Let’s look at South Korea Crypto Inflows
On Tuesday, blockchain data analytics firm Chainalysis released its “2023 Global Cryptocurrency Adoption Index – East Asia Report. South Korea Crypto Inflows tops the list in Asia, according to Channalysis. Learn more about the Asian and Korean crypto markets as analyzed by Chanalysis.
According to Chainalysis:
“East Asia is the fifth most active cryptocurrency market we studied, accounting for 8.8% of all cryptocurrency transactions during the period from July 2022 to June 2023.”
South Korea Crypto Inflows records the largest
South Korea recorded the largest inflow of crypto assets among East Asian countries, with an estimated $110 billion worth of crypto assets from July 2022 to June 2023. During the same time period, the ranking of crypto inflows by East Asian countries was South Korea, Japan, China, Taiwan, and Hong Kong.
Learn more about trading in South Korea
While 68.9% of South Korea’s crypto trading volume was done through centralized exchanges, decentralized finance (DeFi) trading volume was low.
South Korea’s regulatory framework was cited as the main reason for this phenomenon. In South Korea, in order to open a crypto exchange account, one must have a specific type of bank account linked to an individual. These regulations have been shown to be a barrier for institutional players to enter the crypto market. In addition, South Korea has the lowest volume of institutional-oriented trading in the Asia-Pacific region in terms of trading volume.
Another reason cited was the increased negative perception of cryptocurrencies in South Korea following the Terraluna incident. Following the incident, South Korean authorities passed new regulations, imposing reserve requirements on centralized exchanges, among other things. These measures may have helped boost South Koreans’ trust in centralized exchanges as their decentralized financial system took a hit.
East Asia’s declining market share
East Asia was one of the major markets in the crypto space in the early days of the industry due to China’s huge trading activity and influence in the mining industry. However, in recent years, East Asia has seen its market share decline. From July of last year to June of this year, East Asia accounted for 8.8% of global crypto activity, dropping to fifth place in the trading volume rankings for the second consecutive year.
Until 2019, East Asia was one of the top markets in terms of crypto trading volume due to the huge trading activity in China and the influence of the mining industry. However, ongoing strict regulations in China, crypto regulations in South Korea, and the impact of the Terraluna incident have caused the crypto market to stagnate in East Asia.
The rise of Hong Kong
With its crypto-friendly regulations and initiatives, Hong Kong has become a significant player in the East Asian crypto market. It is estimated that around $64 billion in crypto assets flowed into Hong Kong from July last year to June this year. This is not far off from China’s $86.4 billion over the same period, even though Hong Kong’s population is only 0.5% of mainland China’s. A significant portion of this volume came from Hong Kong’s OTC market.
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