordinary people. Crypto enables the creation of tokenized gold, allowing consumers to own a digital fraction of tokenized gold at a much lower price, thereby lowering the barriers to entry.
Crypto regulations in high-growth markets are not perfect and it will take a few more years for them to become even more comprehensive. But these markets understand that effective regulation cannot be universal and they adapt the rules to real use cases of digital assets.
The future of crypto will not be defined by Wall Street or Silicon Valley. It will be defined by people who can use crypto every day to solve real-world problems and address the pitfalls of traditional finance. This is exactly what crypto was designed for.
