Big moves expected for crypto in Asia in 2025: Asia Express

2 days ago

7 minutes read

2025.01.03 11:37

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China’s digital yuan will return to the spotlight

China’s central bank digital currency was once one of the industry’s hottest topics, but 2024 saw a relatively quieter year for the digital yuan.

Still, Winston Ma, an adjunct law professor at New York University and former managing director at China’s sovereign wealth fund, predicts a strong push for the digital yuan’s overseas expansion in 2025.

China expanded the digital yuan to Hong Kong’s retail sector in 2024, but its efforts were slower and less aggressive than in previous years. This slowdown coincided with the investigation of Yao Qian, the first director of the People’s Bank of China’s Digital Currency Institute.

Yao, credited with spearheading the digital yuan’s early development, was investigated in April 2024 for “violations of discipline and law.” In November, he was removed from office for allegedly accepting cryptocurrency bribes. While Yao no longer led the project at the time of his dismissal, the scandal raised concerns about the digital yuan’s integrity.

Despite these setbacks, China remains committed to its digital finance ambitions. At the third plenum, which is China’s most authoritative meeting with President Xi Jin Ping in attendance, the Central Committee of the Communist Party of China announced plans for a renewed focus on the internationalization of its currency, including advancing the digital yuan.

China third plenum snippet A snippet of China’s plenary session vows to crack down on illegal financial activities. (Xinhua)

Then in November, Shanghai, China’s financial hub and most populous city, unveiled plans to boost digital finance, including improving digital yuan acceptance.

Ma said that the digital yuan expansion could be met with resistance from the US.

“[This] may be a year where China’s CBDC overseas expansion efforts, especially with the BRICS countries, would meet with challenges from [Donald Trump], as he indicated in his recent tweet about defending the US dollar supremacy,” Ma says.

Donald Trump tweet President-elect Donald Trump vows to defend the dollar’s supremacy. (Donald Trump)

China has tested retail cross-border digital yuan payments with Singapore. It’s also part of the mBridge project, a wholesale cross-border experiment with the central banks of Thailand, United Arab Emirates, Hong Kong and Saudi Arabia.

The Bank of International Settlements, often referred to as the central bank of central banks, pulled out of the project in 2024 amid scrutiny about whether mBridge could be used by BRICS nations to circumvent international sanctions. BIS General Manager Agustín Carstens claims that the withdrawal was not due to political reasons but to the project’s maturation.

Big moves expected for crypto in Asia in 2025: Asia Express

Too early to expect South Korean institutional wave

South Korea cemented itself as a key cryptocurrency market in 2024, with its won leading the world in fiat trading pairs.

But an interesting nugget about South Korea’s crypto trading volume is that it’s primarily driven by retail investors, as corporations face a de facto ban from participating in the market.

That’s because for Korean investors to access fiat-to-crypto services, they must do so at local exchanges that have established official partnerships with licensed banks. The investor must open a real-name account at the bank, which is used as an entry point for crypto markets, thereby linking the user’s crypto activities to their legal identities.

South Korea crypto volume compared to Binance The trading volume of South Korean exchanges compared to the world’s largest exchange. (CryptoQuant)

Though it’s not prohibited by law, banks are reluctant to hand out such accounts to corporations due to local Anti-Money Laundering guidelines. They’re further fenced out as crypto ETFs are prohibited by the nation’s capital markets law.

“Since only retail investment is allowed, institutional growth significantly lags behind other developed countries. However, the level of interest and adoption among retail investors is overwhelmingly the highest compared to other developed nations,” Ki Young Ju, CEO of CryptoQuant says.

Institutions are waiting on the sidelines to get a piece of the Bitcoin pie, which was valued at over $100,000 a slice for the first time in 2024. The nation’s top finance watchdog launched a crypto committee and one of its first missions is to assess permissions for corporate crypto investors and crypto ETFs.

Near the year-end, a local news outlet cited unnamed sources to report that the Financial Services Commission will release a roadmap outlining the phased introduction of institutional crypto accounts, starting with universities and local governments in 2025.

The FSC has denied the report, stating that the agency hasn’t finalized the decision, though it didn’t deny that the option was on the table.

Ki expects South Korea’s institutional adoption to occur once the nation’s crypto taxation rules are kicked into effect. This year, South Korean lawmakers agreed to postpone its 20% crypto tax implementation to 2027, which is the third two-year delay.

“There appears to be a significant gap between the perception of institutional adoption speed from abroad and the actual pace felt domestically. You can expect Korean institutional investors to enter no sooner than 2027,” Ki says.

Innovations reshaping DeFi, GameFi and beyond

Asia shook up the blockchain world in 2024 with ambitious projects, and their continued developments in 2025 are expected to make the technology even faster and more scalable while addressing the industry’s fragmentation issues as well as capitalizing on the revived GameFi momentum.

“The most enthusiastic communities and users across Asia are willing to jump in and utilize new tech, try it out, and see what can be done with it. In 2024, we saw the DeFi, GameFi, and MEME landscape continue to evolve, from layer-2 developments significantly enhancing throughput and reducing transaction cost to machine learning and artificial intelligence already contributing to enhancing smart contract models,” says Terence Lam, co-founder of Taiko Labs.

Decentralized finance saw significant advancements, with Taiko introducing the first based rollup on Ethereum, leveraging Ethereum validators for decentralized sequencing and enhancing the network’s scalability and compatibility with DeFi applications.

Taiko Based rollup Ethereum developers push for based rollups. (Justin Drake)

Singapore-based project Web3Auth developed tools to simplify wallet management for non-crypto-native users, enhancing accessibility and usability. It also started exploring chain abstraction solutions to address the growing fragmentation of the blockchain ecosystem.

Meanwhile, India-based DePIN project Huddle01, which improves video call latency and quality via Arbitrum-based decentralized nodes, has been onboarding more users through a partnership with FanTV, a video streaming platform that claims to have onboarded a million users onto Sui.

GameFi also witnessed a revival, with games like Pixels drawing large communities in the Philippines, once the epicenter for Axie Infinity, while Japan’s Oasys continued to onboard major gaming studios to launch their next titles on the blockchain.

“For the upcoming year, we expect founders and builders in the region to put more attention on further enhancing user experience like sub-second fast transaction time through more fundamental breakthrough innovation in crypto tech to make it easier to use by even more people as interest in the market increases,” Lam says.

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Yohan Yun

Yohan Yun is a multimedia journalist covering blockchain since 2017. He has contributed to crypto media outlet Forkast as an editor and has covered Asian tech stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking, and experimenting with new recipes.