Southeast Asian Financial Institutions Turn to Ethereum Blockchain


Blockchain innovation is booming across Southeast Asia as the region is home to a number of fintech companies and global crypto companies. In particular, Singapore has become one of the most crypto-friendly countries in the world. This was recently highlighted in a report by the Gemini crypto exchange, which found that 67% of the 4,348 respondents currently own a crypto. The report further notes that Ether (ETH) is the most popular cryptocurrency in the region, with 78% of surveyors claiming to own the digital asset.

Interestingly enough, the Ethereum blockchain may also be the network of choice for financial institutions based in Southeast Asia. Charles d’Haussy, managing director Asia at blockchain company ConsenSys, told Cointelegraph that businesses in the region looking to boost cross-border e-commerce payments are favoring Ethereum for a number of reasons:

“From a technical standpoint, different central banks and financial institutions that have explored various technologies always tend to revert to the core functionality offered by Ethereum.”

Specifically, d’Haussy mentioned that financial institutions find it attractive that Ethereum offers a smart contract layer on a blockchain network, while other competing technologies may only have a smart contract layer without a blockchain. D’Haussy added that the Ethereum network also offers financial institutions the ability to create accounts for certain tokens. He added that the process would seem familiar to many since “you have a bank account and some banknotes that you can put into that account. This can be replicated in many use cases. Other technologies explored in the past were unable to provide both accounts and tokens. “

Ethereum for finance in Southeast Asia

Given Ethereum’s unique features, Haussy noted that financial institutions across Southeast Asia are exploiting it in several ways.

For example, Daniel Lee, Executive Director and Head of Business and Listing at DBS Digital Exchange (DDEx) – a digital exchange backed by DBS, one of Asia’s largest banking groups offering trading services for various digital assets, including security tokens and cryptocurrencies – told Cointelegraph that the company uses Ethereum for its security token exchange:

“We use Ethereum as the authorized blockchain for this purpose. The tokens we use are based on ERC-777, which allows us to create an exchange for this product. And because everything runs on a blockchain, it replaces your traditional central custodian or clearing house.

In particular, it is possible to list ERC-777 tokens which are backed by stocks, fixed income or other real world assets. These quotes can then be offered for secondary resale. Lee explained that a security token exchange can make it easier to sell assets on a secondary basis: “Now when someone wants to sell those assets, they can just post it as an offer on the exchange. And whoever wants that particular amount, they can just lift that offer. “

Additionally, Lee noted that DDEx has been looking at other blockchain networks besides Ethereum to accommodate its security token exchange. However, he noted that Ethereum was the better choice because of how easy it was to find programmers familiar with Solidity, the programming language designed to develop smart contracts on Ethereum.

Related: Are Institutional Investors The Key Silent Partners In Crypto?

D’Haussy further pointed out that Partior – a blockchain-based interbank clearing and settlement network jointly established by DBS Bank, JP Morgan and Temasek – is also built on Ethereum. As part of the Partior project, Lee announced that DDEx will soon issue its own Singapore dollar stablecoin on the Partior network. According to Haussy, this is the case for similar use cases due to the diversity of providers, the wealth of developers, and the variety of services available on Ethereum. “Many other blockchains will not be able to provide such a rich and mature ecosystem. Therefore, this is a refusal for many financial institutions,” said d’Haussy.

It’s also worth noting that China’s involvement in blockchain innovation is on the rise. Although d’Haussy believes the region is not enthusiastic about cryptocurrencies, he mentioned that China is a big builder of blockchain networks. For example, although China recently warned state-owned companies to stop mining cryptocurrencies, Haussy mentioned that ConsenSys Quorum – ConsenSys’ Ethereum-based distributed ledger protocol – is doing well in the region. : “Mainland authorized chains are the preferred frameworks and Quorum is currently used for Blockchain-based Service Network, a national blockchain project supported by the Chinese government.

Will Ethereum’s limitations hamper adoption?

While Ethereum can be used widely across Southeast Asia for a variety of purposes, concerns remain about high network gas charges and scalability issues. But, according to Lee, DDEx uses Ethereum on an authorized blockchain to list and trade security tokens, so high gas charges aren’t a problem. “We are not using mining as a consensus mechanism. We use IBFT as a consensus mechanism. Based on that, the gasoline charge doesn’t really apply to us, ”he said. D’Haussy added that the high gas fees further demonstrate that Ethereum is in demand, noting that layer two solutions are being implemented to solve the main challenges facing Ethereum today.

Even though it may be the case, some financial institutions in Southeast Asia have started to look to other blockchain networks. For example, RippleNet – the global payments network of blockchain company Ripple – is used across the region for cross-border transactions. Brooks Entwistle, RippleNet’s managing director for APAC and MENA, told Cointelegraph that Asia-Pacific has become one of the fastest growing regions for RippleNet with transactions that have more than doubled since third quarter of last year.

Entwistle added that following Ripple’s intention to acquire a 40% stake in cross-border payment processing center Trangloa, the company has facilitated a new on-demand liquidity corridor in the Philippines. He also explained that Japanese money transfer company SBI Remit uses Ripple’s ODL service to transform remittance payments for the large Filipino diaspora in Japan. Entwistle explained:

“This has profound implications for accelerating financial inclusion and creating equity and economic opportunity, especially in a region that includes some of the largest remittance recipient countries in the world, such as the Philippines.

As such, while Ethereum continues to have a noticeable impact in Southeast Asia, other blockchain solutions are indeed on the rise. For example, the Solana blockchain has captured the interest of companies due to its high transaction speeds and low costs. Henri Arslanian, crypto leader and partner of PwC, told Cointelegraph that other blockchain networks are being used as financial institutions become more familiar with the different Layer One solutions:

“Each Layer 1 solution has different characteristics, ranging from speed and scalability to transaction costs and carbon footprint. Each organization will have their own priorities and use case requirements that may cause them to choose one network over another.


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