GCR

The Quick Take

From talking to various people and projects from the West, many projects that have launched are now looking for adoption by putting serious efforts and resources into Asia go-to-market development. Also, despite what Arjun Balaji says from The Block, we don’t think the market in Asia has really recovered at all.

Western projects are now putting resources into competing for adoption in Asia

This is exciting for us as this is a topic that we’ve been stressing for the last year- when identifying potential use cases and adoption, crypto companies that want to pursue long term value HAVE to pay attention to the Asia region, given the numerous crypto-friendly jurisdictions and diverse testing grounds.

Large projects are growing their Asia presence and we are seeing it play out in various ways. I don’t think it is an accident that the new CMO of Cosmos happens to have extensive experience in Southeast Asia, nor that numerous project founders are spending a significant amount chunk of time in exploring the opportunities there such as Near Protocol and Zcash. Josh Swihart, the head of business development for Zcash, will spend the next 3 weeks in Asia and we are co-organizing their Singapore meetup with him and Zooko.

Zcash is one such example of a large project increasing focus on Asia. In January, the Zcash team on its blog has emphasized the importance of Asia as part of its market strategy, as the company “have been moving beyond the technical and scientific cypherpunk community toward early adopters and the early majority with a need or desire for an alternative store of value (SoV).

Geographically, the US and Asia are primary targets for our research, marketing and business development efforts for this use case. In Asia, we are specifically focused on Japan, South Korea, Singapore and Hong Kong for a number of strategic reasons that tie into the vectors discussed in the previous post. We also intend to lightly engage in the Philippines, Thailand, Malaysia and Indonesia. We have a great deal of interest in India, but the current regulatory climate is unfavorable.”.

In fact, Josh has laid out the go-to-market (GTM) emphasis through a full life-cycle (customer decision journey) use cases per the diagram below, focusing first on SoV use cases for near-term full adoption and then exploring MoE use cases in an effort to find product-market fit.

Here’s how Zcash is looking to drive adoption as an SoV: “We intend to market and support features that will appeal to users desiring to invest in Zcash as an SoV, predominantly in the US and Asia. Our activities will include compelling content; event participation (speaking and attending); user research; content localization (specifically targeting Korean and Japanese); and the recruitment of custodians, exchanges and funds catering to institutional investors and family offices. We intend to invest more time and talent in Asia than we have previously. We also intend to engage an Asia-based PR firm focused on traditional financial media and regulatory engagement.”

We believe in the importance of adoption to scale the overall crypto industry and subsequently enable what we do as individuals relevant. In fact, Global Coin Research is doubling down on this area by 1) identify the go-to-market leaders and relevant communities and 2) work with them to share more resources for everyone else to make the experience easier.

At the moment, we are working on a guidebook that will help projects identify the most quality crypto and developer communities in various Asia countries. If you are interested in contributing the best communities you’ve worked with in Asia, let us know and we’ll take a look.

To learn more about this diagram, check out the full Zcash post here

The Zcash team is also hiring a person responsible for executing our GTM strategy across Asia with a specific emphasis on Japan, South Korea, Singapore and Hong Kong. If you know of people who are interested, please let me know.

Trends in Asia right now

Recently, one of the largest crypto conference in Hong Kong, Token 2049, took place. Arjun Balaji on the media publication The Block says the market seems to be recovering and is more bullish than that of the west, I’d beg to differ.

Perhaps because of the sheer number of people who are knowledgeable and involved with crypto in Asia, and the amount of money sustained by numerous TRON parties (as Arjun mentioned in his post), this inevitably just attract coin shillers into the conference. This may have led to the perception that there are more activities happening in Asia.

But overall the markets haven’t really recovered. And here are several reasons:

1- We’ve highlighted before that, in comparison to other large financial hubs, Hong Kong has always been a welcoming city to crypto and the regulators generally show a non-interfering attitude towards companies. For the last few months, there are over 10 exchanges that have been under sandbox testing and monitored by the Securities & Futures Commission of Hong Kong. Some people say that the SFC will issue license soon, but I suspect it may come in Q3 or later.

2- Separately, we are seeing exchanges going through turnovers left and right. In the example of Bithumb, the largest exchange in Korea, laid off 50% of employees, and most recently Huobi is doing some management shuffles in its Huobi Chat product, with the Main Manager Wang Jun and product director Zhang Jingyu have left.

3- Exchanges in Asia stay competitive by copying each other. We are already seeing a number of exchanges launching or developing such a platform: Huobi Prime, Bibox Orbit, KuCoin Spotlight and Bitmax. But based on the projects listed thus far and the numbers shared, the stats not impressive at all. With the number of tokens issued sub or equivalent of 10% of total token supply and subsequently raising a few million dollars, this IEO does not seem to be a sustainable business.

Instead, the IEO model seems like a strategy for projects to bootstrap some funding during a bear market while simultaneously enjoy marketing and distribution through the exchanges. It’s quite amusing to see legit Chinese media sites already speculating which coin will be listed next on Launchpad, would it be Conflux?Blockcloud?MultiVAC?Nervos or Thunder?

4- What is adding further pressure to the Asia crypto market is that we have been seeing increasing restrictions rather than welcome messages coming from Japan this year, with the regulators imposing limited crypto advertising and margin trading.

Japan also just prohibited speculative crypto advertising and solicitations, which will make it difficult for crypto companies to carry out excessive publicity activities. Additionally, the regulators announced that the leverage of cryptocurrency margin trading shall be no more than 4X. Bitmex was originally looking to acquire an exchange in Japan and extend its presence there but now any kind of geographical expansion and business opportunities is capped by ongoing, stricter regulations. An affected party was SBI’s new exchange, which was supposed to launch soon but got pushed to July due to regulatory issues surrounding leveraged trading and security. 

5- And currently, I don’t think we should expect any recovery in mining. There was a brief period in January when mining Grin was the hot thing in China, but that did not sustain at all. If Bitmain updates its IPO filings next week, I think it’s potentially interesting to see the numbers, but we’ve already written about how Bitmain is diversifying away from asset heavy mining farms and is going through a pretty large transition in its business model to stay afloat.  It just came out with the new Zcash miner and a updated SHA-256 miner, but we haven’t seen much reception in the market thus far.

To wrap up, the only aspect I see as a sustainable trend and thereby a bullish sign for the current crypto market is that the US crypto projects are in development and launching. This in return renders hope for folks in Asia.

For example, investors and relevant crypto folks from Asia are still traveling to San Francisco and the US to seek opportunities. dApp and gaming have been and are still interesting to Asia communities, but for them, the breakout opportunities are still sought out in the US.

A place I still keep my eye for breakout opportunities is Thailand. Thailand regulators continue to be very engaged with local and foreign projects. There is an institutional play and retail play happening at the same time and the regulators have been able to welcome crypto with open arms. See more details in my tweet storm here from my recent trip takeaways in Thailand. And as we mentioned before, Elevated Returns from New York has decided to dedicate $100 million of the $250million committed this year to tokenize luxury assets in Thailand on Tezos. It’s pretty interesting and active all around.