The impact of regulation on crypto investors in China: over $100,000 allocated

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According to the latest news, crypto investors appear to be maintaining a strong interest in China despite hostile regulation. 

In particular, Bitget reports that of the twenty countries surveyed, China showed the greatest commitment to crypto investment. See below for full details.

Crypto investment continues in China despite strict regulation 

As expected, interest in cryptocurrencies in China remains strong despite an effective ban imposed by Beijing. 

Specifically, a recent study conducted by crypto derivatives exchange Bitget across 20 countries revealed that China has the highest level of engagement with cryptos. 

The study, which was conducted between May 2023 and August 2023, involved more than 1,500 participants from countries including Europe, China, Japan, South Korea and Turkey.

The report, released on Thursday, found that 18% of China-based investors allocated funds between $50,000 and $100,000, while a further 19% invested sums between $100,000 and $500,000 in crypto assets.

This observation of trading activity suggests that part of the Chinese population is ignoring the ban imposed by Beijing in September 2021.

Despite the fact that China has banned cryptocurrency transactions, sought to eliminate the mining of digital assets, and declared the activities of offshore exchanges as illicit financial activities, some traders have found ways to continue trading through over-the-counter platforms and offshore exchanges.

Different levels of involvement in the crypto world among European, Turkish and South Korean users 

However, the ban on cryptocurrency trading has had a significant impact. 

In fact, according to a recent report by Chainalysis, East Asia has seen a significant decline in cryptocurrency activity, with trading volumes falling in both Hong Kong and China when comparing 2021 and 2022 figures. 

According to the report, the volume of cryptocurrency transactions in China dropped significantly, from around $225 billion to around $86.4 billion between July 2022 and June 2023. 

However, in contrast to China, users in Europe, Turkey and South Korea show lower financial participation.

According to Bitget’s findings, 51% of European users, 49% of Turkish users and 46% of South Korean users have invested between $1,000 and $10,000 in cryptocurrencies.

The study also revealed how gender influences financial goals. In South Korea, 49% of female users and in Japan, 41% of female users invest in cryptocurrencies to improve their financial situation, compared to 45% and 30% of men respectively.

It was also found that around 27% of female investors in Turkey and the US use cryptocurrency to finance their children’s education.

Crypto activity in Hong Kong challenges China, indications of a change of course? 

China may be inclined to consider a return to cryptocurrencies, while one of its neighbours takes a more positive outlook towards blockchain in general.

In a newly published report, blockchain data platform Chainalysis revealed that the volume of cryptocurrencies recently transferred to Hong Kong has reached levels comparable to those transferred within China in the past year, despite Hong Kong being home to only 0.5 per cent of China’s population.

Specifically, Chainalysis, in its 2023 Geography of Cryptocurrency Report, stated the following: 

“Hong Kong remains a highly active crypto market in terms of transaction volume, with approximately $64.0 billion in cryptocurrencies received between July 2022 and June 2023.”

In comparison, China recorded transactions totalling $86.4 billion over the same period. So, while China enacted a series of bans on cryptocurrencies in 2021, Hong Kong is now promoting the development of Web3. 

In fact, the region adopted a regulatory framework that subjects crypto and traditional services to the same regulatory regime in June and issued its first retail cryptocurrency exchange licence to HashKey in August.

This trend “it could indicate that the Chinese government is reconsidering its stance on digital assets or is at least becoming more open to crypto initiative”, Chainalysis suggested.

So far, much of the activity in the region remains ‘over the counter’, a confidential environment designed to prevent large institutional transfers from influencing the market. 

In contrast, China had a higher proportion of ‘retail’ volume (transfers of less than $10,000) than Hong Kong, with 8.5 per cent and 4 per cent, respectively. 

China also had a significantly higher share of ‘professional’ size transfers (between $10,000 and $1 million), at 34.8%, compared to Hong Kong’s 25.1%.