Institutions Drive Crypto Adoption in Eastern Asia, Chainalysis Report Finds

Eastern
Asia
is
witnessing
a
significant
surge
in
cryptocurrency
adoption,
driven
primarily
by
institutional
investors
in
regions
like
South
Korea
and
Hong
Kong,
according
to
a
recent
report
by
Chainalysis.

Eastern
Asia’s
Crypto
Economy

Eastern
Asia
ranks
as
the
sixth
largest
cryptocurrency
economy
globally,
accounting
for
8.9%
of
the
global
value
received
between
July
2023
and
June
2024.
During
this
period,
the
region
received
over
$400
billion
in
on-chain
value.
The
report
highlights
that
the
region’s
share
of
cryptocurrency
transaction
value
has
remained
stable,
with
centralized
exchanges
(CEXes)
being
the
most
popular
service
category,
accounting
for
64.7%
of
the
value
received.

Most
of
this
activity
is
driven
by
large
transfers
indicative
of
institutional
and
professional
investors.
Eastern
Asia
holds
the
largest
share
of
professional-sized
transfers
compared
to
other
regions
studied
in
the
report.

South
Korea:
Leading
the
Charge

South
Korea
emerges
as
the
largest
market
in
Eastern
Asia,
receiving
approximately
$130
billion
in
cryptocurrency
value.
The
country’s
share
of
transaction
value
has
been
steadily
increasing
since
Q1
2023.
Factors
contributing
to
this
growth
include
mistrust
in
traditional
financial
systems
and
the
adoption
of
blockchain
technology
by
major
corporations
like
Samsung.

A
leader
at
a
top
South
Korean
crypto
exchange
noted,
“The
public’s
perception
of
crypto
as
a
viable
investment
option
has
been
further
solidified
by
the
adoption
of
blockchain
by
major
corporations
in
the
region.”

South
Korea’s
interest
in
altcoins
and
stablecoins
has
also
surged,
especially
after
Bitcoin
(BTC)
surpassed
$70,000
in
January
2024.
Altcoins,
primarily
traded
with
the
Korean
Won
(KRW),
have
seen
higher
outflows
to
global
exchanges
than
any
other
crypto
asset.
The
increase
in
stablecoin
outflows
began
in
December
2023,
coinciding
with
USDT
listings
on
major
Korean
exchanges.

Hong
Kong’s
Regulatory
Push

Hong
Kong
has
emerged
as
a
significant
crypto
hub
in
the
Greater
China
region,
thanks
to
its
supportive
regulatory
framework.
The
region
has
experienced
the
largest
year-over-year
growth
in
Eastern
Asia
at
85.6%,
ranking
30th
globally
on
the
Chainalysis
Global
Crypto
Adoption
Index.

In
June
2023,
Hong
Kong’s
securities
regulator
implemented
a
new
regulatory
regime
for
virtual
asset
trading
platforms
(VATPs),
providing
a
regulated
path
for
retail
investors
to
access
crypto.
By
May
31,
2024,
exchanges
could
only
operate
if
they
were
licensed
or
“deemed”
to
be
licensed.
This
has
led
to
a
shift
towards
regulated
exchanges.

Stablecoins
accounted
for
over
40%
of
the
total
value
received
by
Hong
Kong
each
quarter.
This
is
expected
to
grow
as
the
Hong
Kong
Monetary
Authority’s
regulatory
framework
comes
into
force,
permitting
regulated
stablecoins
for
retail
investors.

China’s
Crypto
Landscape

China
has
had
a
tumultuous
relationship
with
cryptocurrency,
marked
by
numerous
crackdowns
and
regulatory
changes.
Despite
this,
Chinese
citizens
have
turned
to
over-the-counter
(OTC)
platforms
and
P2P
trading
networks
to
preserve
wealth.

Ben
Charoenwong,
associate
professor
of
finance
at
INSEAD,
noted,
“The
general
sentiment
toward
the
Chinese
economy
has
been
negative,
so
people
are
looking
for
ways
to
move
money
out
of
the
country.
The
increasing
use
of
OTC
crypto
in
China
suggests
that
people
are
looking
for
faster
options
to
move
money.”

Future
Prospects

The
burgeoning
interest
in
altcoins
and
diverse
trading
opportunities
signals
a
robust
future
for
South
Korea
as
a
regional
leader
in
cryptocurrency
innovation.
Meanwhile,
Hong
Kong’s
supportive
regulatory
frameworks
are
expected
to
further
accelerate
institutional
adoption
across
Eastern
Asia.

For
more
detailed
insights,
visit
the

Chainalysis
blog.

Image
source:
Shutterstock