Hong Kong sees a larger share of transaction volume “coming in large institutional transactions of $10 million or more compared to other countries in the region — notably mainland China,” according to an update from Chainalysis.
On the other end of the spectrum is South Korea, which “appears to be the least institutional-driven market in the region based on transaction sizes,” the Chainalysis team noted.
That’s likely due “to local regulations that make it difficult for financial institutions to trade — South Korea requires a specific type of bank account linked to an individual in order to open a crypto exchange account, which makes it challenging for institutional players to enter the crypto market.”
Overall, Japan appears “to be the Eastern Asia country whose retail versus institutional transaction breakdown is most in line with global averages,” the Chainalysis report added.
Interesting regional trends emerge when we “look at the breakdown of most-used crypto platform types for different Eastern Asia countries. ”
Again, Japan closely follows global markets, “with most activity split close to evenly between centralized exchanges and various types of DeFi protocols.”
The Chainalysis report also mentioned that South Korea, on the other hand, “sees 68.9% of transaction volume associated with centralized exchanges and much less with DeFi protocols.”
One reason for this could “be negative sentiment in the country related to the blowup of TerraLuna, which affected a large number of South Korean crypto users — even residents who didn’t lose money likely saw the incident covered heavily in local media.”
In the wake of TerraLuna, South Korea also “passed several new rules governing the conduct of centralized exchanges, including requirements to hold reserve funds.” The new rules may have increased South Koreans’ faith “in centralized exchanges at a time when DeFi’s reputation took a hit in the country.”
China and Hong Kong also “show unique breakdowns in most-used crypto platform types, though these numbers should be taken with a grain of salt given the anecdotal evidence that much crypto activity in both countries takes place through OTCs or through informal, grey market peer-to-peer businesses.”
Overall, Hong Kong’s unique crypto market “enables a variety of use cases, not just for local users, but for foreigners as well.”
Moreover, while nothing is for certain, “the apparent tacit approval of Hong Kong’s new crypto initiatives could possibly signal that the Chinese government’s stance on cryptocurrency is evolving.” That may mean interesting developments “are in store for what was once one of the most important countries in the crypto landscape,” the report concluded.