# Asia Embraces Web3: Regulatory Clarity and Integration into Mainstream Finance

## Japan, South Korea, Hong Kong, and Singapore: Accelerating Web3 Integration

Major Asian countries are transitioning towards incorporating Web3 into mainstream finance through tax reforms, financial product reclassification, and licensing issuance. Japan and Hong Kong are expanding their stablecoin markets through private initiatives, while South Korea is focusing on public-led digital currency experiments via large-scale Central Bank Digital Currency (CBDC) pilots.

## Emerging Economies: Entering the Institutionalization Phase

Emerging markets like Vietnam and Thailand are moving from policy discussions to implementation stages. Active measures include regulatory sandboxes, collaboration with global corporations, and cross-border payment use case experiments.

## Asia’s Web3 Market Takes Center Stage

In the first quarter of 2025, Asia’s Web3 market demonstrated sustained growth. While Western markets grapple with political and regulatory uncertainty, Asian governments are taking concrete actions. Regulatory authorities across the region introduced new legislation, issued licenses, launched regulatory sandboxes, and enhanced cross-border collaborations.

From Japan’s tax reforms and regulatory overhaul, South Korea’s cautious approach, and Hong Kong’s expanded licensing issuance to Singapore’s regional diplomacy, market shifts are apparent. These moves prove that Asian countries are not merely following the cryptocurrency cycle. Instead, they are building a robust foundation for a new era of institution-friendly, policy-linked, and highly interoperable digital finance.

This report offers a country-specific analysis of key updates from Q1 2025 and provides practical insights needed by companies and developers operating in the rapidly evolving Asian Web3 landscape.

# Japan: Calm Strategy, Bold Moves

### Gradual Advances Led by Financial Institutions

Japan’s Web3 strategy shows a calm yet planned pattern. Gradual progress is led by financial institutions, with the government taking a more proactive role through market openings and regulatory framework development.

### Cryptocurrency Tax Reform: Lower Rates, Deferred Taxation, Legal Clarity

In Q1 2025, Japan implemented steps to improve the regulatory environment for the Web3 industry. The ruling Liberal Democratic Party proposed a virtual asset tax reform, replacing up to 55% progressive tax rates with a flat 20% capital gains tax. Additionally, transactions like swapping Bitcoin for Ethereum will not be taxed.

This reform is expected to reduce tax calculation complexity and provide clearer guidelines for investors and businesses. Although the 20% rate is an improvement, it is still less competitive than markets like South Korea, which have a non-taxable policy for virtual asset capital gains. However, Japan’s strengthened legal clarity may appeal to companies prioritizing predictability over minimal tax rates.

### Regulatory Reclassification: Integrating Virtual Assets into Traditional Finance

The Financial Services Agency of Japan (FSA) announced plans to reclassify virtual assets as financial products by 2026. This significant shift aims to include virtual assets under the same legal framework as traditional securities, encompassing insider trading regulations and investor protection mechanisms.

### The Stablecoin Momentum: A New Phase in Japan’s Stablecoin Market

Japan made strides in the stablecoin sector. Notably, Circle partnered with SBI Holdings to introduce USDC in Japan, marking the first foreign-issued stablecoin operating under Japan’s 2023 stablecoin legislation. SBI’s exchange became the first licensed electronic payment instrument transaction service provider supporting overseas stablecoins.

Memorandums of understanding signed between SMBC, Ava Labs, and various Japanese partners further boost the stablecoin market. They aim to explore yen and dollar-denominated stablecoin issuance, preparing for market expansion. These developments highlight traditional financial institutions’ growing influence in the stablecoin market. Simultaneously, domestic projects like Progmat are also thriving, showcasing Japan’s rapid evolution into a dynamic market for stablecoin innovation within a stringent regulatory framework.

# South Korea: Signs of Cautious Regulatory Easing

### New Funding: Limited Institutional Investment Opening

South Korea made notable regulatory moves in Q1 2025. The Financial Services Commission (FSC) partially lifted the corporate cryptocurrency trading ban, allowing certain approved institutions, such as law enforcement agencies, universities, and non-profits, to liquidate their held cryptocurrencies. However, these institutions are still not permitted to purchase digital assets and can only sell them.

The more significant change is expected later this year with a pilot program allowing a few listed companies to trade digital assets under capital market regulations. This approach focuses on creating a controlled environment rather than welcoming institutional participation openly.

### CBDC Pilot: Large-Scale Real-World Testing

South Korea has also made significant advancements in its CBDC strategy. In March, the Bank of Korea launched a pilot program involving 100,000 consumers and seven major banks. The program aims to simulate real-world payment scenarios and assess the infrastructure needed for potential nationwide adoption. Retailers like 7-Eleven Korea are set to accommodate CBDC payments as part of the program.

### Unlicensed Platform Ban: A Firm Stance on Investor Protection

While some doors are opening, others remain firmly shut. In March, Korean regulators ordered Google to remove seventeen unregistered cryptocurrency exchange apps, including Poloniex and KuCoin, from the Play Store. This move reaffirms the FSC’s firm stance against unlicensed platforms operating without local registration.

Despite gradual institutional participation and initiatives like the CBDC, South Korea maintains a strict approach to investor protection. While the market is not entirely inaccessible for Web3 companies, it is not fully open either. Opportunities exist for firms that build compliant infrastructures.

