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Although the United States is often seen as a leader in financial and technological progress, it is clear that it has struggled in recent years to establish clear (and consistent) crypto regulatory frameworks.
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 suitable for digital assets, which are often more efficient than those in the West. These rules offer 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 US should not be a blueprint for regulations
In recent years, the US has struggled in its attempt to regulate the crypto industry, with regulatory agencies, such as the SEC, often taking hostile and inconsistent measures.
High-profile lawsuits against Ripple and Coinbase made headlines around the globe, which has cast a shadow over innovation and pushed some crypto companies to move to friendlier countries. The lack of clear guidance 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 issues is that the US has been trying to fit digital assets into existing laws (eg, securities and commodities regulations), which were not designed to -never for crypto in the first place.
While the newly elected crypto-friendly US Congress is showing hope for progress, the country has a lot of catching up to do. It is no longer possible to wait for the United States to set the standard when others are already leading.
Emerging markets are a hidden gem of regulation
In the meantime, high-growth markets such as Indonesia and Malaysia have introduced a new way to deal with crypto regulations, with the understanding that digital assets are not enemies but should be managed as any other property.
While the US SEC spent years trying to classify cryptocurrencies, such as Ethereum (ETH), as securities, Indonesia's Commodity Products Trading Regulatory Agency (known as BAPPEBTI) officially declared all digital assets as products as early as 2019.
In Malaysia, the Securities Commission creation a comprehensive framework for crypto exchanges with high standards for licensing, investor protection, and anti-money laundering. This was also implemented in Indonesia, which introduced clearer rules for exchanges, such as mandatory customer asset segregation, strong security requirements, and token listing requirements. In both countries, these measures have reduced fraud and improved trust in the overall system, making the use of crypto safer for everyone (and more attractive!).
This is the level of clarity and communication we need as we move towards wider global adoption of web3.
As a result, the Asian crypto market is booming. The Indonesian crypto market exceeded $30 billion in transactions from January to October 2024, an increase of 350% compared to the previous year. It is now the third largest country universe for the adoption of cryptocurrency, just ahead of the US In fact, in this index, seven of the top 20 countries are in Central and South Asia and Oceania, which indicates that it is a multilateral business is the crypto world.
Emerging markets lead in crypto resources
But why are high-growth markets seemingly more advanced in crypto regulations? It is because in these markets, the utility of crypto shines brighter than anywhere else.
Crypto deals with several problems, such as high payment costs and limited access to property and investment. On average, taxes are paid around 6.65% of the amount sent, which could take a large portion out of what workers send back to their families. In the Philippines, compensation make out nearly 10% of the country's GDP, showing their importance.
Digital assets are also a hedge against inflation. In Asia and the Middle East, gold has traditionally been a safe and reliable asset that has been able to hold value over the years. However, access to physical gold is complicated, with high entry costs, storage issues, and lack of accessibility for everyday people. Crypto allows for the creation of tokenized gold, allowing users to own a fraction of tokenized, digital gold at a much lower price, thus lowering 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 complete. But these markets understand that effective regulation cannot be one-size-fits-all, and are tailoring rules for the 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 the people who can use crypto every day to solve real-world problems and deal with traditional financial problems. That is exactly why crypto was made.
