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By Fahmi Syed, President of the Midnight Foundation
Asia has become a global hotspot for Web3. Digital-first economies, tech-savvy populations, and deep talent pools have powered that rise — and there’s no slowdown in sight. The region now accounts for six of the world’s top ten countries by crypto usage and hosts some of the most vibrant hubs for collaboration and discourse. It’s also starting to embrace blockchain-based tools to solve real-world problems.
From Korea’s digitalisation of rice purchases and Singapore’s ‘Building Blocks’ humanitarian programme to Japan’s JasmyCoin for device-to-device tokens and network payments, blockchain is improving efficiency and accountability and helping to level the playing field. Local innovators can begin to compete with dominant tech conglomerates and build locally tailored products that resonate with users, whether they are in Seoul, Singapore, Tokyo or Saigon. Governments, logistics firms and healthcare providers can also leverage blockchain’s immutable transaction records to boost transparency and operational efficiency.
Yet despite this progress, many deployments are still held back by one crucial flaw: blockchains are public by design and are not business-ready. Their inherent transparency reveals wallets, users, and activity to any interested party, and no business or government wants to expose sensitive data. Privacy infrastructure is the last necessary component for universal blockchain adoption, enabling all aspects of life and commerce to be processed on chain, with clear benefits for compliance and business operations.
Roaring Stablecoin Adoption in Asia
The need for privacy has steadily come to light with the growing popularity of blockchain based applications like stablecoins, which are seeing especially strong uptake across Asia. These digital currencies took off amid long-held frustrations in the region’s export-dependent economies with SWIFT-based global payment rails, which are slow and cumbersome, affecting margins. When stablecoins arrived, they offered the market country-agnostic rails for money transfers, and Asian economies were quick to pounce.
Countries such as South Korea have taken the lead in embracing stablecoin usage. The nation has become a key regional hub with $42bn in stablecoin volume in Q1, driving local banks to accelerate their integration of digital assets within their offerings. Momentum is building with the legislature, too, with South Korea’s government advancing the Digital Asset Basic Act to impose strict reserve requirements and regulatory oversight on Won-pegged stablecoins.
Vietnam is even further ahead. In June, digital assets were officially brought into the fold, and a five-year pilot for regulated crypto markets was launched. Increasing regulatory clarity in Asia is wind in the sails for stablecoins, with tokens pegged to the USD becoming the default for businesses trading across borders.
Meanwhile, Singapore is focused on establishing itself as the trusted hub for responsible crypto activity. The Monetary Authority of Singapore has taken a hard line on bad actors, tightening rules around consumer protection and speculative trading, while at the same time providing clear legal pathways for legitimate businesses to operate. Despite differences in execution, stablecoins have become common infrastructure across Asia, introducing almost every business to the benefits of blockchain.
Wide-reaching Applications
Beyond widespread adoption of stablecoins, blockchain is increasingly powering non-financial services too, with interesting projects blossoming across the region.
A good example is Thailand’s blockchain-supported electronic voting system. Pioneered seven years ago, it’s still used to strengthen digital democracy.
Another is Singapore’s OpenAttestation framework, initially built to verify lab results during COVID-19, and now expanded into TrustVC, a verification service that ensures the authenticity of international trading documents.
Over in Vietnam the recent deployment of NDAChain, a national blockchain platform, is creating a foundational layer for data verification used by government and private sector systems. In South Korea, a blockchain-based mobile ID verification called K‑DID – backed by the Ministry of Interior and Safety- supports the issuance for mobile drivers’ licences.
The list goes on.
Privacy Shortfalls Limiting Blockchain Take-Up
However, amid the race to roll out blockchain technology, the inherent privacy risks have often been overlooked by Asian businesses and governments. The advantages of lower fees, simpler infrastructure and increased transparency have often crowded out public debate, leaving the fundamental importance of trust and data protection largely ignored.
Transparent by design, every transaction made on a public blockchain is recorded and immutable. The history of any wallet, address or vault interacting with stablecoins is permanently visible to the world and can never be altered or deleted. Most existing deployments of blockchains do not adequately protect sensitive data from prying eyes. Everything from a customer’s financial history to a business’s supply chains or a citizen’s health data may be publicly accessible forever.
This unchecked liability is a sleeping tiger. For individuals, information on blockchains could be used to steal their identity or perpetrate surveillance, among a host of other invasive actions thought up by bad actors. Organisations are also at peril, as sensitive data recorded on blockchains could be easy pickings for fraudsters, and a red flag for regulators. Their business agility is at risk, with major investments and supply chain mechanics available for competitors to study and respond to at their leisure.
For blockchains to reach mass adoption, these unprecedented windows of transparency must be addressed. Blockchains have demonstrated that they are a potential engine for growth for Asian businesses, but cannot hope to become the foundation for all digital platforms until the privacy issue is resolved. Without rational privacy and selective disclosure mechanisms, blockchain will remain an add-on rather than fundamental infrastructure.
Limit Transparency to Fuel Adoption
It’s crucial that we align blockchain’s progressive features, including immutability and transparency, with the data protection protocols and laws that businesses and governments require. Cryptographic techniques, such as zero-knowledge proofs, preserve transaction privacy while enabling auditability. These capabilities enable institutions to minimise risk through features like shielded balances and selective disclosures, but are not yet commonplace.
As more businesses across Asia embrace blockchains, they must look beyond today’s compliance requirements. Now that South Korea, Singapore and Vietnam have established themselves as mature crypto hubs with clear legislation, regulators will continually evolve their guidelines to protect consumers from harm. To convince businesses to extend their adoption of blockchains, we must incorporate privacy as a fundamental layer and recognise zero-knowledge proofs as compliant forms of transactions and disclosures.
Fail to get privacy right, and businesses and governments will delay adoption of blockchain, stunting the growth of such a socially transformative infrastructure. Avoiding such an outcome is paramount for Asia’s fast-expanding crypto ecosystem, and will require developers to put rational privacy at the centre of their design.
This post is commissioned by Midnight and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.
