Hong Kong and China’s OTC Markets Remain Active Despite Crypto Winter

By Sharan Kaur Phillora

In the last year, Hong Kong and China’s over-the-counter (OTC) cryptocurrency markets have showcased robust activity despite the global downturn in crypto markets, known as the crypto winter. Hong Kong’s OTC market generated a significant $64 billion in trading volume, closely trailing China’s $86.4 billion, a noteworthy feat considering Hong Kong’s smaller populace.

Here’s what we know:

Amid Beijing’s enduring stringent restrictions on crypto assets, data revealed a decrease in transaction values in both territories over the preceding year. However, a report by Chainalysis highlighted the large and relatively stable OTC markets in these regions as indicators of Beijing’s nuanced stance towards cryptocurrency, suggesting a level of tolerance amidst regional and global market declines.

The burgeoning crypto market in Hong Kong, bolstered by its evolving closeness with China, has spurred speculations. Some believe this growing status might hint at a potential shift in China’s digital asset policies, or at least, a warming towards crypto initiatives. 

Chainalysis emphasized Hong Kong’s leading role in handling large institutional crypto transactions within Asia. Their findings disclosed that nearly 47% of the city’s annual crypto trades were institutional, with transactions surpassing $10 million, a stark contrast to the mere 4% represented by retail trades under $10,000, slightly below the global average of 4.7%.

On the flip side, South Korea’s crypto scene heavily leans towards retail trading on centralized platforms, with a notable 40% of its trading volume coming from “professional” traders dealing between $10,000 and $1 million. Japan mirrors global tendencies, harmonizing centralized exchange trading with decentralized finance (DeFi) protocols, indicating a balanced approach towards cryptocurrency trading.

This active OTC crypto trading within Hong Kong and China not only defies the global crypto winter but also introduces a new narrative of potential governmental openness to digital assets in the region, while contrasting the retail-centric crypto markets in neighboring South Korea and Japan.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.

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