Hong Kong has emerged as a key player in the cryptocurrency market, particularly when it comes to large institutional transactions. According to a recent update from Chainalysis, Hong Kong sees a larger share of transaction volume in deals worth $10 million or more compared to other countries in the region, including mainland China.
On the other hand, South Korea appears to have the least institutional-driven market in the region. This can be attributed to local regulations that make it challenging for financial institutions to trade cryptocurrencies. South Korea requires a specific type of bank account linked to an individual in order to open a crypto exchange account, making it difficult for institutional players to enter the market.
Japan, on the other hand, seems to have a transaction breakdown that aligns more closely with global averages. The retail versus institutional transaction balance in Japan is in line with the rest of the world, according to the Chainanalysis report.
When examining the breakdown of the most-used crypto platform types in Eastern Asia, interesting regional trends emerge. Japan closely follows global markets, with activity split almost evenly between centralized exchanges and various types of decentralized finance (DeFi) protocols. South Korea, on the other hand, sees a majority (68.9%) of transaction volume associated with centralized exchanges and less with DeFi protocols.
One possible reason for this discrepancy in South Korea is the negative sentiment surrounding the blowup of TerraLuna. This incident affected a large number of South Korean crypto users and was extensively covered in the local media. Additionally, South Korea implemented several new rules governing the conduct of centralized exchanges after the TerraLuna incident, which may have increased Koreans’ trust in centralized exchanges compared to DeFi protocols.
China and Hong Kong also have unique breakdowns in the most-used crypto platform types. However, these numbers should be taken with caution as much crypto activity in both countries occurs through over-the-counter (OTC) markets or through informal, grey market peer-to-peer businesses.
Hong Kong’s crypto market, in particular, offers a variety of use cases for both local users and foreigners. Furthermore, the apparent tacit approval of Hong Kong’s new crypto initiatives could signal that the Chinese government’s stance on cryptocurrency is evolving. This development could lead to interesting opportunities and changes in what was once a major player in the crypto landscape.
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