Summary
- South Korea leads the region with a $449.1 billion crypto economy, followed by Japan ($228.3 billion), Hong Kong ($192.2 billion), China ($176.3 billion), and Taiwan ($140.4 billion).
- South Korea’s famously retail-driven market bet on AI cryptocurrencies more than on any other token type, repeating the investment preferences that shape the country’s stock market.
- Japan’s vibrant, growing retail market outpaces expert consensus, and is slated to grow in the years ahead.
- Institutional platforms captured 16% of Hong Kong’s service inflows in 2026, nearly three times any regional neighbor, and the city pulled in nearly $24 billion in inbound business-to-business (B2B) flows.
- Unique wallets sending stablecoin peer-to-peer (P2P) transactions in China grew 43x between Q1 2024 and Q2 2026.
Eastern Asia’s crypto economy is among the most diverse in the world. From country to country, wholly distinct regulatory environments, risk appetites, and business objectives push users toward different use cases. While the region’s crypto economy contracted modestly overall between July 2025 and June 2026, the decline was far from uniform. Institutional platforms in Hong Kong received 87% more than the year before, the fastest institutional growth in East Asia. And Japanese users moved onto decentralized exchanges (DEXs), where inflows rose 36%.
That contraction aligns with crypto’s global bear market, but is only one part of a story of some of the world’s largest standalone crypto hubs. Regional leader South Korea (fifth in our grassroots adoption index) had a $449 billion crypto economy in the 2026 period, growing 12.3% period over period, driven by 16.3% growth in the South Korean exchange ecosystem and a massive pivot to buying and selling AI-crypto assets.
Hong Kong’s 16% institutional platform share, nearly three times any regional neighbor’s, is concentrated among custody and prime brokerage providers and market-making desks (which together account for 85% of the category), reflecting the city’s position as the settlement layer for cross-border institutional trades. Japan’s DEX share of 34.5%, the highest of any market in the region with a mature centralized exchange (CEX) sector, is driven by retail DEX swaps, 65.7% of which happen between the $10-$1,000 range.
These regional trends show significant regional variation. Some locations like Hong Kong and, to a degree, Japan, are institutional hubs, while other countries see significant grassroots adoption, either for use as a financial instrument as in the case of South Korea or use as an alternative financial channel in the case of Mainland China. As Daniel Kim, CEO of Tiger Research, put it, “Asia is that rare region with both grassroots retail depth and institutional firepower.”
South Korea is the region’s largest crypto economy
South Korea’s $449 billion all-in crypto economy grew 12.3% period over period, with an additional $51.1 billion in exchange-related flows. Much of this growth is attributable to South Korea’s “famously retail-driven” crypto market, said Francis Kang, the executive director of Korea Blockchain Week. And this activity is linked to the broader ‘AI trade’.
Much of the growth we see in South Korea is happening without the entry of major financial institutions. Financial institutions have been slow to adopt crypto at scale for payments or investing, partly due to legislative roadblocks. Only in February 2026, for example, did the government begin easing a longstanding ban on corporate crypto trading. Kang summarizes the state of institutional engagement with crypto and digital assets in South Korea as in “preparatory mode,” even though the trend toward institutional participation has begun. “Every major bank and securities firm now has a digital asset team, and most are running stablecoin, tokenization, or custody pilots,” he added.
One catalyst for South Korea’s retail crypto dominance remains its crypto taxes: throughout the 2026 period, there weren’t any. A long-delayed 22% tax on crypto profits is scheduled to take effect at the start of 2027, but the legislature has delayed it before, and could do so again, the experts we spoke to said. That timing coincides with a second shift already underway: the gradual arrival of institutional participation.
In February 2025, the Financial Services Commission announced a roadmap opening the market to nonprofits, exchanges, listed companies, and registered professional investment corporations, though investment-driven corporate participation has yet to scale in practice. If the tax takes effect on schedule and corporate access broadens at the same time, 2027 could produce a very different Korean market: one where retail activity is suppressed and institutions become a meaningful counterweight for the first time. “The outcome of the National Assembly’s discussions could have a meaningful impact on retail investor demand and market participation,” said Jinhyeong Jo, Senior Examiner at Korea’s Financial Intelligence Unit.
The AI cryptocurrency trade dominates South Korea
South Korea’s retail market has favored high-risk, high-reward opportunities. We found this trend most prominently in the AI trade. South Korea’s mainstream stock market is dominated by one company, SK Hynix, that builds the memory chips fueling the data center explosion.
AI-crypto trading in South Korea has grown in parallel to SK Hynix’s rise. By June of 2026, AI cryptocurrencies (digital assets of AI-focused projects or associated with AI infrastructure) were the single most popular thematically-defined investment category as measured by a share of won-denominated trading volume, beating out payment tokens like XRP.
This share makes South Korea an outlier both in East Asia and globally. JPY trading of AI-crypto assets reached only 0.91% in June of 2026, making South Korean won-denominated activity 19.5x the yen rate. Likewise, won/AI-crypto volumes stand out against other large regional currencies which all saw modest volumes as a share of overall activity. The Brazilian Real, for example, was only 0.20%, the Great British Pound at 0.03%, or the Euro at 1.02%, all much lower than the activity in South Korea.
