A new report from blockchain analytics firm Chainalysis reveals that Hong Kong has experienced the highest year-over-year growth in cryptocurrency adoption within Eastern Asia.
The report shows that the special administrative region in China has seen an 85.6% increase in crypto adoption. Chainalysis also stated that this places Hong Kong as the 30th-ranked country globally in terms of crypto adoption.
As per the report, Eastern Asia continues to be a major crypto player globally. It also ranks as the sixth-largest crypto economy globally. The region accounted for 8.9% of global value received between July 2023 and June 2024. Additionally, the total on-chain value exceeded $400 billion during this period.
China’s crypto landscape changes amid restrictions
China’s ongoing crackdown on crypto activities began in earnest in 2021. However, the country’s citizens have found alternative ways to engage with crypto.
The report highlights a major shift towards over-the-counter (OTC) platforms and peer-to-peer (P2P) trading networks. This is particularly evident since mid-2023.
“Nowadays, if you want to move money out of China through traditional unofficial means like using mules, fees can be as high as 25 to 30 percent. The increasing use of OTC crypto in China suggests that people are looking for faster options to move money,” said Ben Charoenwong, associate professor of finance at INSEAD’s Asia Campus.
Hong Kong emerges as regional crypto hub
Despite mainland China’s crypto restrictions, Hong Kong has positioned itself as a crypto hub in the Greater China region. Hong Kong’s regulatory framework has allowed for more flexibility in fostering financial innovation.
The report shows that Hong Kong has witnessed the largest year-over-year growth in crypto adoption in Eastern Asia at 85.6%. The special administrative region also stands at the 30th rank globally as per Chainalysis global crypto adoption index.
Interestingly, stablecoins accounted for over 40% of the total value that was received every quarter in Hong Kong. The state’s securities regulator also introduced a new framework for crypto trading platforms in June 2023.
The framework has provided a safe and regulated way for investors to get their hands on crypto with robust AML standards. Additionally, these rules are attracting institutional adoption.
