FameEX Hot Topics | South Korea and Hong Kong Drive Crypto Market Growth in East Asia

East Asia's cryptocurrency market is experiencing rapid growth, primarily driven by institutional adoption in South Korea and Hong Kong, according to a report by blockchain analytics firm Chainalysis. South Korea is leading the charge with $130 billion in on-chain value, while Hong Kong is emerging as a key hub due to its unique regulatory framework. These regions reflect changing attitudes toward digital assets as skepticism surrounding traditional financial systems grows.

In its 2024 Geography of Cryptocurrency Report, Chainalysis highlighted the latest cryptocurrency adoption trends in East Asia, focusing on South Korea and Hong Kong. The report identifies East Asia as the sixth-largest cryptocurrency economy globally, with the region receiving over $400 billion in on-chain value between July 2023 and June 2024. This impressive growth is mainly driven by institutional investors and professionals searching for alternatives to traditional financial systems.

South Korea, the regional leader, accounted for around $130 billion of the total value during this period. A South Korean exchange executive noted that corporate adoption of blockchain technology has significantly improved the public perception of cryptocurrencies in the country. The executive explained that “mistrust in traditional financial systems has led investors to seek out cryptocurrencies as alternative assets.” The rising popularity of altcoins and stablecoins has also contributed to higher outflows to global exchanges, supported by opportunities like the kimchi premium, where crypto prices in South Korea are often higher than in global markets.

In contrast, Hong Kong is establishing itself as a major cryptocurrency hub, bolstered by its distinctive regulatory environment. The report highlights growing institutional adoption, driven by the introduction of new regulations for virtual asset trading platforms in 2023.

On April 30, Hong Kong's Securities and Futures Commission (SFC) approved spot exchange-traded funds (ETFs) based on bitcoin and ether for public trading. In the weeks leading up to this launch, institutional bitcoin transfers surged, with many transactions occurring on exchanges catering to institutional clients. Both South Korea and Hong Kong are expected to continue playing critical roles in the expansion of the cryptocurrency market in East Asia.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.