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China warns foreign spies about crypto, Singapore dominates Asia: Asia Express
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Asia Express: Singapore’s Crypto Boom Contrasts With China’s Warning and Korea’s Liquidity Gap
Asia’s crypto markets are diverging sharply, with Singapore’s digital-asset activity surging while Beijing tightens its warnings and South Korea considers a rule change that could formalize professional liquidity provision. Singapore saw activity climb 55.4% to $284 billion in the year ended June 2026, according to Chainalysis. The contrast matters because it shows regional adoption is being shaped less by a single cycle than by each government’s approach to enforcement, institutional access, and market plumbing.
China’s latest signal builds on a long-running campaign against digital currencies. The Ministry of State Security argued on social media that cryptocurrencies facilitate money laundering, cyberattacks, and espionage, describing them as “accomplices” of overseas “anti-China hostile forces.” Beijing prohibited cryptocurrency exchanges in 2017, stopped mining in 2021, and has treated crypto-related business activity as illegal. The ministry’s focus is therefore part enforcement rhetoric and part political messaging.
The warning targets a misconception: major cryptocurrencies are generally pseudonymous, not anonymous. Bitcoin and Ethereum publish transaction ledgers, letting analysts trace addresses, cluster wallets, and link users to exchanges or identified entities. Privacy coins such as Monero and Zcash obscure more, but are not automatically untraceable because metadata, endpoints, and operational mistakes can still expose users. The message to intelligence services is clear: blockchain analytics can turn crypto payments into an evidentiary trail.
Singapore, by contrast, is consolidating its position as the region’s largest crypto economy. Chainalysis said total activity in the city-state rose 55.4% to $284 billion, while the wider Central, Southeast Asia and Oceania region contracted 6.8%. Institutional platform activity jumped 94% to $60 billion, but Chainalysis cautioned that growth came mainly from high-volume activity at a small group of existing platforms, not a wave of new entrants. Market makers, over-the-counter firms, and institutional brokerages accounted for much of the concentration.
South Korea’s debate was prompted by a dramatic test of stablecoin liquidity. Upbit opened JPYC, a yen-backed token, on Sept. 17 at 12 won per coin; the price reached 37.6 won within an hour, more than four times its reference value. The exchange attributed the spike to limited liquidity, exposing the difficulty of maintaining tight prices when trading is thin. The Financial Services Commission said it will review market-making systems to improve efficiency and stability.
Current rules complicate that proposal. South Korea’s Virtual Asset User Protection Act has no exemption for market-making from provisions against market manipulation, leaving professional liquidity providers uncertain about their legal position. MoonPay has separately launched a South Korean subsidiary to work with local banks on remittances, payments, settlement, and digital-asset distribution, although it still needs regulatory approval. The moves indicate growing institutional demand, but they also place compliance and licensing at the center of market expansion.
Industry reaction will hinge on whether rules reward liquidity without weakening oversight. Singapore’s numbers may strengthen its case as a regulated base for institutional crypto activity, although concentration could increase counterparty and systemic risks. China’s message will likely reassure regulators that traceability supports enforcement, while privacy-focused communities may criticize it as overbroad. Policymakers now face pressure to clarify market-maker status, require reserve and disclosure standards for stablecoins, and fit digital-asset rules into broader payments competition.
