East Asia’s Economies’ Struggles Continue Amid China Crypto Ban – Report

Decline In Crypto Activities

A recent report by the blockchain analytic firm Chainalysis indicates that China’s long-standing ban on cryptocurrency and its related activities has continued to impact the region. Even though Eastern Asia accounted for 8.8% of the global crypto trading activities, China didn’t reverse its crypto ban.

Also, the influx of investors into the Hong Kong digital asset market was not enough to make China reverse its decision. The Chainalysis report revealed that cryptocurrency activities in East Asia have changed significantly following the ban by Chinese authorities.

Once a formidable stronghold in the global crypto market, the region’s crypto transaction volume has dropped significantly. Nevertheless, East Asia is now the world’s fifth most active cryptocurrency market, per the Chainalysis report.

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This represents a decline from the region’s previous position as one of the industry’s dominant forces globally. The report attributes the onset of this decline to the Chinese government’s implementation of stringent regulatory measures for the crypto sector.

Furthermore, these regulatory interventions, intended to foster a more controlled financial ecosystem, have reduced crypto-related activities in East Asia. This change in market dynamics has resulted in a global redistribution of crypto trading and investment activities.

China’s Crypto Crackdown

The analytics firm report highlighted the critical role that China’s stringent measures played in triggering this decline. A decade ago, the Chinese government began a country-wide crackdown on crypto mining and trading.

Then, the government announced a blanket ban on crypto activities throughout mainland China in 2021. Before the ban, there had been a meteoric rise in crypto-related activities across China and its administrative regions.

Despite its massive population, China currently ranks third across the Asian continent regarding crypto-related trade volume, trailing behind South Korea and Japan. However, the report also hinted at a possible shift in the country’s stance on digital assets, referencing the burgeoning crypto scene in Hong Kong,

Thus, it predicts that the Chinese government might begin reducing its cryptocurrency trading restrictions. Hong Kong has seen increased crypto investments in 2022 as an administrative region under Chinese jurisdiction.

The blockchain analytic platform suggests that this surge indicates a shift in the regulatory landscape and a friendly approach to crypto-related activities in mainland China.

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Hong Kong’s OTC Crypto Market Transaction Volume Spikes

Furthermore, the report highlights a surge in Hong Kong’s over-the-counter (OTC) crypto market, stating that it continues to attract institutional investors and high-net-worth individuals. Meanwhile, the founders of two prominent Hong Kong-based OTC crypto firms have revealed their reasons for the spike in adoption.

They cited the increase in international crypto-related transactions and the growing number of people looking to store their assets in cryptocurrency, particularly stablecoins. On the international appeal of the region’s OTC market, the founders believe that the trend highlights the nation’s critical role as a global fintech hub.

According to the founders, international investors in the region are primarily foreigners, so they prefer OTC transactions to move their assets from local financial institutions. They added that citizens also leverage OTC platforms to process transactions due to the level of control they enjoy.

Author: Owen Clark

Owen Clark, a seasoned crypto newsman and broker, deciphers the intricacies of the digital currency realm, empowering investors with his astute analysis and actionable insights.

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