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While the United States is often seen as a leader in financial and technological progress, it has clearly struggled in recent years to establish a clear (and consistent) crypto regulatory framework.
This lack of clarity has allowed other countries, especially in the Middle East and Asia, to take the lead. High-growth economies in these regions create appropriate frameworks for digital assets, which are often more efficient than those in the West. These regulations offer a model for the rest of the world to follow. If the West does not catch up, it risks being left behind in the crypto industry that changes the center of gravity.
The United States should not be the floor for regulations
In recent years, the United States has struggled in its attempt to regulate the crypto industry, with regulatory entities, such as the SEC, often taking hostile and inconsistent measures.
High-profile lawsuits against Ripple and Coinbase have made headlines around the world, casting a shadow over innovation and pushing some cryptocurrencies to move to friendlier countries. The absence of clear guidelines from the SEC has left founders and investors walking on eggshells, unsure if their next move could land them in legal trouble.
One of the main problems is that the United States has tried to fit digital assets into existing laws (for example, securities and commodities regulations), which were never designed for crypto in the first place.
While the crypto-friendly Congress of the newly elected United States indicates 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 regulations
Meanwhile, high-growth markets such as Indonesia and Malaysia have introduced a new way to approach crypto regulations, with an understanding that digital assets are not enemies, but should be regulated as and any other assets.
While the US SEC has spent years trying to classify cryptocurrencies, such as Ethereum (ETH), as securities, Indonesia’s Commodity Futures Trading Regulatory Agency (known as BAPPEBTI) officially classified all digital assets as commodities already in 2019.
In Malaysia, the Securities Commission 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 developed clearer rules for exchanges, such as mandatory segregation of customer funds, strong security requirements and token listing requirements. In both countries, these measures have reduced fraud and improved trust in the overall system, making crypto use safer for everyone (and more enticing!).
This is the level of clarity and engagement we need as we move towards wider web3 adoption around the world.
As a result, the Asian crypto market is thriving. 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 globally for the adoption of cryptocurrency, 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, which indicates that the crypto world is an industry multipolar
Emerging markets lead in crypto utility
But why are high-growth markets seemingly more advanced in crypto regulations? That’s because in these markets, the utility of crypto shines more than anywhere else.
Crypto addresses many pitfalls, such as high remittance costs and limited access to owning assets and investing. On average, remittance fees are around 6.65% of the amount sent, which can take a large part of what the workers send back to their families. In the Philippines, remittances make up 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 been able to hold value over the years. However, access to owning physical gold is complicated, with high entry fees, storage problems, and a lack of accessibility for everyday people. Crypto enables the creation of tokenized gold, which allows consumers to own a tokenized digital fraction of gold at a much lower price, thereby reducing barriers to entry.
Crypto regulations in high-growth markets are not perfect, and it will take a few more years to be even more complete. But these markets understand that effective regulation cannot be one-size-fits-all, and adapt the rules for real digital asset use cases.
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 face the challenges of traditional finance. That is exactly what the crypto was made of.
