For the longest time, traditional finance (often referred to as TradeFi) has been named as the backbone of the global economy. This system is built on central banks, financial institutions, intermediaries and regulations. In short, this is the system by which money moves, grows and is stored. However, in the last few years, a new contender has gotten into the market: cryptocurrencies and the entire decentralised finance (DeFi).

The biggest issue that cryptocurrency faces is that governments have been setting up bans, and since DeFi and crypto are yet to be regulatable. For instance, crypto trading and mining have been banned in China since 2021. 

You see, when mining was banned in the country, the price of Bitcoin dramatically went down. But, well, looking at the current Bitcoin price, it’s proof that things have been taking shape. In fact, there were speculations that China might be lifting the ban on crypto in 2025 in a broader strategy of embracing tech and digital assets.

Cambodia lifts its ban

Recently, countries across East Asia have become more accommodating of crypto, a stand that is making institutions in this region continually adopt these digital assets. For instance, Cambodia is the latest addition to the adoption, having lifted the ban in late December 2024.

The National Bank of Cambodia (NBC) has now given permission to commercial banks and payment institutions to offer services involving Category 1 crypto assets. These are tokens banked up by fiat currencies, like USDC, USDT CBDCs. Unfortunately for standalone cryptocurrencies like Bitcoin and Ethereum, the ban is yet to be lifted.

Interestingly, the financial institutions are not allowed to use client crypto assets for their own benefit. And to add on, no institution is allowed to work out these services without first getting the NBC’s approval.

But why are many countries banning the use of crypto? To start with, governments are trying to protect their citizens from the high volatility following virtual assets.

For instance, according to a piece by Forbes, the average annual volatility of Bitcoin over the past 10 years is 46.31%. This is higher than all the other traditional assets, including gold, S$P 500 or even Apple stock. The more volatile an asset is, the riskier it is.

Another major reason is that there is the widespread notion that crypto is used to run illegal activities such as money laundering and fraud. However, the global trend of crypto adoption in the UAE, the US and Hong Kong are leading these Asian countries to actually think twice about their decisions.

Now, since governments are accepting the use of crypto, institutions have the liberty to use these virtual assets to their advantage. Here are some of the things why crypto is very attractive to different institutions.

Easy cross-border transactions

One of the USPs of crypto is the ability to connect the globe in terms of transactions. You see, the cross-border transaction market has been increasing at a tremendous rate. Data compiled by Statista showed that in 2023, the value of cross-border payments reached at least $190.1 trillion. The report also predicted that the market’s value might reach 290 trillion in 2030. Now, out of the total transactions made in 2024, at least 3% of those ($6 trillion) were done through stablecoins. Let’s just leave that there!

But the grand question is, why are cryptocurrencies gaining such popularity? For a start, these digital assets take up lower costs when making transactions. Where popular credit cards like Visa and Mastercard take up transaction fees of between 2% and 6%, crypto fees are usually lower than 1%. This is because there are no intermediaries involved in the whole transaction process.

Another benefit of crypto is that the transaction speed is quite fast. Traditional modes of money transfer, e.g., bank transfers, can take up to 5 days (or even 2 weeks in case of complications) for an international transaction. However, it just requires a couple of minutes, if not seconds, for a crypto transaction to complete. More businesses feel like if they can make transactions faster, then they have higher chances of retaining their customers.

Reaching out to new customers

By institutions using crypto, they are setting themselves on the line of tech-savvy customers. In fact, they are opening up their doors to more Gen Z and Millennial customers, as they are the ones who are most interested in these digital tokens.

Statistics have shown that in a country like Singapore, at least 40% of the Gen Z and Millennial population are reported to be crypto owners. Also, data from Indonesian regulators revealed that at least 60% of crypto investors were Gen Zs and Millennials.

If a business starts accepting crypto payments, they brand themselves as innovative, a feature that the above tech-savvy generation is attracted by. Gregory Boutte of luxury conglomerate Kering, stated that the aim of the company embracing new technologies like crypto was to reach younger and Asian clientele.

Asia has become a hub of crypto adoption even as more countries embrace these digital assets. Countries that had previously banned the use and mining of cryptocurrencies are slowly warming up, following the trend of other countries around the world. Also, institutions are embracing the use of these tokens because of the advantages they offer over traditional modes of payment. There is no doubt that crypto is gaining ascendancy in the financial sector.