The 86% year-over-year growth of crypto exchanges is astounding. Chainalysis reports that Hong Kong leads Eastern Asia in crypto adoption following this surge. The region is ranked 30th in global digital currency acquisitions, which shows its strength as a major player.
Growth Factors
There are several factors driving this dramatic increase. Hong Kong’s jurisdiction is different. For example, Hong Kong has adopted a more negative attitude towards cryptocurrencies than mainland China, where higher regulations have been applied.
This flexibility encourages financial innovation and attracts the attention of institutional and individual investors who wish to develop their cryptocurrency portfolio.
Source: Chainalysis
The total amount received in the marketplace is dominated by the central exchange, which holds about 64% of the total amount received in East Asia. This pattern shows that investors are using those central platforms to fulfill their trading needs.
The crypto landscape is fragmented in East Asia. CEXs remain the favorite, holding a whopping 65% market share. The convenience and reliability of these platforms make retail traders enter them, but under such reality they are playing themselves – many institutional players are moving away from these central areas.
As of today, the market cap of cryptocurrencies stood at $2.01 trillion. Chart: TradingView.com
Decentralized exchanges (DEXes) and decentralized financial platforms are becoming increasingly popular with institutional investors, despite the fact that ordinary traders prefer centralized exchanges. This change shows that large participants are looking for diversified investment methods that can take advantage of market inefficiencies, which are often the case in fragmented markets.
Eastern Asia Crypto Landscape
In East Asia, there has been a huge increase in the use of cryptocurrencies in recent years. The region accounted for nearly 9% of the total cryptocurrency transactions between July 2023 and June 2024. There was more than $400 billion in blockchain transactions during this period.
Source: Chainalysis
South Korea holds the top spot in the Eastern Asian region in terms of the amount of cryptocurrency acquired, at about $130 billion at the time of study.
Although Hong Kong has grown rapidly, there are still significant challenges in the near future. The approval of the Ether ETF from the US Securities and Trade Commission recently eroded some of the competitive advantages that Hong Kong had over other global crypto-currency hubs.
Crypto investments will attract more attention from other financial institutions, and Hong Kong will have to continue to innovate to stay on the radar of top digital currency destinations.
The Way Forward
Although promising, the prospects for earning a lot of money in Hong Kong are still unknown. While consolidating its dominance in East Asia, the region had to negotiate changing policies at home and abroad. Investors are eagerly awaiting the response of the financial region and whether it can maintain its strong growth rate.
A supportive regulatory environment and growing institutional interest in the area and surrounding areas have facilitated further development. New issues arising from domestic policy and international competition, however, will require new ideas and more legal clarity if the city is to maintain its edge.
Featured image from the Hong Kong Tourism Board, chart from TradingView