According to a recent report from the blockchain data platform Chainalysis, cryptocurrency activities in Eastern Asia have experienced a significant decline in recent years. The report reveals that the region, which once held a substantial share of the global crypto market, now constitutes only 8.8% of global crypto activity over the past year.
The report specifically ranks East Asia as the world’s fifth most active crypto market, highlighting its gradual descent in the rankings. This decline in market share can be traced back to the implementation of stricter cryptocurrency regulations in the region.
Notably, the report attributes a significant part of this decline to China’s ban on various forms of crypto-related activities. Dating back to 2013, the Chinese government imposed a permanent ban on crypto mining and trading in 2021. Prior to this ban, China had experienced a surge in crypto-related activities.
However, the report suggests that the strict regulatory environment in China may be showing signs of softening. Despite its large population, China currently ranks third in the region in terms of crypto trade volume, lagging behind South Korea and Japan.
Furthermore, the report points to the increasing crypto activities in neighboring Hong Kong as an indication that the Chinese government may be relaxing its restrictions. Hong Kong, an administrative region in China, has witnessed a surge in crypto investments over the past year.
The report highlights Hong Kong’s growing over-the-counter (OTC) crypto market, which has attracted institutional investors and high-net-worth individuals. The founders of two local OTC crypto firms in Hong Kong attribute this growth to international transactions and individuals seeking to store their assets in crypto.
According to these founders, institutional investors in Hong Kong, many of whom are foreigners, use the OTC market to move their assets away from local banks. Additionally, ordinary individuals turn to OTC trading to gain greater financial control.
It’s important to note that while Chinese investors have shown interest in the region, the report emphasizes that this doesn’t necessarily imply an imminent change in China’s stance on cryptocurrency regulation.