Hong Kong has managed to maintain a strong over-the-counter (OTC) crypto market, defying the global downturn in crypto prices and the stringent regulations imposed in mainland China, according to a recent report by Chainalysis on October 2.
According to the report, Hong Kong recorded approximately $64 billion in crypto transactions between July 2022 and June 2023, which sets Hong Kong as the fifth-largest cryptocurrency market in East Asia, trailing behind South Korea, Japan, mainland China, and Taiwan. Surprisingly, this figure is not far behind China’s $86.4 billion despite the latter having a significantly larger population and economy.
Hong Kong as a Crypto Hub
Chainalysis suggests that the robust over-the-counter (OTC) market in Hong Kong may indicate a shift in the Chinese government’s stance towards cryptocurrency. This signifies a potential openness or a less hostile approach towards crypto initiatives.
“The increasingly close relationship between China and Hong Kong leads some to speculate that Hong Kong’s growing status as a crypto hub may signal that the Chinese government is reversing course on digital assets, or at least becoming more open to crypto initiatives,” the report says.
The report reveals that Hong Kong holds a dominant position in large institutional crypto transactions when compared to other Asian regions. Within Hong Kong, approximately half of the annual crypto trades involve institutional transactions exceeding $10 million. Retail trade under $10,000 only makes up 4% of the city’s overall volume, slightly lower than the global average of 4.7%.
Other Asian Markets
In contrast, South Korea heavily relies on centralized exchanges for retail trading. Approximately 40% of the trading volume is driven by “professional” traders handling transaction volumes between $10,000 and $1 million. On the other hand, Japan follows global trends by having a balanced approach to transactions, with a combination of centralized exchanges and decentralized finance (DeFi) protocols.
According to the report’s findings, the top 10 countries in terms of crypto adoption are ranked based on factors such as on-chain value received, on-chain retail value transferred, number of on-chain deposits, and peer-to-peer exchange trade volume.
Read also: World’s Top 10 Countries That Are Leading In Crypto Adoption
Notably, Vietnam and the Philippines stand out among the top three countries alongside Kenya—indicating that lower-middle-income countries contribute a significant portion of their capital towards cryptocurrency investments.
Surprisingly, despite its crackdown on crypto trading and mining activities, China still holds ninth place in this list. The report acknowledges that China has a substantial number of crypto users and miners who have shifted their operations overseas or into underground channels.
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Source: https://coingape.com/crypto-winter-fails-to-freeze-hong-kongs-otc-market/
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