East Asia has emerged as the sixth largest crypto economy globally, largely driven by institutional activity in South Korea and Hong Kong. according to to a September 18 report from Chainalysis.
The region accounted for 8.9% of global value received between July 2023 and June 2024, totaling more than $400 billion in value across the chain.
Most of this amount (64.7%) is related to large transfers through centralized exchanges, suggesting that institutions and professional traders are driving up the numbers in East Asia.
Additionally, the company noted a strong institutional presence on decentralized exchanges (DEX) and other decentralized applications (dApps). The blockchain analytics firm speculated that this could be related to institutional investors looking for investment strategies that capitalize on market inefficiencies.
Since decentralized exchanges tend to offer more arbitrage opportunities with price differences between different platforms, this would explain the institutional presence.
South Korea is in the lead
Chainalysis insights revealed that South Korea remains the East Asian country with the largest transaction value, with nearly $130 billion in crypto value received during the period.
According to executives at local crypto exchanges, South Koreans’ distrust of traditional financial systems is the reason behind the significant value of crypto transactions.
Furthermore, blockchain-related efforts by major companies like Samsung are ensuring that crypto is seen as a viable investment with improved transparency and efficiency.
The trading strategy adopted by South Koreans involves using local exchanges as ascending alternatives and then moving crypto to global platforms. That would explain the intensive use of both centralized and decentralized applications by institutions.
Another crypto exchange executive told Chainalysis that crypto investors in South Korea, as one of the top information technology countries, have easy access to digital asset trading.
Hong Kong benefits from China’s aggressive stance
China is notoriously opposed to crypto as an investment, with the country issuing a blanket ban on the industry in 2021. As a result, Hong Kong’s crypto market has absorbed demand.
Chainalysis highlighted that Hong Kong has emerged as a crypto hub in the Greater China region, fueled by regulators’ positive attitude towards crypto and the clarity of a regulatory framework.
Consequently, the region saw the largest year-on-year growth in East Asia, at 85.6%, and ranks 30th globally in crypto adoption.
Moreover, it had a positive impact on institutions, which can access demand from Chinese markets through their presence in Hong Kong, especially after the adoption of spot crypto-related exchange-traded funds (ETFs).
Kevin Cui, CEO of institutional crypto services provider OSL, explained to Chainalysis that Hong Kong is witnessing growing institutional interest, which could soon lead to greater capital inflows.
He added that ETFs have provided a regulated pathway for investing in digital assets, marking a transition from traditional financial instruments to a more direct involvement in digital assets.