Digital currencies
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
A monitor shows trading prices for bitcoin and other cryptocurrencies in Hong Kong on September 25, 2021. China is back among the top 10 crypto-using countries in a new report from Chainalysis, but Hong Kong is not even among the top 40. Photo: EPA-EFE

China back among top 10 crypto-using countries in Chainalysis report after crackdown, as Vietnam keeps top ranking

  • Lower-middle-income countries make up half the top 20 in this year’s Crypto Adoption Index, while Hong Kong languishes at No 46
  • Beijing’s crackdown on bitcoin mining and ban on cryptocurrencies last year temporarily drove many related activities underground
Cryptocurrency activities remain strong in mainland China despite the government’s ongoing crackdown on the industry, while people in lower-middle-income countries including Vietnam and the Philippines are putting the biggest share of their money into the digital assets, according to a report from blockchain data firm Chainalysis.

Mainland China ranked 10th in the firm’s 2022 Global Crypto Adoption Index, up from 13th place last year but down from fourth place in 2020. The country was found to be “especially strong” in its usage of centralised cryptocurrency exchanges, ranking second in the centralised service subcategories.

Such data suggests that the Chinese government’s ban on all cryptocurrency trading, announced in September last year, “has either been ineffective or loosely enforced”, according to Chainalysis.

More Hong Kong institutional investors cut crypto offerings amid slump

China saw a lull in cryptocurrency activity last year after a months-long crackdown on bitcoin mining. Since then, bitcoin mining activity has bounced back up. Crypto traders in the country may also be continuing their activities under the guise of participating in adjacent markets like non-fungible tokens (NFTs), according to Yip Ki-nang, a manager at Hong Kong-based blockchain advisory firm QuantBlock.

“The ban was severe on financial service providers offering fiat-to-crypto/token exchange services, but China has been supportive to blockchain technologies,” Yip said in a written exchange. “In my opinion, crypto/blockchain participants are playing with the word ‘metaverse’ and ‘NFT’ as a disguise to move on with their activities in ‘crypto’.”

The Global Crypto Adoption Index ranks countries and regions by the value of cryptocurrency transactions across different types of services, weighted based on the jurisdictions’ income level. Half of the top 20 countries in the report are lower-middle-income countries, with Vietnam taking the top slot for the second year in a row and the Philippines ranking second.

Sending remittances is one popular use of crypto for lower-middle-income countries, according to Chainalysis.

Video games that use cryptocurrencies, often dubbed “play-to-earn” games, are also popular in Southeast Asian countries, with one example being Axie Infinity. But such games, which some people play with the intent of earning a living, have also been criticised as exploitative over the practice of large crypto holders loaning game assets to players who cannot afford them.

Notably absent from the report’s top 20 is Hong Kong, the city that has become China’s southern crypto hub since cryptocurrencies were officially banned on the mainland.

Country Overall index ranking Overall index score Centralized service value received ranking Retail centralized service value received ranking P2P exchange trade volume ranking DeFi value received ranking Retail DeFi value received ranking
Vietnam 1 1.0000 5 5 2 7 6
Philippines 2 0.7533 4 4 66 13 5
Ukraine 3 0.6937 6 6 39 10 14
India 4 0.6628 1 1 82 1 1
United States 5 0.6526 3 3 111 3 2
Pakistan 6 0.6092 10 10 50 22 16
Brazil 7 0.5619 7 7 113 8 7
Thailand 8 0.5603 12 12 61 5 3
Russia 9 0.5407 8 8 109 11 12
China 10 0.5353 2 2 144 6 4
Nigeria 11 0.5210 18 18 17 20 17
Turkey 12 0.5191 9 9 121 19 15
Argentina 13 0.5100 13 13 26 21 25
Morocco 14 0.5070 19 19 21 33 18
Colombia 15 0.4961 23 23 10 27 29
Nepal 16 0.4776 17 17 19 34 41
United Kingdom 17 0.4734 14 14 71 12 11
Ecuador 18 0.4092 37 37 6 45 56
Kenya 19 0.3972 43 43 5 9 34
Indonesia 20 0.3963 16 16 129 18 13
Hong Kong 46 0.252 50 50 52 35 33

As Asia’s financial centre, Hong Kong has seen a flurry of crypto-related activity in recent years, becoming home to some of the world’s largest exchanges. Some of those businesses, such as FTX, have since left, with many investors unhappy with what they see as a slow-moving and less hospitable regulatory environment compared with other markets like Singapore.

The city came in at No 46 in the report, with an overall index score of 0.252, compared with 0.535 for China and 0.653 for the US. As the top scorer, Vietnam’s index score is 1.

The report divides crypto activity by trades through centralised exchanges, decentralised finance (DeFi) platforms and peer-to-peer (P2P) transactions.

Centralised exchanges – which include the most widely used crypto service providers such as Binance and Coinbase – are the most popular means of trading crypto in China, which ranked second in the Chainalysis report in both total and retail funds sent to such exchanges, after India. Chainalysis defines retail transactions as those under US$10,000 worth of cryptocurrency.

Chainalysis did not account for the usage of virtual private networks (VPNs), which can make traffic look like it is coming from another country, suggesting crypto traders have become less worried about covering their tracks this year. On OKX, one of the world’s biggest centralised cryptocurrency exchanges by trading volume, 6.65 per cent of desktop traffic came from China on Wednesday, making the country its third biggest traffic source, according to data from SimilarWeb.


Is cryptocurrency too risky for China?

Is cryptocurrency too risky for China?

DeFi services are also relatively popular in China, which ranked sixth and fourth in total and retail funds sent to such services, respectively. DeFi exchanges are managed through the use of smart contracts, with no central authority or servers that store the crypto for users.

While the US has both high financial development and high crypto adoption, financially mature Hong Kong has languished in the crypto adoption index.

Other metrics suggest Hong Kong maintains a strong interest in the crypto industry. The city is home to the most cryptocurrency ATMs per capita outside the US and the most blockchain start-ups per capita outside Switzerland, according to a report from Forex Suggest in July.