Authors: Chi Anh, Ryan Yoon and Yoon Lee
Translated by: TechFlow
Brief Summary
Western Centralized Exchanges (CEX) Target Asian Market: Companies like Robinhood and Coinbase are expanding in Asia, leveraging regulatory-friendly hubs and localization strategies.
Regional Platforms Maintain Strong Positions: Local exchanges continue to hold competitive advantages through their strong market positions, presenting formidable challenges for Western exchanges in gaining market dominance in Asia.
Key to Success Lies in Localization: Success hinges on collaboration with financial institutions, compliance with regulatory requirements, and launching customized products and services that align with local user behaviors.
1. Exploring East-West Dynamics in the Crypto Market
[The rest of the translation follows the same professional and accurate approach, maintaining the specific translation rules for proper nouns and technical terms.]3.1 Local Exchanges Dominate the Market
South Korea is a typical representative of a market dominated by local exchanges, where a strict regulatory framework has allowed platforms like Upbit and Bithumb to thrive. These platforms gain an advantage by complying with strict measures (including "Travel Rule" requirements and financial reporting obligations). These regulations create high entry barriers, making it difficult for Western CEXs to enter the Korean market without significant licensing and compliance investments.
Japan is similarly a highly regulated market, with local exchanges like bitFlyer and Coincheck continuing to dominate. The Japanese Financial Services Agency (FSA) implements strict licensing requirements, ensuring only highly compliant entities can operate. Foreign exchanges like Kucoin and Bybit have received regulatory warnings, further highlighting the obstacles Western companies face when entering the Japanese market.
On the other hand, Binance successfully entered the Thai market through a strategic partnership with Gulf Energy, a major Thai business group. The two established a joint venture to launch a regulated digital asset exchange. This collaboration secured Binance approval from the Thai Securities and Exchange Commission (SEC), ensuring compliance while leveraging Gulf Energy's deep commercial network in Thailand.
By partnering with influential local companies, Western exchanges can find compliant and scalable paths to enter restrictive markets. This approach not only reduces regulatory friction but also benefits from existing business network support. Instead of directly competing with local strong players, Western exchanges might achieve greater success by establishing local partnerships, focusing on institutional services, or offering specialized financial products that meet regional needs.
3.2 Global Exchanges Dominate the Market
Countries like Vietnam present a markedly different market landscape. Due to the lack of clear regulations for crypto exchanges, local trading platforms are limited in development. Even where local exchanges exist, high tax rates drive investors to seek alternatives on global exchanges.
In this regulatory vacuum, global exchanges like Binance, OKX, and Bybit have significantly expanded their influence. These platforms successfully meet user needs by offering low fee policies and peer-to-peer (P2P) services, gaining market share especially in areas where local exchanges fall short.
As a market entry strategy, global exchanges actively employ grassroots marketing techniques to quickly attract users. These strategies include launching localized Telegram communities, offering referral reward programs, and enhancing local language support. These initiatives effectively improve market penetration by establishing direct communication channels with local users.
However, many platforms typically operate in legal gray areas without clear regulatory frameworks. Yet, with global regulations becoming stricter, the necessity of complying with local legal requirements has significantly increased. This change is driving major operational adjustments for global exchanges.
Some notable cases further highlight this trend. For example, in January 2024, Indian financial enforcement agencies requested blocking IP addresses of nine foreign exchanges, including Binance, until Binance promised to comply with regulations. In November 2023, the Philippines Securities and Exchange Commission warned Binance for unauthorized operations and formally instructed blocking Binance's website and app IP addresses in March 2024. These actions clearly demonstrate increasingly strict regulatory oversight.
In response, global exchanges are gradually abandoning operations in legal gray areas, instead adjusting their businesses to fit clear legal frameworks. Compliance is no longer optional but a key foundation for sustainable, long-term operations. As the cryptocurrency industry continues to mature, this trend is expected to intensify.