# Hong Kong: Bridging the Regulatory Gap to Foster an Institution-Friendly Environment

### From Roadmap to Execution: Leading with the A-S-P-I-Re Framework

In Q1 2025, Hong Kong accelerated its climb to become a key cryptocurrency hub in Asia through regulatory initiatives and institutional cooperation. In February, the Securities and Futures Commission (SFC) announced the “A-S-P-I-Re” roadmap to strengthen Hong Kong’s virtual asset sector.

### Licensing Momentum: Platforms Making Headway

Building on the retail exchange licensing framework introduced in 2023, the SFC approved a total of ten virtual asset trading platform licenses by the end of Q1 2025. For instance, Bullish HK Markets Limited acquired a license in February 2025 to operate as a virtual asset trading platform under Hong Kong’s regulatory framework.

### Growing Stablecoin Sector: Major Companies Entering the Market

According to the Hong Kong Monetary Authority (HKMA), Standard Chartered Bank Hong Kong, Animoca Brands, and Hong Kong Telecom (HKT) announced the formation of a joint venture to issue a Hong Kong dollar-based stablecoin. Global banks and prominent Web3 venture firms collaborating signify growing financial institution interest in digital assets.

Hong Kong’s dual approach of fostering private stablecoin infrastructure and conducting CBDC tests via Project Ensemble highlights a comprehensive strategy for digital currency ecosystem development. This two-track approach experiments with various digital currency models, reflecting Hong Kong’s ambition to be an innovation leader.

# Singapore: Prioritizing Systematic Over Speedy Growth

### Institutional Licensing Momentum: Prioritizing Suitability over Big Names

Hex Trust received a major payment institution license from the Monetary Authority of Singapore, enabling cross-border cryptocurrency transfer services. Similarly, Cumberland SG, the Asia arm of U.S. trading firm Cumberland, also received in-principle approval for a license.

The Monetary Authority of Singapore (MAS) prioritizes companies with sound corporate structures, global reliability, and strict regulatory compliance over flashy names and exaggerated promotions.

### Regional Diplomacy: Singapore-Vietnam Agreement

Notable international developments include Singapore and Vietnam signing a cooperation memorandum on digital asset regulation and supervision. Led by MAS and the State Securities Commission of Vietnam, the agreement aims to enhance collaboration on regulatory frameworks, supervision, and industry standards.

### Singapore’s Strategic Appeal: Robinhood’s Entry

Singapore’s clear regulations and reliability continue to attract global companies. In Q1, U.S. fintech platform Robinhood announced plans to launch cryptocurrency services in Singapore by the end of 2025. This move, based on its recent Bitstamp acquisition, underscores Singapore’s appeal as a strategic base for global companies seeking stable and systematic regulatory environments.

# Vietnam: Moving from Policy Discussions to Implementation

### Establishing a Legal Framework: Taking Shape

In Q1 2025, Vietnam made decisive progress in building a comprehensive legal framework for digital assets. Prime Minister Phạm Minh Chính issued Directive No. 27/NQ-CP, directing the establishment of cryptocurrency regulations within the year. This framework will address asset classification, licensing, Anti-Money Laundering (AML)/Know Your Customer (KYC) obligations, and consumer protection comprehensively.

### Collaboration Between Government and Industry

On March 27, the Vietnam Blockchain Association (VBA) held a high-level conference focused on centralized exchange oversight, featuring major government agencies, over 30 financial institutions, and leading global exchanges like Binance, OKX, and Bybit.

### Traditional Finance Involvement: VBA and Dragon Capital’s Strategic Alliance

At the same conference, the VBA and Dragon Capital (with approximately $6 billion in assets) announced a strategic partnership focusing on research related to tokenized ETFs. Similar to Thailand’s regulatory approval for cryptocurrency ETFs, Vietnam is likely to see regulated products emerge.

# Thailand: Selective Openness with Clear Boundaries

### Approved Stablecoins: Tether and SEC

The Thai Securities and Exchange Commission (SEC) added Tether’s USDT and Circle’s USDC stablecoins to the list of tradable cryptocurrencies on digital asset exchanges in Q1 2025. This decision followed a public consultation process where the majority of stakeholders expressed support.

### Cryptocurrency Sandbox: Testing in a Controlled Environment

In February 2025, the Thai government announced plans to establish a cryptocurrency sandbox in Phuket, set to launch by October 2025. This sandbox will provide a controlled environment for testing digital asset payment systems and refining future policy frameworks.

# Conclusion: The Structured Growth of Asia’s Web3 Market

Asia’s Web3 environment is not chaotic but rather shows coordinated directionality. While the pace varies by country, overall trends are converging toward systematic regulation, clear industry structuring, and long-term investment commitments for the Web3 industry.

For companies operating in this region, the market sends a clear message: the era of rapidly moving while disrupting established orders is over. The environment is now more stable and opportunity-rich for firms that can comply with regulations, develop practical use cases, and adopt locally tailored strategies.

Asia’s next wave of Web3 growth will come from companies that operate smoothly within institutionalized markets, collaborate with major institutions, and grow in harmony with regulations. The path to success has narrowed, but for businesses navigating this path, growth opportunities have never been greater.