Eastern Asia has solidified its position as the sixth largest crypto economy globally, with a significant focus on institutional activity in South Korea and Hong Kong, as reported by Chainalysis on Sept. 18.
During the period between July 2023 and June 2024, Eastern Asia accounted for 8.9% of the global value received, totaling over $400 billion in on-chain value. The majority of this value (64.7%) can be attributed to large transfers conducted through centralized exchanges, indicating a strong presence of institutions and professional traders in the region.
Chainalysis also identified a notable institutional presence on decentralized exchanges (DEX) and other decentralized applications (dApps). This trend could be linked to institutional investors seeking investment strategies that take advantage of market inefficiencies. Decentralized exchanges offer more arbitrage opportunities due to price divergences across different platforms, making them attractive to institutional players.
Leading the pack in Eastern Asia is South Korea, which saw nearly $130 billion in crypto value received during the period. Executives at local crypto exchanges attribute this significant value to South Koreans’ mistrust of traditional financial systems. The country’s strong IT infrastructure and blockchain-related efforts by companies like Samsung have also contributed to crypto’s popularity as a transparent and efficient investment option.
South Korean investors typically use local exchanges as on-ramps before moving their assets to global platforms, explaining the widespread use of both centralized and decentralized applications by institutions in the country.
On the other hand, Hong Kong has emerged as a prominent crypto hub in the Greater China region, benefiting from China’s strict anti-crypto stance. With regulators in Hong Kong showing a more positive attitude towards crypto and providing a clear regulatory framework, the region experienced an impressive 85.6% year-over-year growth in crypto adoption, ranking 30th globally.
The approval of spot crypto-related exchange-traded funds (ETFs) in Hong Kong has further fueled institutional interest in the region. Kevin Cui, CEO of OSL, a provider of institutional-grade crypto services, noted that Hong Kong is witnessing a surge in institutional interest, which could lead to increased capital inflows. The introduction of ETFs has paved the way for a regulated approach to investing in digital assets, marking a shift from traditional financial instruments to direct engagement with digital assets.
Overall, Eastern Asia’s crypto economy continues to thrive, driven by institutional activity in South Korea and Hong Kong. The region’s unique dynamics and regulatory frameworks make it a key player in the global crypto landscape.