FEB 3, 2024
Crypto enthusiasm prevails in China despite crypto trading prohibition
In the face of a crypto trading ban imposed in 2021, the cryptocurrency market in China continues to thrive, defying the odds, according to a recent report from Kyros Ventures.
Regional survey and report
The Vietnam-based blockchain-focused startup incubator and venture capital firm has presented its report findings, shedding light on the unique dynamics of the Chinese crypto landscape compared to neighboring countries such as South Korea, Vietnam, Taiwan and Thailand.
The survey was conducted in December in collaboration with 10 media agencies across the region, involving over 5,000 participants to gauge their sentiments and investment patterns.
Greater crypto interest
More than 70% of respondents revealed that cryptocurrencies accounted for over half of their asset portfolios. Among survey respondents in China, 88.9% reported heavy investments in cryptocurrencies, surpassing the enthusiasm observed in Vietnam, South Korea, Taiwan and Thailand.
The finding is surprising, given that cryptocurrency trading is prohibited in China, while in the other jurisdictions the same level of restrictions is not in place. China’s crypto scene faces substantial regulatory hurdles, with a government ban on crypto trading implemented in 2021. Despite this, the report highlights that a majority of Chinese investors opt for centralized crypto exchanges (CEXs) for their trading activities.
Arthur Hayes, the founder of crypto derivatives platform BitMEX, recently outlined that wealthy individuals in China have access to international banking, and with that, access to overseas cryptocurrency platforms through the Chinese autonomous territory of Hong Kong.
An investigative report produced by the Wall Street Journal in 2023 found that leading global crypto exchange Binance continues to have a thriving business relative to its Chinese user base.
The Chinese authorities appear to be aware that the crypto trading prohibition that has been applied by the government is being flouted. This is demonstrated by the fact that the government is looking to update its anti-money laundering rules for the first time in 17 years to account for the rise in cryptocurrency investment, trading and use.
Higher risk appetite
Notably, 33.3% of Chinese investors indicated an allocation to stablecoins. That is indicative of a greater risk appetite in China by comparison with countries like South Korea and Vietnam where 43% and 59% of respondents had money allocated in risk-off stablecoin positions.
In terms of investment by referral, Thailand and China emerged with the highest rates, reaching up to 80%. Previous research carried out by Kyros earlier in 2023 highlighted the significance of crypto investment via referrals within the Vietnamese market.
Developing regional regulatory landscape
The regulatory landscape in Asia witnessed significant developments in 2023, with Hong Kong emerging as a leading hub for crypto and Web3 innovation. The issuance of cryptocurrency exchange licenses in Hong Kong marked a pivotal moment for the industry in the region.
In South Korea, new legislation aimed at protecting cryptocurrency users, enhancing transaction transparency and fostering market discipline was enacted. Meanwhile, Taiwan’s Financial Supervisory Commission explored the possibility of allowing crypto exchange-traded funds, pending a thorough analysis of the product’s development in global markets.