Notes from crypto hops around Asia
With 60% of commodity trading taking place in East Asian time zone, Binkabi team really felt at home in our round trips to Singapore, Vietnam, China and South Korea. We found a very receptive audience for our project.
Traditionally, Singapore is a major trading hub for physical commodities due to its strategic location. Singapore ranks a top 5 global commodity hub along side Chicago, New York, London, Geneva and Hong Kong.
Singapore is also at the heart of ASEAN (Association of Southeast Asian Nations), one of the most dynamic economic regions of the world with over 600m people. In fact, trading within ASEAN and between ASEAN and the rest of the world is growing at the fastest rates in the world. Singapore is well-positioned to capture this growth.
Singapore has been forward-thinking in recognizing a broader trend of reshoring manufacturing back to Western countries (who have outsourced to East Asia to take advantage of lower labour costs), due to the advent of robots. Singapore, therefore, is switching its thinking to that of a digital hub in addition to a physical hub of commodities.
So it is no surprise that we found Singapore very welcoming to Binkabi. We now have a legal entity set up in the city state.
Singapore has also been fairly crypto-friendly. There are many ICOs choosing Singapore as their home jurisdiction. Trading of Bitcoin is allowed here. Monetary Authority of Singapore (MAS)has clarified stances on crypto tokens. It cautioned against money laundering but a token is not automatically a security until it exhibits features of such.
Indeed Singapore has been embracing blockchain technology. Project Ubin by MAS is about issuing central bank currency on the blockchain and transforming securities clearing and settlement and Real Time Gross Settlement (RTGS). These are very exciting developments for Binkabi as we look to work with a range of payment currencies on our platform.
Vietnam is arguably the one of the most active blockchain markets in Southeast Asia. Vietnamese investors have regularly invested in ICOs. Crypto currency mining has also been taking off here, especially after China’s bans. Electricity used for mining has been fairly cheap until recently when it is re-classified to be that of commercial use (as opposed to manufacturing use).
What exciting is however the wide range of blockchain-based projects co-founded by Vietnamese tech entrepreneurs. These include Kambria (Robot economy), Kyber Network (Decentralise crypto exchange), TomoChain (base protocol resolving scalability problem), TD Food (Traceability), WeTrust (Social lending circle) and of course Binkabi (Decentralised commodity exchange). Moreover, many blockchain projects have their development teams partly or fully based in Vietnam.
With a young population of 90 million people and a strong focus on maths and computer science, Vietnam will surely produce many more exciting blockchain innovations.
Our trip in Vietnam was concluded with a MOU signing ceremony with TomoChain.
In Shanghai we met with VeChain, a supply chain blockchain infrastructure project that pioneered provenance work in the luxury car, wine, handbag and … cold chain with the use of IoT.
The VeChain Foundation was set up in Singapore as a company limited by guarantee. The company went to ICO in August 2017, just before China banned ICO. Some token redemption was made as a result. Today, VeChain is one of the biggest blockchain projects in China (network value around $1.4bn at the time of writing).
VeChain has an interesting dual coin system Vet an Vethor with Vet representing right and privilege to occupy and use VeChainThor blockchain and Vethor representing underlying cost of using VeChainThor blockchain.
Dalian, a major coastal city in the Northeast of China is the home of Dalian Commodity Exchange (DCX), one of the largest in the world by volumes. Started in 1993, it now handles trades in agriculturals (soybean, corn, palm olein and eggs), industrials (PVC, coking coal and iron ore) and indices. We met with senior officials from DCX.
It is interesting to note that only 2–6% of trades are ultimately ended up in physical delivery. Around 10% of customers are producers looking to hedge commodity price risk. The exchange is working to increase this ratio but it is also aware that speculators are necessary to provide liquidity.
Physical delivery can be done either by handling over the physical commodity or electronic warehouse receipts. The exchange is experimenting using warehouse receipts as collateral for loans and linking them up with crop insurance for farmers.
Customers do not directly trade on the exchange but through brokers. Daily settlement is done where net loss or profit is settled.
DCX is also opening up to foreign investors. They are interested in blockchain technology as a potential way to bring foreign investors to the exchange.
Seoul, South Korea
If Vietnam is the most exciting blockchain market in Southeast Asia then Korea is certainly among the most exciting markets is East Asia. If in Vietnam, young people are the main group interested in cryptocurrencies and blockchain technology then in Korea there is quite a broad section of interests. Our meet-up in Seoul certainly attracted a lot of private investors who looked as those they regularly invest in the stock market and see cryptos as a way to diversify their portfolios.
Our presentation was well received. Whilst South Korea is hardly an emerging market, it depends on many developing countries for the supply of raw materials that go into cars, electronics, clothing and of course K-Pop. For would-be investors into Binkabi token (BKB), it is a way to gain exposure to exciting commodity opportunities from developing countries.
As part of the trip, we also met with a number of institutional investors. The crypto investing ecosystem in South Korea is very well developed.
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