Asia offers hope amid the crypto winter

At Token2049, it was hard to tell the crypto industry was in “winter” mode. The September crypto conference in Singapore drew an unprecedented 20,000 attendees, who visited hundreds of side events across the city to avoid the expensive main event ticket.

While the government’s actions against FTX, Ripple, Binance, and Coinbase chilled the crypto industry, an ominous cloud was forming in the U.S. According to Kevin Goldstein, senior advisor to crypto investment firm HashKey Capital, Washington regulators’ “anti-crypto position” and the Federal Reserve’s raising of the federal funds rate have “quite negatively impacted VC investment in the crypto ecosystem,”  reported.

Crypto projects and investors have looked east for growth. Goldstein noted that many U.S.-based crypto projects have opened offices, hired local talent, and moved people to Asia in recent years, but many have accelerated their growth initiatives in APAC in the past year due to U.S. developments.

Asia’s growing crypto adoption and favorable policymaking fuel its enthusiasm. Due to the legalization of retail crypto trading in Hong Kong, many web3 startups set up shop there to tap into mainland China’s massive investor base. The Singapore stablecoin regulation clarification has also been well-received. This year, Circle’s CEO spoke at Token2049.

According to Pantera managing partner Paul Veradittakit, Token2049 had the largest U.S. crypto VC crowd he had seen at any Asian event.

“Things have changed quite a bit since FTX where there’s been a little bit more scrutiny around regulations in the U.S., while there have been some positive developments [in Asia] around stablecoins, XRP, or ETF possibilities,” said Veradittakit, referring to Ripple’s XRP token payment license in Singapore.

Since FTX hit everyone, I think Asians can more easily forget that and see the possibilities of starting a company, getting a banking license, and doing things without fear of going to jail. He stressed that entrepreneurs need that.

A sign of hope

Coco Kee’s 19-hour flight from New York to Singapore was worth it because Asia is becoming a popular destination for crypto projects seeking users and talent. The blockchain-focused investor who runs Kee Global Advisors met a founder who was moving from California to Hong Kong, where his company had received city funding to hire local staff and rent subsidized office space.

“While [crypto] projects’ teams are increasingly distributed with members located globally, projects initiated outside the U.S. tend to postpone adding U.S. operations, mostly to avoid regulatory liabilities,” Kee noted.

U.S. crypto companies like Coinbase, Galaxy, Gemini, Paxos, and CMT Digital are hiring in Asia.

Investors and founders considering an Asia strategy should understand the region’s culturally and demographically diverse market opportunities. South Korean fan economy companies have used tokenomics successfully. Japan has a lot of NFT-ready TV and gaming IP. After Axie Infinity’s success, Vietnam became known for blockchain games. Singapore and Hong Kong, financial hubs, are leading institutional crypto finance regulation.

As with any international expansion, local investors or partners are essential for go-to-market strategies. Asian investors in the new asset class are plentiful, thankfully.

“The thing to look for is just that local expertise for how to reach the users,” said Selini Capital investment officer Jordi Alexander. Asian communities are difficult for American or Western projects to reach due to language barriers. Different social media exist. They have huge Telegram groups, so it’s a different way to reach people. Not all Western firms have those. Having local investors for expertise is crucial.”