China for the longest time has been the world’s crypto capital. By accounting for more than 60% of Bitcoin mined, no other Asian country seems to be investing quite as much when it comes to cryptos. However, this has all changed with the China crackdown on crypto mining and exchanges.
With most of the China-based miners unable to mine anymore, they are looking for other locations to set up their facilities. From a global view, the USA and Kazakhstan are the best options. These countries already have clear cryptosystems like energy for Bitcoin mining.
Still, not all the miners can fit in the two countries. There are also transportation concerns that make it difficult to move the mining machines over longer distances. Therefore it makes sense to move to another Asian country.
Taiwan is one of the Asian countries that seems to be the natural China replacement as the Asian crypto capital. So, will Taiwan be the next crypto capital of Asia? Not really. Here’s why.
Reasons for Taiwan becoming the next crypto capital of Asia
Taiwan being fronted as a possible replacement for China as the next crypto frontier is no mistake. There are various reasons that make it seem like the ideal destination for the Bitcoin miners looking to set up new mining plants and other crypto services. Some of these reasons include;
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Taiwan is entrepreneur-friendly
Taiwan is one of the most entrepreneur-friendly countries in the world. The country is always willing to accept any company that invests in the country. It then provides an enabling environment for such companies to prosper. That explains why Taiwan is the hotbed of startups.
Most of the startups in Taiwan focus on recent innovations like Artificial Intelligence (AI), blockchain and the Internet of Things (IoT). Facilities like Taiwan Tech Arena look to support the creation and expansion of various startups.
Given the ease of setting up a business in Taiwan, getting a work permit and support, operating cryptocurrency in Taiwan seems a no brainer.
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The Chinese-Taiwan political tensions
China and Taiwan have one of the longest political differences. Even though these countries had a period of peace after the 1980s, they are currently back to wrangling. Taiwan seeks to be independent of China, while China seeks to retain its grip.
In most cases, political tensions are never a reason to invest in any place, but it might be different with Taiwan. Given its position to gain independence from China, Taiwan promotes laws that don’t conform to Chinese regulations. Given China is cracking down on cryptos, it is likely to embrace cryptos as part of getting away from the mainland.
There is also less concern about the tensions boiling over to violence or business disruption, given Taiwan is supported by powerful countries like the USA and Japan.
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A proper COVID haven
Covid is one of the most impactful pandemics of our lifetime. The virus impacted all economies with most of the industries stalling. Taiwan, however, is one of the least impacted countries with Covid. The country has received widespread criticism over its prompt reaction at the onset of the pandemic. As such, it did not have to grapple with other control measures like locking down the country.
The low concerns over Covid make it an ideal location for investors looking for an environment to invest in while leading a normal life.
Reasons why Taiwan is not the next crypto capital of Asia
For the above reasons, you might feel like hopping on the next flight to Taiwan and setting up your business. For any other business, it’s easy to get going. However, for crypto-related business, you might want to hold on a bit.
Taiwan might not be the ideal location for your crypto mining company or to set up a crypto exchange. We’ve listed some of these reasons below.
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The recent crypto regulations changes
Taiwan has been one of the most friendly countries in the past years. This was until July 1, 2021, when it enacted new anti-money laundering regulations. These regulations came with more stringent provisions for crypto exchanges.
The new laws require crypto exchanges to report transactions worth more than NT$500,000 (AUD24,000) conducted in cash. The exchanges should also observe full Know Your Customer Protocols (KYC). They are to ensure the identity authentication of all users on the platform. The regulations came in the wake of Taiwan’s FSC warning the exchanges that virtual products are highly speculative, hence risky.
Keeping up with these new regulations requires installing a wide range of systems for identification verification. It also limits the units to trade and the number of users. Hence, it has become less profitable to operate a crypto exchange in Taiwan.
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Business operation limitations
Even though setting up a business in Taiwan is simple, it comes with limitations. It is all good when you deal in products or services not used by the locals. However, if the Taiwanese population is your target market, then you might have a challenge. You will have to meet various complex provisions before beginning to operate.
When you operate a Taiwan crypto exchange, you are mostly targeting the local market. It is therefore quite strenuous to start operating in the country.
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Risk-averse Taiwan investors
The other concern that comes with setting up a crypto-related enterprise in Taiwan is the risk-averse nature of the local population. The Taiwanese tend to save money more than they do spend. Taiwan will have a gross saving rate of 39.3% in 2020, which is some of the highest in the world.
Given their attitude towards spending, the Taiwanese are not likely to jump in droves on cryptocurrencies. As a new investment, cryptos might be too risky for the average investor. Even if they were to buy these assets, they would end up selling to avoid the risk.
The volatile nature of cryptos does little to help when it comes to investing. Most of them consider Taiwan cryptos as gambling tools. Most of them lost money in the 2018 crypto crash. They have also had a run with crypto scams during the ICO craze. The country currently has only less than 10% of its population investing in cryptos.
The other possible countries to be the next crypto capital of Asia
With all the above reasons, it is unlikely that Taiwan will become the crypto capital of Asia. Not many investors are willing to keep up with the concerns. However, another country must come to be the new crypto capital. Some of the possible options include:
Singapore
Singapore has become a hotspot for crypto companies and executives due to the regulations and license exemption. While other countries are clamping down on crypto exchanges, Singapore has been welcoming them. For instance, the crypto companies need to have a license, but they can be exempted to start setting up when it is still being processed. This has made it easy for crypto companies to move to the country.
Singapore also comes with a high potential for growth. The country only has 0.01% of its assets in cryptos. Given the high standards of living and the existing potential consumers, crypto can be a hit in the country.
Thailand
The possibility of Thailand becoming a crypto capital for Asia is based on the increased demand by companies. The Bank of Thailand revealed that most companies are seeking payments in cryptocurrencies such as Bitcoin and Ether.
However, there are concerns over the central bank’s warnings over the crypto use in the country due to the possible risks. The Thai SEC has already banned some cryptocurrencies from offering services related to fan tokens, meme coins and non-fungible tokens (NFTs).
If the crypto regulations don’t become more strict then the country still stands a chance of becoming the next crypto frontier in Asia.
Taiwan next Capital of Asia FAQs
Can any country emulate China’s crypto output?
No, even though various countries in Asia might become the next crypto capital, it is almost impossible to reach the levels of China. No Asian country is likely to account for more than 60% of global Bitcoin mining like China did. Bitcoin mining has become more widespread with other countries gaining from China’s crypto crackdown.
Will China return as the crypto capital of Asia in future?
If you follow cryptos then you understand the changing crypto landscape in China. They have previously banned some cryptos, only to later change their mind. However this time it seems different.
China had first struggled on how to manage cryptos. As a country, it never embraced earlier to protect its citizens. However, as a leading economy, it had to accept cryptos due to its position as the future of money. For now, China has systems in place to operate without cryptos. They are instead looking to launch a national digital currency.