China could be contemplating a crypto comeback as one of the nation’s close neighbors adopts a more welcoming stance toward blockchain at large.

In a newly published report, blockchain data platform Chainalysis found that recent crypto volume transferred to Hong Kong has rivaled that transferred to mainland China over the past year, despite hosting only 0.5% of the latter’s population. 

“Hong Kong is an extremely active crypto market by raw transaction volume, with an estimated $64.0 billion in crypto received between July 2022 and June 2023,” wrote Chainalysis in an excerpt from its 2023 Geography of Cryptocurrency Report. By comparison, China received $86.4 billion in transactions over the same period. 

While China enacted a series of bans on all things crypto in 2021, Hong Kong is now actively promoting Web3 development. The region adopted a policy framework that subjects similar crypto and TradFi services to the same regulatory standards in June, and provided its first retail crypto exchange license to HashKey in August.

The trend “may signal that the Chinese government is reversing course on digital assets, or at least becoming more open to crypto initiatives.” wrote Chainalysis. 


Thus far, most activity in the region remains “over the counter” (OTC)—a private environment designed for large institutional transfers not to affect the market. 

By contrast, China boasted a greater share of “retail” volume (transfers under $10,000 in value) than Hong Kong, boasting figures of 8.5% and 4%. China also had a much larger share of “professional” size transfers (between $10,000 and $1 million) at 34.8%, versus Hong Kong at 25.1%. 

Interestingly, the vast majority of crypto activity in China (73.5%) still stems from centralized exchanges, whereas most of Hong Kong’s (68.3%) is connected to DeFi. 

In a statement to Decrypt, Chainalysis Head of APAC Policy Chengyi Ong explained that China’s approach to banning all crypto transactions—despite having slowed activity—ultimately doesn’t work.

“Crypto activity remains substantial, which suggests that the bans have either been ineffective or loosely enforced,” she explained. “In lieu of broad-based bans, clear regulatory frameworks would better protect end-users by enabling them to engage with digital assets in a safer way."


Eastern Asia accounted for 8.8% of global crypto activity during the analyzed period.

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