The global narrative on crypto regulation is becoming more and more out of touch. This has never been clearer than in the context of Southeast Asia. We're so busy debating the degree of decentralization, a metric that feels ripped from a Silicon Valley whiteboard, that we're missing the forest for the trees. Or maybe it’s because just underneath that canopy, thousands of artists, creators, and entrepreneurs still have room to grow. They are using blockchain technology to build the future that legacy systems have robbed them of. Are we seriously going to allow lofty discussions over whether or not to pursue decentralization kill that excitement?

Western Lenses, Local Realities Clash

The regulatory framework being discussed in the US right now is completely focused on this singular concept. It thinks that a cryptoasset’s regulatory status should vary based on their decentralization. Now, if no one person or company has control over the entire network, poof, it’s not a security. This perspective is deeply rooted in the Howey Test and the SEC’s current mindset. It feels like square peg, round hole in execution. It has all the charm of the depressing art scenes of Bali, Bangkok, or Hanoi. As unfit for purpose as a revenant in a Roman funeral.

Think about it. We're applying a test designed for Wall Street securities to digital art created by a single mother in the Philippines who's using NFTs to feed her family. The disconnect is staggering.

This fixation on decentralization is a dangerous red herring. It's like arguing about the horsepower of a car when the real issue is whether or not it's roadworthy. The real question isn't how decentralized a crypto network is, but what is the fundamental nature of the asset itself? Or does it simply give the holder a right to be paid, as an employee would be paid under labor law. If it does not, then what’s the point of trying to stretch the application of securities regulations intended for those kinds of assets?

Artistic Freedom, Financial Inclusion Threatened

Southeast Asia has been a long-time hub of artistic innovation, and blockchain technology is opening new doors for artists in this region like never before. NFTs allow them to directly monetize their work, bypass traditional gatekeepers like galleries and record labels, and connect with a global audience. Access to traditional financial services is notoriously difficult in this southern region. Consequently, artists continually find it challenging to be compensated fairly for their work.

Meet the young Cambodian painter who just scored a spot on the world stage. Importantly, she now has the ability to sell her creations directly to collectors, using an NFT marketplace. She’s bypassing corrupt local officials and a predatory, legacy banking system. By doing so she’s not only building a sustainable career, but she’s empowered herself. Now imagine an inflexible regulatory system, crafted thousands of miles away in Washington DC, that does just that – make it all but impossible for her to run her business. It's a tragedy in the making.

These aren’t just numbers—these are real individuals with hopes and dreams. And now, we’re discussing how blockchain technology could help promote financial inclusion and empower marginalize communities. Are we really going to endanger all that because we have our heads in the sand in an arbitrary theoretical argument about decentralization.

This new approach is not just misguided, it’s downright dangerous. When we focus on the wrong metrics, we stifle innovation and economic growth. This process shuts out a dynamic pool of artists and makers.

A New Lens, A Call For Action

So let’s stop scoring progress on how much we’re decentralizing. To avoid reading more into the terms than there is, it’s important to focus on what the asset really is. Second, does it constitute a debt claim on a company’s assets, either revenues or profits. If it doesn’t, then don’t impose a very strict security regime on it. If not, then let’s figure out the premium regulatory frameworks better suited to distinctive features of cryptoassets.

This approach offers greater predictability and clarity. All other things equal, it’s simpler to determine whether an instrument is a claim on an operating enterprise. Judging how decentralized the process is, is a whole different ballgame. It allows us to focus on the real issues, such as consumer protection and market integrity, without stifling innovation.

We need to hear and heed the voices of Southeast Asian artists and game developers. To do that, we must first identify their specific needs and challenges. Let’s get the new regulatory framework in place that will allow them to flourish and succeed. We want to inspire their creativity and increase their opportunities, not dampen them.

The long-term future of crypto in Southeast Asia hangs in the balance. Let's make sure we get it right. This is the moment to continue to support artists and entrepreneurs—not to clamp down on them with outmoded regulations.

  • Support Southeast Asian artists: Buy their NFTs, share their work, and amplify their voices.
  • Contact your elected officials: Urge them to support a more nuanced regulatory approach to crypto that considers the specific context of emerging markets.
  • Engage in the conversation: Share this article, discuss the issue on social media, and help raise awareness about the importance of protecting artistic freedom and financial inclusion in Southeast Asia.

The future of crypto in Southeast Asia is at stake. Let's make sure we get it right. Let's choose to empower artists and entrepreneurs, not stifle them with outdated regulations.