Even after the recent crash in the global cryptocurrency market, blockchain innovations such as cryptocurrencies and non-exchangeable tokens (NFTs) remain ready to redefine the fintech sector in Southeast Asia. So far, regional governments have shown great interest in taking advantage of these innovations, allowing the emergence of several lucratively funded blockchain platforms as well as further technological development.
In parallel with pro-growth policies, governments have received a number of regulatory responses to blockchain, particularly in relation to illegal transactions. As the crypto landscape in Southeast Asia continues to expand, authorities are aware of the growing opportunities for criminal actors to exploit vulnerabilities in the platform through hackers, scams and scams.
Most importantly, the recent instructions of the Singapore Monetary Authority to advertise cryptocurrencies to the public reflect a growing recognition of the wider social risks posed by the blockchain, which in turn facilitates the emergence of cryptocurrency-related crime. As Southeast Asian users remain determined to take advantage of the growing blockchain trend, regional governments face the unique challenge of addressing these social risks by reaffirming their commitment to financial technology innovation amid the current turmoil in the crypto world. .
The complex of this challenge is the position of the region as one of the fastest growing cryptocurrency markets in the world, despite regulatory uncertainty and prices. The boom that resulted in the blockchain buzz has prompted speculative investors to allocate significant funds to unfinished projects, leaving them particularly vulnerable to “carpet-pulling” scams.
However, the spread of such scams is easily offset by the noise around the blockchain in Southeast Asia. For example, despite recent evidence that global NFT popularity is declining, including a decline in prices and trading volumes, the adoption of regional NFTs nevertheless has expectations of continued growth. With many Southeast Asian countries already having some of the highest NFT adoption rates in the world, regional users’ fears of losing are keeping up with major cryptocurrency trends, despite the potential risks.
These trends are increasing Southeast Asia’s exposure to cryptocurrency. However, many criminal blockchain applications, such as money laundering and terrorist financing, are largely irrelevant to investors who are primarily interested in maximizing personal profits. Instead of sound investment bases, basic instincts like greed drive users’ desire to catch the current wave of crypto abundance. Continued attempts to deal with cryptocurrency crime will be in vain if the users themselves are careless or unaware of their vulnerability.
Southeast Asia’s demographics also reflect a continuing shift in the investment paradigm, with new investors increasingly willing to invest in limited-growth tangible assets, in contrast to older investors’ reluctance to invest in non-assets -materials with greater negative risk. These attitudes have remained largely unchanged in the wake of the cryptocurrency price crash. For example, while many Singaporean investors in their twenties and thirties experienced huge losses following the fall of the popular Luna and TerraUSD stable currencies, many users reiterated their intention to continue investing in cryptocurrency, citing its potential – despite that they lost more than $ 500,000. the case of an individual.
Outside Singapore, young residents of the region, with digital knowledge, also complete the blockchain appeal for freedom-loving and anti-establishment sentiments, contributing to a social media-friendly message. Today’s online information environment has an additional impact on the way users socially build this evolving technology, reinforcing the aforementioned feelings and strengthening the user mentality. To explain the rise of these sentiments, a broader conversation is needed about how regional users perceive cryptocurrency value preservation in relation to other financial instruments.
Essentially, many of these regional perceptions and values arise from frequent interactions with blockchain technology, for example, through NFT play games to win that are very popular in Southeast Asia. Between 2020 and 2021, the number of daily active Axie Infinity players increased from around 10,000 to over 2 million, with the majority of players from Southeast Asian countries. Amid widespread unemployment during the COVID-19 pandemic, trading NFT tokens with gaming cryptocurrencies has proven to be a valuable alternative source of revenue especially among Filipino players.
But beyond this positive noise lie a host of social risks, which are particularly difficult to manage in Southeast Asia due to the spread of blockchain. Built on artificially driven shortages, cryptocurrency-based platforms have the potential to boost regional inflation and inequality, highlight the disproportionate impact of the pandemic on the vulnerable, and make the prospect of an unequal economic recovery more likely. Moreover, as technology continues to shape users’ perceptions of value and money, artificially driven demand not only creates a favorable environment for cryptocurrency fraud, but can also pose significant risks to speculative investors, given the value unusual and uncertain currency. – assets.
This is not to ignore the potential benefits of blockchain, as many Southeast Asian countries have recognized the great potential of technology in improving payment efficiency and strengthening e-commerce. However, in light of the above risks, the authorities are also advised to adopt regulations addressing the concepts of protection and liability, especially as more and more users fall prey to these risks and begin to demand more action and accountability from the government. However, regional governments will be inclined to ensure that these regulations do not adversely affect business confidence as a growing number of crypto companies relocate from Southeast Asia to the UAE.
After all, any response should be proportionately focused on protecting the retail investor from the uncertainties surrounding the technology, while also recognizing distributed books as legitimate platforms for financial transactions. Therefore, authorities should avoid creating or promoting moral panic about blockchain, as users with deep-rooted views of technology are unlikely to hesitate and may even be pushed further into dubious crypto-based platforms, making strategies such important.
Southeast Asian users will also have to accept greater responsibility in terms of detecting any traps and risks, such as the loss or theft of crypto assets. Canadian Securities Administrators 2021 Notice to cryptocurrency issuers and holders of assets, instructing users to take appropriate measures to protect their assets and to be able to justify such actions. While these priorities are most important, Southeast Asian countries may also want to create more initiatives designed to educate the public and promote social responsibility around the blockchain, such as establishing due diligence procedures and best practices. good around crypto assets as well as ethical cryptocurrency mining. An educated and socially responsible population will minimize the need for strict regulations, allowing for a favorable business environment, and also ensuring that users themselves are adequately protected.