Chainalysis, an American blockchain analysis firm, published a new research study Thursday, showing that East Asia is the fourth largest crypto market, receiving $777.5 billion worth of crypto between July 2021 and June 2022.

This figure represents just under 13% of global transaction volume during that time period.

As a result, the study found that East Asia has lost ground to other regions this year. The region saw year-over-year transaction volume growth of just 4%, making it the region with the lowest crypto activity this year, according to the research. Last year, the region ranked as the third largest region by crypto transaction volume at the moment.

Source: Chainalysis

The main reason for this loss is likely due to declining cryptocurrency activity in China, the largest market in the region. While the study identified that China saw its crypto transaction volume drop by 31% compared to the prior year period, neighbors such as Japan more than doubled transaction volume. This is likely due to the Chinese government’s crackdown on crypto activity over the past year, the study revealed.

In addition to low cryptocurrency trading activities in the region, the data indicates that East Asia has surprisingly low DeFi adoption. During the one-year period that Chainalysis conducted this study, DeFi accounted for just 28% of transaction volume in East Asia, less than all but one region, Eastern Europe, as shown in the figure below.

Data shows that Japan’s crypto market has grown significantly over the one-year period studied, with on-chain transaction volume increasing 113.2% over the previous 12 months, compared to 72% for the next closest country. , South Korea, and 31.1%. for chinese

To explain Japan’s resilient crypto activities, one of the reasons is due to the relatively high adoption of DeFi. Despite having a smaller overall crypto market, Japan’s DeFi transaction volume is nearly twice the size of South Korea at $56.7 billion and close to China’s total of $67.6 billion, as noted in the figure below. Research shows that decentralized exchange (DEX) trading may be affecting centralized services trading, which have not seen similar growth.

As highlighted in the data above, China has witnessed a huge decline in cryptocurrency activity, likely due to the government crackdown imposed last year. However, despite a 31.1% drop in transaction volume, China remains the largest crypto market in the region, fourth overall in the world, and ranks 10th for grassroots adoption. in Chainalysis’s Global Crypto Adoption Index.

While the government crackdown has clearly had an impact, China’s cryptocurrency market remains strong, with healthy transaction volumes across centralized services and DeFi. The figure below shows that China’s business activity has started to pick up in recent months, and even mining, which saw a massive drop in activity following the ban, has returned to the country.

Earlier this month, Chainalysis published a similar study showing that emerging markets, such as the Middle East and North Africa (MENA) region, dominated this year’s global cryptocurrency adoption rate. Latin America became second in transaction volume growth, North America was third, and Central and South Asia followed closely.

Image Source: Shutterstock