China’s Cryptocurrency Ban Continues to Hurt Eastern Asia: Report

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China’s Cryptocurrency Ban Continues to Hurt Eastern Asia: Report
  • Chainalysis reported that Eastern Asia accounts for 8.8% of global crypto activity.
  • Since China banned crypto mining and trading, crypto activity in the region has declined.
  • Chinese investors’ influx into Hong Kong hasn’t changed China’s stance on crypto.

Blockchain data platform Chainalysis’ recent report shows that crypto activities in Eastern Asia have reduced significantly over the years. As per the report, the region that once held a larger share of the crypto market now accounts for 8.8% of global crypto activity over the past year.

In particular, the report placed East Asia as the world’s fifth most active crypto market. While noting its descent over the years, the report stated that the drop in market share started after stricter crypto regulations in the region.

Notably, the report stated that China’s ban on several forms of crypto-related activities played a key role in this decline. In what spans as far back as 2013, the Chinese government in 2021 placed a permanent ban on crypto mining and trading. Before that, the country had seen a surge in crypto-related activities.

Despite that, the report mentioned that the strict clampdown on crypto activities in China may be softening. Despite its huge population, China currently ranks third in the region in crypto trade volume, behind South Korea and Japan.

Furthermore, the report pointed to the rise in crypto activities in nearby Hong Kong as a sign that the Chinese government is softer on the restrictions. The country, an administrative region under China, has seen an influx in crypto investments since last year.

According to the report, Hong Kong’s over-the-counter market has attracted institutional investors and high-net-worth individuals. On what is driving the adoption of OTC, the founders of two local OTC crypto firms in Hong Kong attributed it to international transactions and people keeping their assets in crypto.

The founders said institutional investors in Hong Kong, most foreigners, use the OTC to move their assets away from local banks. Similarly, ordinary people also indulge in OTC trades to have more financial control.

Additionally, they mentioned that the OTC is also favored for international transactions due to its speed and efficiency. However, they clarified that the influx of Chinese investors into the region doesn’t mean China will change its stance on crypto soon.

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