3 key ways Web3 is transforming Asia’s financial markets

Arthur Lewin, account manager at VISEO Asia, emphasizes this potential: “We hope that as leading countries in Asia mature in Web3 adoption, the region can create more synergy for the global ecosystem and drive adoption”

While Web3’s definition continues to evolve, its core principle remains clear: decentralization empowers individuals by giving them ownership of their data and assets. This makes Web3 more than just a technological shift—it is a fundamental reimagining of digital and financial interactions. In Asia, where mobile-first economies and digital banking innovations are already thriving, Web3 could redefine financial inclusion and create new economic opportunities.

For investment banks, the real opportunity in Web3 lies in the disruption of underlying financial infrastructure. The tokenization of assets, digitization of trade lifecycle processes, and automation of clearing and settlement functions hold immense potential. Decentralized finance (DeFi), a key component of Web3, is driving innovation in Asia’s capital markets, with governments and financial institutions exploring its applications for cross-border payments, trade finance, and asset management.

DeFi’s three fundamental pillars – distributed ledgers, tokenization of digital assets, and smart contracts – are continuously evolving to challenge traditional financial structures. In contrast to legacy financial ecosystems that rely on intermediaries and centralized oversight, DeFi leverages blockchain-based applications to enhance transparency, reduce costs, and democratize access to financial services. This is particularly relevant in Asia, where digital payments and fintech adoption are at an all-time high, driven by mobile penetration and regulatory support for digital transformation.

Web3 Adoption in Asia’s Financial Sector

Web3 technologies are no longer theoretical; they are already shaping real-world applications. In 2018, the World Bank issued bond-i, the world’s first blockchain-based global bond, enabling same-day settlement and eliminating cumbersome paperwork. More recently, Asia has emerged as a leader in blockchain-powered financial innovation, with governments in Singapore, Hong Kong, and Japan spearheading initiatives to integrate distributed ledger technologies (DLT) into financial services.

Singapore, renowned for its leadership in the Web3 space, has been particularly proactive in supporting fintech solutions. In 2023, the city-state’s central bank allocated $112 million to bolster local fintech initiatives, with a strong focus on emerging Web3 technologies. As a result, major crypto platforms such as Blockchain.com, Circle, Crypto.com, and Coinbase have sought licenses to operate within its jurisdiction, solidifying Singapore’s reputation as a global Web3 hub.

DLT is particularly promising for over-the-counter (OTC) derivatives markets, where complex paper-based processes can be replaced by smart contracts that automate trade execution and collateral movement. This reduces reconciliation complexities and minimizes the number of intermediaries, leading to greater efficiency and lower operational risks. Additionally, shared ledger technology enables real-time visibility of liquidity positions across multiple accounts—one of the most pressing challenges for intraday liquidity management. With the rise of Asia-based digital banks and decentralized finance platforms, we are also seeing the emergence of actively traded intraday liquidity markets that help financial institutions optimize liquidity management.

Regulatory landscape and risk mitigation

Despite Web3’s promise, skepticism remains, particularly in light of past market volatility and the collapse of centralized crypto platforms such as Celsius and FTX. However, it is crucial to separate speculative cryptocurrency trading from the foundational benefits of Web3 technology. Governments across Asia are taking proactive steps to regulate digital assets and blockchain-based finance. Singapore’s Monetary Authority (MAS) and Hong Kong’s Securities and Futures Commission (SFC) are pioneering regulatory frameworks that encourage innovation while ensuring financial stability.

The European Securities and Markets Authority (ESMA) laid the groundwork with its 2023 Markets in Crypto-Assets (MiCA) framework, but Asia is now shaping its own regulatory path. Japan’s Financial Services Agency (FSA) has introduced stringent rules to protect investors, while South Korea is developing comprehensive guidelines for digital asset service providers. These regulatory efforts are essential for building trust in Web3 and encouraging institutional adoption.

The Road ahead: Asia’s Role in Web3’s Future

While uncertainties around Web3’s adoption remain, Asia is at the forefront of this generational technology shift. The region’s deep fintech expertise, forward-thinking regulators, and strong digital economy position it as a key driver of Web3 innovation. Investment banks and financial institutions that embrace Web3’s potential – while navigating regulatory complexities – stand to gain a competitive advantage in the future of decentralized finance.

As Asia continues to lead in digital payments, blockchain adoption, and fintech development, Web3 will become an integral part of the region’s financial infrastructure. The next phase of this transformation will require collaboration between regulators, financial institutions, and technology providers to build a resilient and scalable Web3 ecosystem. The firms that prepare now will be the ones shaping Asia’s digital finance landscape in 2025 and beyond.

Tony Pottier, Digital Director at VISEO Asia, highlights the surging demand for blockchain expertise in Asia: