China is warming up to crypto via its on-chain relationship with Hong Kong across a very active over-the-counter market, according to a recent report.

While the crypto industry remains uncertain in the West, and despite the JPEX fraud probe that has somewhat dampened Hong Kong’s crypto spirits, the territory and its ties with China have significantly influenced crypto adoption in Asia’s biggest economy, says blockchain analysis firm Chainalysis in its 2023 Global Crypto Adoption Index report.

Industry-friendly initiatives and progressive regulatory moves have propped up Hong Kong, the report notes, as a bright spot in East Asia as the territory saw an estimated US$64 billion in crypto received between July 2022 and June 2023 – only slightly less than China even though its population is equivalent to 0.5% of the country’s.

Japan is the only East Asia country with activity that mirrors global averages – with activity split close to even between centralized exchanges and various decentralized finance protocols.