The Promise of APAC as a Global Leader in Digital Assets

Key jurisdictions across the APAC region are providing regulatory clarity and consistency which is fostering responsible innovation while the US remains sluggish.

The breadth and vibrancy of the Fintech scene in APAC was out in full force during the Japan Fintech Festival (JFF) which took place in Tokyo in early March. A close collaboration between the public and private sector saw Japan’s major financial services players and financial regulator, the JFSA (all distinguishable by wearing branded white hoodies) welcoming an impressive array of executives both from within Japan and from across the world. Financial institutions, policy-makers, regulators and technology providers flew in from Europe and the US alongside near neighbours from Singapore, Hong Kong and Australia to name just a few.

Digital assets was a golden thread throughout the week, gaining almost as much air-time as AI, which is currently at peak hype. This was helped by a half-day Summit dedicated to Digital Assets and a series of associated events run in collaboration with JFF towards the end of the week including the excellent inaugural APAC DeFi Retreat.

From a digital assets perspective, the overarching themes of the week were summed up during the week’s highlight – a fireside chat with Chris Giancarlo. Giancarlo has earned the nickname “Crypto Dad” for his celebrated call on Congress to respect a new generation’s interest in cryptocurrency, during his time serving as the 13th Chairman of the United States Commodity Futures Trading Commission. The Crypto Dad pulled no punches in describing the current US stance on the sector as “sluggish”. He blamed the complexity of the current regulatory system which is run by a generation that is completely out of touch with the, soon to be economically powerful, Generation Z who operate on a different digital economy paradigm.

Conversely, and to the delight of the audience who were listening so intently you could have heard a pin drop, Giancarlo asserted that this presents a massive opportunity for the APAC region. While the US is asleep at the wheel APAC, with it’s track record of clarity and consistency in regulation of the sector, could absolutely pull ahead to become a global leader in digital assets.

The JFSA clearly understands the potential of this opportunity for Japan with senior officials delivering keynotes and participating on panels throughout the week. In particular, Myoshi Toshiyuki, the Vice Commissioner for International Affairs delivered an unexpectedly frank and open overview of the JFSA’s approach to regulating digital assets. Commonly acknowledged as the safest country to be in after the collapse of FTX, the JFSA’s foresight in requiring 95% of assets to be held in cold storage, has meant Japanese customers of FTX were the first to recover their funds globally.

Toshiyuki-san presented a balanced perspective asserting that on one hand “if left unregulated, crypto-asset markets could pose a threat to customer interests, market integrity and financial stability” whilst on the other “robust regulation does not stifle, but rather facilitates responsible innovation”.

Responsible innovation, it seems, is the key to unlocking the promise of the APAC region with “regtech” probably the most lauded phrase throughout the week. Financial institutions, policy-makers and regulators alike called for more investment and support for regtech innovation. This is vital if we are to realise the vast potential of not just crypto-currencies, but also the much more material change coming down the financial services track: tokenisation of real-world assets.

As we move up the Gartner “slope of enlightenment” with institutional adoption proliferating globally, APAC is poised to benefit from an out-sized slice of the digital assets pie. The rallying cry from the industry and regulators alike was “now’s the time to go hard” before the US wakes up from a post-election daze in 2025. By then, thanks to the momentum driven by a regulatory head start, APAC could well be the jewel in the digital assets crown globally.