The Big Whale: You arrived at Singapore a year ago to take over commercial management of Chainalysis in Asia. What surprises you most about the Asian market?
Diederik van Wersch: Beyond the obvious cultural differences, I would say that the main difference is clearly the market and the size of the companies. With a few exceptions, it's here that there are the biggest crypto companies on the planet like Bybit, Cryptocom, BitGet, Gateio, Animoca Brands and others.
In Europe, the ecosystem is very interesting, with some very fine companies, but their size is generally smaller. Even in the US, where they have Coinbase and Kraken, the market is not as big.
How do you explain the size of the companies in Asia?
The size of the market and adoption, quite simply. When you have countries the size of Indonesia or the Philippines, with on top of that people who have difficulty accessing banking services or want to protect themselves against inflation, inevitably that creates demand and the companies have the size to match that demand.
In Asia, especially in the countries of south-east Asia, there are a lot of projects linked to decentralised finance (DeFi), gaming, and obviously also a lot of activity around everything to do with money transfers.
Many people don't work in their country and send funds back home via crypto or stablecoins like Tether's USDT.
What does Asia represent in terms of business for Chainalysis?
I'm necessarily biased, but Asia is very important for us. Asia is a market that has been slow to emerge, only from 2020-2021 with Covid and liquidity injections, but now it's a must. The adoption is there and things are only going to accelerate with companies.
We now have 100 people in Asia with offices all over the place. If you take Asia in the broadest sense, we even have a presence in India and the Middle East.
Chainalysis is known for working with private companies, but also with the public sector. Which governments do you work with?
We work closely with governments across the region, particularly on the fight against scams. We help them identify those responsible and recover assets linked to the scams.
We also work with regulators to enable them to ensure that companies, especially platforms, apply anti-money laundering policies properly; this can also affect drugs and terrorist financing.
You are based in Singapore, which is now a hotspot in Asia and even the world. How do you explain this?
Singapore has succeeded in creating a particularly favourable environment for businesses, with clear rules and advantageous taxation. The authorities - the Monetary Authority of Singapore (MAS) - have also understood very well the advantage they would gain from adopting a benevolent stance on cryptos.
They have created initiatives such as Project Guardian, which promotes collaboration between the public and private sectors, and they provide a clear regulatory framework for cryptocurrency businesses. As a result, companies are flocking in from all over, and even from places like Hong Kong.
Hong Kong seems to have lost ground in Asia, not least with Beijing taking back control. Do you also make this observation?
Hong Kong is still Hong Kong, meaning a leading financial centre. Things haven't always been clear, but cryptocurrencies remain a topic. They launched Bitcoin and Ethereum Spot ETFs a few months ago, they have many banks present there and crypto players like Animoca Brands, so they shouldn't be forgotten.
What do you think would be the biggest challenge for Chainalysis in Asia?
Chainalysis is one of the best known and established companies in the crypto landscape. But, as with any business, market cycles represent the main challenge. We need to succeed in developing a business that is as insensitive as possible to market changes.
The Bear Market we've just been through has reduced trading volumes and penalised many companies. At the end of the day, this ends up affecting us.
As you said, the markets seem to be picking up again. Apart from the price of bitcoin, what is telling you that?
There is clearly the number of companies interested in the subject. It's not necessarily materialising in the form of contracts yet, but there's definitely a renewed interest. And then there's the number of transactions on blockchain, which is at a record high.
We've published a report on the subject which shows that volumes are now higher than the previous peak. These figures show that the actual use of cryptocurrencies is progressing. Adoption is not just measured by the price of bitcoin.
In Singapore, where I am based, we have seen an increase in cryptocurrency payments, particularly among merchants. In the second quarter, merchants processed almost $1 billion in cryptocurrency transactions, which is a record for the country.
This figure is all the more interesting because Singapore is well equipped from a financial point of view, so people aren't using cryptos because there's no way to pay, but because they find it more efficient.
