Stablecoins and cryptocurrencies have begun to replace fiat currencies in some East Asian countries and have gained importance in emerging economies.

East Asia is pegged as the sixth-largest crypto economy in 2024, accounting for more than 8.9% of global cryptocurrency value between June 2024 and July 2023, according to a September 17 report from Chainalysis.

The increasing use of crypto and stablecoins has been driven in part by countries with constantly devaluing fiat currencies and high inflation rates.

“In most emerging markets, stablecoins are gradually replacing fiat currencies due to lower barriers to entry, lower costs and ease of use,” said Maruf Yusupov, co-founder of a gold-backed digital stablecoin called Deenar. Interest may wane.” he said.

Stablecoins stand out as a cheaper and faster alternative to traditional bank transfers, especially in cross-border transactions. According to Statista, in 2024, remittance fees averaged 7.34% for transactions involving bank account transfers.

East Asia received more than $400 billion in on-chain value between June 2024 and July 2023. Most of the cryptocurrency activity in the region is likely driven by institutional and professional investors.

According to the Chainalysis report, when looking at large digital asset transfer sizes, most of this increase was carried out by institutions. “Remarkably, East Asia accounts for the largest share of professional-sized transfers compared to all other regions examined in this report,” the report said. The statement was included.

Institutional investors predominantly preferred decentralized exchanges (DEXs) and other decentralized finance (DeFi) services, while professional investors continued to use centralized exchanges (CEXs). The report stated that DEXs offer more arbitrage opportunities compared to CEXs.

Hong Kong’s efforts to become a global crypto hub are starting to pay off with increased digital asset activity.

Hong Kong, which recorded an 85.6% growth in cryptocurrency usage, showed the largest year-on-year growth among East Asian countries, followed by South Korea.

Stablecoins played a significant role in this increase, accounting for more than 40% of the total value received in Hong Kong.

Yusupov added that the increased use of stablecoins will bring more regulatory supervision: “Central banks will do their best to limit the impact of stablecoins on fiat currencies. Additionally, with the increase in the use of stablecoins, new fraud models may emerge.”

In July 2024, regulators in Hong Kong proposed a new stablecoin licensing regime for fiat-backed stablecoin issuers.