While the United States is often viewed as a leader in financial and technological advancement, it has clearly struggled in recent years to create clear (and consistent) regulatory frameworks for cryptocurrencies.

This lack of clarity has allowed other countries, especially in the Middle East and Asia, to take the lead. High-growth economies in these regions are creating tailored frameworks for digital assets, which are often more effective than those in the West. These regulations provide a model for the rest of the world. If the West does not catch up, it risks being left behind as the cryptocurrency industry shifts its center of gravity.

The United States should not be the primary planner of regulations

In past years, the United States has struggled trying to regulate the cryptocurrency industry, with regulatory bodies, such as the Securities and Exchange Commission, often taking hostile and inconsistent action.

High-profile lawsuits against Ripple and Coinbase have made headlines globally, casting a pall on innovation and prompting some cryptocurrency companies to move to friendlier countries. The lack of clear guidelines from the SEC has left founders and investors walking on eggshells, unsure if their next move might land them in legal trouble.

One major issue is that the United States is trying to integrate digital assets into existing laws (e.g., securities and commodities regulations), which were never designed for cryptocurrencies in the first place.

While the newly elected, pro-crypto US Congress signals hope for progress, the country has a lot of catching up to do. Waiting for the United States to set the standard is no longer viable when others are already ahead.

Emerging markets are the hidden gem of regulations

Meanwhile, high-growth markets such as Indonesia and Malaysia have introduced a new way of approaching cryptocurrency regulations, recognizing that digital assets are not enemies but should be regulated like any other asset.

While the US Securities and Exchange Commission has spent years trying to classify cryptocurrencies, such as Ethereum (Ethereum) as securities, Indonesia's Commodity Futures Trading Regulatory Agency (known as BAPPEBTI) officially classified all digital assets as commodities early in 2019.

In Malaysia, the Securities Commission creature A comprehensive framework for cryptocurrency exchanges with high standards for licensing, investor protection and anti-money laundering. This has also been implemented in Indonesia, which has introduced clearer rules for exchanges, such as mandatory segregation of client funds, strong security requirements, and token listing requirements. In both countries, these measures have reduced fraud and improved trust in the system as a whole, making the use of cryptocurrencies safer for everyone (and more tempting!).

This is the level of clarity and engagement we need as we move to broader global adoption of web3.

As a result, the Asian cryptocurrency market is booming. Transactions in the Indonesian cryptocurrency market exceeded $30 billion from January to October 2024, an increase of 350% compared to the previous year. It is now the third largest country Worldwide In fact, in this index, seven of the top 20 countries are located in Central and South Asia and Oceania, indicating that the world of cryptocurrencies is a multipolar industry.

Emerging markets drive crypto interest

But why do high-growth markets seem to be more advanced in regulating cryptocurrencies? That's because in these markets, crypto instruments shine brighter than anywhere else.

Cryptocurrencies address many risks, such as high transfer costs and limited access to owning assets and investing. On average, transfer fees are around 6.65% of the amount sent, which can take a significant portion of what workers send to their families. In the Philippines, money transfers makeup Nearly 10% of the country's GDP, which shows how important it is.

Digital assets also act as a hedge against inflation. In Asia and the Middle East, gold has traditionally been a safe and reliable asset that has managed to retain its value over the years. However, getting access to owning physical gold is complicated, with high entry fees, storage issues, and inaccessibility for ordinary people. Cryptocurrencies allow the creation of tokenized gold, enabling consumers to own a tokenized digital portion of gold at a much lower price, thus lowering barriers to entry.

Cryptocurrency regulations in high-growth markets are not perfect, and it will take a few more years for them to become more comprehensive. But these markets recognize that effective regulation cannot be one-size-fits-all, and are working to design rules for real use cases of digital assets.

The future of cryptocurrencies will not be determined by Wall Street or Silicon Valley. It will be defined by people who can use cryptocurrencies every day to solve real-world problems and address the risks of traditional finance. This is exactly what cryptocurrencies were made for.