Asia's Crypto Market Thrives Despite UN’s Crime Concerns

Asia is embracing the crypto industry with Hong Kong-based HashKey Group achieving 'unicorn' status and Binance expanding into Thailand.

In 2024, Asia's cryptocurrency landscape has seen quite a few developments. Binance expanded into Thailand with the launch of Binance TH, offering Thai baht trading pairs and integration with local banking, following approval from Thailand's Securities and Exchange Commission. This expansion challenges the dominant market player, Bitkub.

In Hong Kong, HashKey Group reached "unicorn" status after raising nearly $100 million in a Series A funding round. Meanwhile, the United Nations Office on Drugs and Crime highlighted the misuse of cryptocurrency in illicit activities in East and Southeast Asia, particularly noting the role of Tether (USDT) stablecoin on the Tron blockchain in financial crimes.

Binance Expands to Thailand

So far, 2024 has been a big year for the cryptocurrency industry in Asia . Binance recently expanded its operations to Thailand, shaking up the local crypto exchange market. Binance TH officially opened to all eligible users on Jan. 16. This move comes after Binance received approval from Thailand's Securities and Exchange Commission two months ago and initially launched on an "invitation only" basis.

Binance TH, which is operated by Gulf Binance, a joint venture between Binance Capital Management and Gulf Innova, a subsidiary of Thai energy giant Gulf Energy, has been meticulously planned in collaboration with Thai regulators. The platform is tailored for the Thai market, featuring a dedicated order book for Thai baht trading pairs and offering seamless integration with domestic banking systems for easy currency deposits and withdrawals.

While Binance TH currently focuses on spot trading, a Binance spokesperson revealed that they have long-term plans for the Thai market and are working closely with regulators to expand their services even more. However, for now, additional services beyond spot trading are not available just yet.

The entry of Binance into Thailand is especially interesting considering the market's current dominance by Bitkub, a Bangkok-based exchange that holds about 77% market share. Bitkub sees a daily volume of about $30 million, with the Thai baht and Tether USDT pair being the most traded. Other players in the Thai market include Upbit, Bitazza, and Zipmex, although Zipmex faced regulatory challenges and suspended trading in November 2023.

Gulf Binance CEO Nirun Fuwattananukul emphasized the effort put into detailed planning and collaboration with Thai regulators over the past year. Binance CEO Richard Teng also highlighted the company's goal to be a part of digitizing Thailand's economy and fostering growth and new opportunities. However, Binance TH has a specific limitation: it is not available to foreigners residing in Thailand as it requires a Thai National Digital ID for the completion of Know Your Customer (KYC) procedures.

HashKey Secures Major Funding in Crypto Sphere

Meanwhile, Hong Kong-based crypto exchange HashKey achieved a huge milestone by reaching "unicorn" status, a designation for startups valued over $1 billion. This development comes after the company successfully raised nearly $100 million in a Series A funding round, achieving a pre-money valuation of more than $1.2 billion.

The funding round saw participation from many big-name institutional investors and leading Web3 institutions, although their identities were not revealed by HashKey. However, a report from Bloomberg on Jan. 16 identified OKX Ventures, the investment arm of crypto exchange OKX, as one of the lead investors in this funding round. The funds raised are set to bolster HashKey's different business arms, which include asset management, blockchain node validation services, tokenization services, and a Web3 incubation arm.

HashKey's ascent to unicorn status comes on the heels of its licensure by the Hong Kong Securities and Futures Commission (SFC) in August of 2023. HashKey, along with OSL, is now one of the two exchanges authorized to serve retail investors in Hong Kong.

Asia’s favorable stance towards crypto is also reflected in the fact that the SFC and the Hong Kong Monetary Authority (HKMA) are showing openness towards allowing spot crypto exchange-traded funds (ETFs). In a recent interview with Chinese media outlet Caixin, HashKey's Chief Operating Officer Livio Weng revealed that 10 firms are exploring the launch of ETFs.

UN Exposes Crypto Misuse in East and Southeast Asia

Unfortunately, not all of the crypto developments in Asia are good. The United Nations Office on Drugs and Crime recently released a report highlighting the growing misuse of cryptocurrency in illicit economies across East and Southeast Asia. The report pointed towards the combination of crypto with the latest technological innovations resulting in new and complex challenges for law enforcement.

A big area of concern is the Mekong Region, where poorly regulated or illicit casinos and "pig-butchering" romance scams have seen massive growth. These scams are becoming increasingly sophisticated, leveraging advancements in large language model-based chatbots, deepfake technology, and automation.

The report also sheds light on the strategic location of illegal gambling and scam operations in underregulated special economic zones and areas controlled by autonomous armed groups. This has given rise to a specialized travel industry centered around these casinos, with junket operators offering services akin to international banking. These services include credit issuance, currency exchange, and other underground financial activities, often exploited by organized crime.

A key finding of the report is the prevalent use of the Tether (USDT) stablecoin on the Tron blockchain among the region’s financial criminals. The continued use of this stablecoin could be attributed to its stability, ease of use, anonymity, and low transaction fees. Concerningly, local crypto exchanges may be unwittingly facilitating money laundering, exacerbated by gaps in blockchain crime attribution, fabricated reporting, and the prevalence of wash trading.

In response, the report proposed a long list of policy improvements and awareness programs to combat financial lawlessness in the region. Notably, similar allegations have been made against Circle's USD Coin (USDC) used on Tron. Investigations by Reuters have also linked Tron to illicit financing in the Middle East. In response to these challenges, China imposed a crackdown on the use of USDT for foreign exchange in December of 2023.

Despite these issues, stablecoins like Tether are gaining traction in foreign exchange and decentralized finance. However, Tether has been proactive in cooperating with U.S. law enforcement to address these concerns.