Charles d’Haussy is the Asia managing director for blockchain software company ConsenSys and was previously head of fintech for the Hong Kong government. He is also an author of Block Kong, a book documenting Hong Kong’s blockchain ecosystem.
What’s driving the popularity of cryptocurrencies in Southeast Asia?
The easy thing to say is that Covid-19 has accelerated digitalization, [and Southeast Asia] was already super digital. In Indonesia, for example, about one-third of the population is unbanked. If you’re unbanked, you’re exploring every possible way for a mobile phone to send value across islands, across countries. There, crypto is compensating and doing the last mile. Wherever they are — on an island, in the middle of the forest — if people have access to the internet, with crypto, they can start that journey.
Play-to-earn has also taken Southeast Asia by storm, with protocols like Axie Infinity. Singapore is clearly much more progressive on cryptocurrency and blockchain than some other countries in the region, and that’s why they are attracting so many companies right now. We also see a lot of followers in Thailand, totally under the radar — this is a white-hot market.
What are some of the challenges you foresee across the region?
The big thing you’re going to see in the next 12 to 18 months will be competition between central bank digital currencies (CBDCs) and stablecoins. China is de facto the biggest CBDC market today, and it will be dwarfing everyone else for the next five years. Then, you will see this competition between the official money coming from central banks and private money issued by social media companies, such as Facebook, or big IT companies. You will see branded money.
You have multiple digital nations within one country. Facebook is a digital nation; TikTok is another. Some people might say, actually, I believe more in these digital nations, in my digital community. Everyone will have their own view. What I foresee is, in Asia, we’re going to see more of this. This is a wake-up call for central banks. There is no product manager at the central banks. They have no idea what a product is, and now they have to care about it. It will be a long journey. CBDCs are issued by central banks, which can connect to my [official] identity. The private sector will always have to suffer the costs of know-your-customer compliance. CBDCs have this advantage.
What kind of knock-on effects have you seen from China’s crackdown on cryptocurrency activity?
For Bitcoin mining, it was a very big change. But all the others were already decentralizing themselves. It was not the first time there were strong warnings. It will probably keep accelerating diversification in key markets such as India, Indonesia, and the Philippines. If you look at the pure crypto community, so many of them are coming from Hong Kong. The center of finance today will be the center of crypto tomorrow. Regulation will just help this to happen.
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