Boom, Bust, and Catch-Up: Non-Fungible Tokens, Informal Financial Inclusion, and Regulatory Lag in Southeast Asia

Abstract

The Philippines was briefly the world's largest market for non-fungible token (NFT) ownership, driven by the play-to-earn game Axie Infinity during the pandemic, with Vietnam and Thailand close behind. This conceptual paper examines that episode as a case in which NFT-based play-to-earn income functioned as an informal financial-inclusion mechanism during an economic shock, while regulatory and fiscal responses across the Philippines, Vietnam, Thailand, and Indonesia lagged behind adoption. Because no bulk dataset exists for NFT activity at the country level, the paper builds a thematic literature synthesis — drawing on financial-inclusion theory, fintech regulatory-lag theory, NFT/play-to-earn market scholarship, and comparative Southeast Asian digital-asset regulation — rather than an econometric analysis. The review finds that informal, unregulated income channels are theoretically and empirically recognized as legitimate resilience mechanisms under shock, and that fintech regulation generally follows rather than anticipates adoption. Applied to the four focal countries, the evidence shows genuine variation in regulatory posture but a shared pattern of reactive timing, with attention arriving after play-to-earn adoption had already peaked. The paper's central finding is that NFT-based play-to-earn income cannot be resolved into either an inclusion narrative or a fragility narrative alone; it exhibits both simultaneously, a hybridity the existing literature does not directly reconcile. This reframes the region's regulatory-lag problem as one of protecting participants after a cycle has contracted, not only shaping innovation still underway, and points toward retrospective consumer-protection instruments and earlier monitoring infrastructure as complementary policy responses. The paper is explicitly positioned as a precursor to future survey- or transaction-data-based empirical work.