HashedOpenResearch
Nov 09, 2023
Written by Miseon Lee, Dongin Kim, Minsun Cho
※ This content was originally posted on an external platform. For additional notes, please refer to the end of the main text.
Table of Contents
Executive Summary
Companies venturing into the crypto payment market
Key Variables to Accelerate Mass Adoption
1. People receiving salaries in cryptocurrencies
2. Crypto assets in mobile apps (Grab, PayPal)
3. Japan opens a 1,000 trillion-yen payment market
The Impact of Stablecoin Expansion on Existing Industries
1. Impact on the banking industry
2. Impact on the credit card industry
3. Impact on crypto exchanges (CEX vs. DEX)
4. Impact on the on-chain market (Liquidity, RWAs)
Executive Summary
Mobile wallets make it easy for users to access and perform wallet-to-wallet transactions
Companies with a global reach, such as Grab and PayPal, have begun offering in-app crypto mobile wallet services. Instead of using complicated private keys, they use PIN codes to make it simpler for users to manage their wallets and access their assets. This change is expected to boost the desire for people to store their assets independently rather than relying on third parties. As a result, the dominance of existing exchanges may decrease, as it becomes easier for users to transfer assets between wallets and buy/sell major cryptocurrencies within the app.
The increased issuance of stablecoins aims to enhance liquidity in on-chain markets.
Amendments to Japan's Financial Services Law will allow stablecoin issuance starting in June. Progmat, initially a project under Mitsubishi Trust Bank, became an independent company in October. It has formed a consortium with 214 Japanese companies to create a specialized tokenization platform. This move is expected to lead to more financial institutions in Japan and other places issuing stablecoins. This, in turn, will boost liquidity in on-chain markets, increase the market value of stablecoins, and generate more interest in Staking-RWAs.
A new financial and economic order may emerge as industry boundaries weaken
Deel, an HR platform, reports that in the latter half of 2022, 4% of total salaries were paid in cryptocurrency. Most of the recipients are from emerging economies that lack traditional banking systems. Cryptocurrency salaries can be sent directly to a personal wallet without the need for a traditional bank account. This shift could lead to the establishment of a new financial and economic system, especially as the digitally native generation, representing 26% of the world's population, engages in economic activities. To stay competitive and foster growth, banks and card companies should explore the potential of blockchain technology.
Companies venturing into the crypto payment market
Crypto economy in our daily lives - Initiating the journey toward widespread adoption
The crypto market has faced significant challenges, including the Tera-Luna debacle, FTX exchange bankruptcy in 2022, and the Silvergate and SVB bank failures in 2023. Global cryptoassets' total market capitalization, as reported by Coingecko, peaked at $2.8 trillion in November 2021 but has since dropped to $1.1 trillion, nearly two years later(as of October 17,2023). However, despite these price fluctuations, there have been significant recent developments in the blockchain industry that could signify a pivotal moment. We have covered these developments in this report, and they are likely to be remembered as catalysts for the widespread adoption of the crypto economy in the future.
Meanwhile, let's explore why widespread adoption hasn't happened yet. The bankruptcy of major cryptocurrency exchanges has made people less trusting of third-party custody. Moreover, it has been difficult for individuals to handle their own assets because it's not easy to store the secret phrases (mnemonics) and carrying around cold wallets has been inconvenient. Also, cryptocurrencies have had limited use in the real world beyond trading, which has held back widespread adoption.
However, some recent developments are changing the game. Companies like Grab and PayPal, which have users worldwide, have integrated crypto wallets into their apps. This makes managing crypto assets much more convenient and accessible. Additionally, Japan's Mitsubishi UFG plans to start issuing stablecoins early next year. These changes are expected to make it easier for people to get into crypto, removing the obstacles that were holding back mass adoption and fostering genuine growth in the crypto ecosystem.
Exploring why big countries and global corporations are venturing into the crypto payments market
On September 14, Grab, an app with approximately 180 million active users in Southeast Asia, introduced a Web3 wallet service for storing and sending NFTs. They partnered with Circle, the issuer of the USDC stablecoin, to power this wallet. The service was initially launched as a pilot project in Singapore, and it's worth noting that the Monetary Authority of Singapore has joined this initiative. As a first step towards Central Bank Digital Currency (CBDC) development, the Monetary Authority of Singapore created Purpose Bound money (PBM), which allows you to store and use NFTs in the form of PBM within the Grab app. This move will provide Singaporeans with the opportunity to naturally use NFTs as a means of payment.
Until now, most people have seen crypto assets like stablecoins as new investments primarily for trading. But imagine if your everyday apps could be used to order food or pay for a taxi by crypto assets. What if you could send money instantly using just a mobile crypto wallet, without needing a traditional bank account? How will banks fit into this new picture? If cryptoassets can serve as both online and real-world money, they could reshape finance into something entirely new, blurring the lines between technology, finance, payments, and more.
Global companies and governments are racing to gain an edge in this evolving landscape. Grab, Telegram, and PayPal have introduced user-friendly web3 wallet services for mobile, making it easier for people to access crypto assets. In June, Japan changed its Financial Services and Settlement Law to allow qualified financial institutions to issue stablecoins. The Bank of Korea is also getting in on the action, announcing a plan for “CBDC utilization testing” in collaboration with the Financial Services Commissionand the Financial Supervisory Service on October 4.