Exclusive: Chainalysis Director on Bitcoin ETFs, global crypto trends, and regulatory shifts

Fresh off the Singapore TOKEN2049 event, we review an interview with Diederik Van Wersch, Regional Director of the Association of Southeast Asian Nations (ASEAN) and Hong Kong, at Chainalysis.

At Chainalysis, Diederik oversees activities and initiatives related to blockchain and cryptocurrency in these countries, ensuring they align with regional regulations and market dynamics.

Chainalysis is a decentralized data provider for various entities, including government agencies, financial institutions, and cryptocurrency exchange

Institutional adoption of cryptocurrencies

Following up on previous interviews with Coinbase and M2, who noted that more users were buying and holding instead of constantly trading assets, we checked with Diederik to see whether he observed similar trends, especially in institutional adoption.

Diederik referred to a report where they investigated adoption trends across the world.

“So previously, what we saw last year was lower-income countries saw higher rates of adoption. Now it’s all across different income brackets from the wealthiest down to the most lower income.”

This coincided with observations from Coinbase and  M2 on growing adoption rates.

On institutional adoption, Diederik saw Bitcoin ETF as a major driver, which has attracted a whole new class of investors.

Diederik went further to compare crypto prices which were higher than last year, with on-chain data they were collecting.

“… interestingly, if we look at on-chain data, if we look at the transaction volumes, we’re blowing past the all-time highs we saw at the peak of the last bull market.”

He then emphasized the importance of exploring metrics other than the price when exploring adoption rates.

Crypto adoption in Singapore

We then asked Diederik about the exciting developments he had observed in recent reports.

Diederik began by looking at Singapore, the host of the TOKEN2049 event. In Singapore cryptocurrency payments were up across the board. 

“So, in Singapore, what we find right now is that payments are up across the board..Grab, which is kind of like the Uber slash Deliveroo, a bit of an everything app in Singapore, has started to accept payments in crypto. Now, why do I find this interesting? Why does this bode well for an industry?

See, Singapore already has a very sophisticated payment infrastructure for fiat, right? You have PayNow, you have PayLa. It’s not the kind of thing that, in your day-to-day, you have a lot of friction when it comes to making transactions. But still, people are flocking towards crypto, right? People are still finding value in cryptocurrency for transactions.”

In Indonesia, Diederik pointed out that adoption had grown 200% in the last year, with 60% of the transactions related to DeFi.

“So we have countries that you might have not been at the forefront of your mind when it comes to cryptocurrency adoption starting to realize the true value of this technology. And as they start to enter into it, that can really pull this entire industry out.”

Chainalysis on cryptocurrency adoption vs purchasing power

The Chainalysis adoption report showed that India topped the list for crypto adoption. The list also comprised other wealthy countries, such as South Korea and the United States.

“We also see countries like Cambodia. We see Vietnam. We see the Philippines. We see Indonesia. We see Thailand, right? We see Nigeria coming up. So yeah, in countries like Nigeria, which have rapid and mild inflation.”

China had high adoption despite a ban on crypto exchanges in 2021. Singapore, a country dominated by financial institutions and wealthy investors, saw a significant increase in transactions and investments from lower-income members.

Cryptocurrencies adoption and price predictions

Diederik began by admitting his previous predictions, most of which were wrong. However, he stressed that we would see more institutional adoption, especially following the approval of Bitcoin ETFs in the U.S. and Hong Kong.

“Arguably one of the main reasons that Bitcoin managed to break past an all-time high in March before it happened, that has never happened before. We saw it in the U. S., we saw it in Hong Kong…. We’re seeing financial institutions entering the space en masse.”

On regulation, he noted that countries globally were starting to adopt cryptocurrencies.

“… if you look at the regulations in India, they’ve not been crypto-friendly in the slightest. They have a 1 percent tax on every single transaction. They’ve basically kicked out nine offshore exchanges. Yet still, despite the constraints, the users have still decided that, no, we are going to enter cryptocurrency anyway.”

To summarize the prediction, Diederik pointed out that cryptocurrencies were here to stay, and regulators would be better off accepting this fact and coming up with comprehensive regulations that can protect them and allow the industry to flourish rather than fighting against it. Cryptocurrencies were here to stay, and more financial institutions will be involved.

Interviewed by Gideon, authored by Brian