“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.

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.

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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.