Institutional players drive crypto adoption in South Korea, Hong Kong — Chainalysis

Eastern Asia has emerged as the sixth largest crypto economy globally, largely driven by institutional activity in South Korea and Hong Kong, according to a Sept. 18 report by Chainalysis.

The region accounted for 8.9% of global value received between July 2023 and June 2024, totaling over $400 billion in on-chain value.

Most of this amount (64.7%) is related to large transfers using centralized exchanges, which suggests that institutions and professional traders are boosting Eastern Asia’s numbers.

Additionally, the firm identified a heavy presence from institutions on decentralized exchanges (DEX) and other decentralized applications (dApps). The blockchain analysis firm speculated that this might be related to institutional investors seeking investment strategies that capitalize on market inefficiencies.

Since decentralized exchanges usually offer more arbitrage opportunities with price divergences among different platforms, that would explain the institutional presence.

South Korea holds the lead

Chainalysis insights revealed that South Korea is still the Eastern Asian country with the largest transaction value, nearing $130 billion in crypto value received during the period.

According to executives at local crypto exchanges, South Koreans’ mistrust of traditional financial systems is the reason behind the significant value in crypto transactions.

Additionally, blockchain-related efforts from large companies such as Samsung make crypto perceived as a viable investment with enhanced transparency and efficiency.

The trading strategy applied by South Koreans consists of using local exchanges as on-ramping alternatives and then moving crypto to global platforms. That would explain the heavy usage of both centralized and decentralized applications by institutions.

Another crypto exchange executive told Chainalysis that, as one of the top information technology nations, crypto investors in South Korea 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 been absorbing demand.

Chainalysis highlighted that Hong Kong has emerged as a crypto hub in the Greater China region, fueled by regulators’ positive stance toward crypto and the clarity of a regulatory framework.

Consequently, the region experienced the largest year-over-year growth in Eastern Asia at 85.6%, ranking 30th globally in crypto adoption.

Additionally, it had a positive impact on institutions, which can access the demand from Chinese markets through their presence in Hong Kong, especially after the approval of spot crypto-related exchange-traded funds (ETFs).

Kevin Cui, CEO of institutional-grade crypto services provider OSL, explained to Chainalysis that Hong Kong is witnessing growing institutional interest, which could soon lead to increased capital inflows.

He added that ETFs have provided a regulated pathway for investment in digital assets, marking a transition from traditional financial instruments toward more direct engagement with digital assets.

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