In the last market bull run, it was perhaps not surprising to see a lot of crypto action in East Asian countries like China, Japan, and Korea. These were among some of the biggest early adopters of cryptocurrency, and despite numerous government interventions over the years, interest in all things crypto remains strong in these leading Asian nations.
However, nestled among this regional activity we also noticed increasing crypto adoption in a relatively small and often overlooked island: Taiwan. Apart from manufacturing the twinkling chipsets that will arguably determine the future of human civilization, people in Taiwan are increasingly getting involved in cryptocurrency — the asset class with the potential to liberalize the world’s economy.
Historic early tech adoption
Within East Asia, Taiwan possesses qualities for cryptocurrency adoption that are as valuable as oil in the Middle East, or vibranium in the fictional Wakanda, and this is driving its uptake. First and foremost is the island nation’s openness to technological innovation. According to Taiwan Tech Arena (TTA), Taiwan is ranked 6th globally in terms of hardware and innovation and technology verticals.
This puts Taiwan ahead of Canada, the Netherlands, and Japan as a tech-start-up hotbed, while only Taipei houses over 30 blockchain-based start-ups. The vibrant tech start-up scene in Taiwan has been nurturing hundreds of thousands of tech-savvy young professionals, many of whom are also hardcore crypto adopters in the country.
The risk-on mentality of youth
The end of every bull run leaves many feeling that they have missed out on a once-in-a-lifetime opportunity to get rich overnight — especially in cryptocurrency. Most sensible investors would learn their lesson, do their research, and get ready for the next run. In Taiwan, however, the highly tech-literate younger generation is taking this as an opportunity to consolidate their positions in this emerging market.
On the YIELD App platform, Taiwan has been our fastest growing East Asian market over the second quarter of 2021 and is now our third biggest market of the region behind India and China, and seventh within Asia overall.
This is not to say Taiwanese are immune to fear, uncertainty, and doubt (or “FUD” in crypto parlance): cryptocurrency’s volatile nature may not be something all investors would comfortably sign up for, especially those from the more traditional financial space. Among younger participants, though, while bullfighting is risky, the rewards a victory can bring often prove irresistible.
Hardly any other investment can generate the potential returns that crypto can: whether through high-adrenaline trading or via passive income from DeFi wealth management platforms. On the trading side, crypto particularly appeals to traders from the Taiwan Stock Exchange, which caps daily price fluctuation within 10%. Young Taiwanese — just like their peers from the mainland — enjoy risk and frequently flock to crypto, where a 20% price fluctuation is often all in a day’s work.
Historically hands-off regulation
In many Asian countries, trading crypto is strictly regulated, or even regarded as illegal. This makes mass adoption of cryptocurrency almost impossible in places like India, Thailand and Indonesia. Instead of taking a hostile stance, however, the Taiwanese government adopts a relative laissez-faire approach to cryptocurrency, with the exception of rules around security token offerings (STOs).
Some have argued that the Taiwanese government has not done enough on cryptocurrency: that it would perhaps be better to come up with a favorable regulatory framework, rather than not have one. However, others argue that its hands-off approach combined with Taiwan’s Financial Supervisory Commission (FSC)’s Sandbox Act — which allows fintech businesses to test their financial technologies in a controlled regulatory environment — has protected Taiwanese crypto traders from imminent risks.
A promising future
There is potential change on the horizon in Taiwan, though. With increasing numbers of large crypto providers and institutional investors taking part in the space, the general public is demanding more regulation over cryptocurrency trading. As such, the Taiwanese government has already introduced a law to regulate cryptocurrency trading, which came into force on July 1, 2021.
There is an art to imposing regulations on cryptocurrency. Many Asian countries have faced challenges in formulating optimal crypto regulations that adequately protect traders and investors without stifling financial technology innovation in their countries. India, for example, has repeatedly imposed and retracted crypto laws over the years trying to get this right.
Reflecting its historically favorable stance on crypto, the new law Taiwan introduced is intended only to prevent cryptocurrency from being used for money laundering and terrorism. Despite this, though, local hybrid-decentralized exchange platform Joyso has announced that its decentralized exchanges will cease to operate from July.
It remains to be seen how this new law will affect the Taiwanese market: the Wakanda of cryptocurrency within Asia. The country’s reputation as a global leader in technology and innovation is reason to be hopeful, as is the strong use of cryptocurrency among younger generations. What we can be sure of is that — right now at least — Taiwanese are wholeheartedly embracing the liberalization of global finance.