A broad assortment of AI cryptocurrencies caught bids from traders this period. The single-largest was Worldcoin (WLD) with $7.41 billion in volumes, with newcomer token SAHARA contributing $3.2 billion in volume, VIRTUAL contributing $2.7 billion, BIO contributing $2 billion, and NEAR contributing $1.7 billion.
The specific AI tokens driving South Korea’s volume have already turned over once, with 2025 leaders like VIRTUAL and KAITO giving way to Worldcoin and SAHARA. What the data make clear is that Korean retail traders are moving through this category faster and at higher intensity than any other market we measure.
Japan’s consumer-crypto economy
Japan’s $228 billion crypto economy draws attention for its institutional activity. Unlike its peers elsewhere in Asia, its core driving force is increasingly banks and financial firms, not consumers. The experts we spoke to about crypto in the world’s fourth-largest economy by GDP described a market where the most consequential crypto activity happens inside regulated institutions.
But this country of 122 million still has plenty of consumers. In our 2026 period data, we repeatedly found evidence of their footprint.
For example, roughly one in four people who withdraw from exchanges operating in Japan later deposit funds into DeFi protocols. Similarly, DEXs held nearly 35% market share of Japan’s services industry in the 2026 period, which was a higher share than any other country in the region. Indeed, as the chart below shows, Japan’s engagement with DEXs has trended upward since 2022, rising over 200%, while CEX activity during the equivalent period has remained flat. These findings challenge a perception that Japan has a minimal consumer footprint.
“The most visible activity is in perps.” said Taishi Sato, CEO of DeFimans, a subsidiary of SBI. He credits the popularity of perpetual futures in Japan to the sophistication of a trader-population well-versed in foreign exchange markets. Currency power traders already speak the language of hedging they need to trade perps, he said.
Sato has observed traders using venues such as Hyperliquid alongside their equity portfolios “to manage directional and macro exposure, rather than treating them purely as crypto-native trading venues.” In doing so, the Japanese market is using on-chain venues to manage real-world risks.
Still, Japanese traders invested in tokens directly. The single most popular token type remained store of value tokens such as Bitcoin, with 73.8% share of yen trading volume in the 2026 period. But store of value’s share slipped 4.32 percentage points amid a 27% drop in store of value overall volume. The largest gainer for the period were smart contract tokens such as Ethereum and Solana. After taking only 10% of yen trading volume share in the 2025 period, they ended the 2026 period with 15.4% following a 17.7% increase in overall trading volume, making this asset class the only yen-pair to grow in absolute volume period over period.
“Japan has a large, active retail crypto base, but growth has been constrained by tax treatment and a relatively conservative investing culture,” said Arisa Toyosaki, General Manager of Binance Japan. “That said, with tax reform and the strong government push now in place, we believe retail sentiment may shift over the next 12 months.”
High taxes have historically suppressed consumer crypto adoption, the local experts said. Crypto traders in the country faced a maximum marginal rate of 55% under tax laws on the books through the 2026 period. A series of tax reforms that advanced in July 2026, too late to affect our study period, may catalyze growth across all parts of Japan’s crypto economy, especially consumer activity, the local experts told us. If eligible gains move from the current top rate to roughly 20% separate taxation as expected — easing the friction on participation — Japanese retail trading volumes could see a meaningful boost in 2027.
How financial firms approach crypto in Japan
That same window is likely to matter for the institutional side, which remains earlier than the current market share numbers suggest. “For financial institutions in particular, ‘digital assets’ as a broader category, including stablecoins, real-world assets (RWA), tokenized deposits, and payments, are beginning to be recognized as a new area of business,” said Yuya Hasegawa, a market analyst at Bitbank. His framing captures where things actually stand: Japanese banks, brokers, and payment companies are still in the phase of identifying digital assets as a business line worth building around, not yet in the phase of running those businesses at scale.
Experts are closely tracking the introduction of new, locally useful crypto finance tools, such as yen-denominated stablecoins. The first, JPYC, was introduced in October 2025, and could be used for international remittances and in conjunction with more globally popular dollar-backed stablecoins, Hasegawa said. Another contender, JPYSC, from SBI Group, could be useful for OTC trading, RWA settlement, and FX. It was launched right at the end of our study period, in June 2026.
The success of these nascent stablecoins will become clearer in the year ahead, as will the effects of tax reform on retail. If both land as expected, Japan’s 2027 crypto market could look meaningfully different from this year’s.
“The opportunity is not to replace the existing financial system,” said Sato. “It is to connect the existing system to on-chain markets and make the basis between them tradeable for institutions.”
Hong Kong is Eastern Asia’s institutional hub
Hong Kong’s $192 billion crypto economy is defined less by its size than by who is trading. Government policy has placed digital assets at the center of the city’s financial strategy, and the experts we spoke with described a market where regulatory clarity has become the primary driver of participation.
SB Seker, Head of APAC at Binance, put it directly: “Hong Kong’s development in recent years has demonstrated that regulatory clarity and financial innovation can advance in parallel.”
Hong Kong’s first Five-Year Plan and its latest Policy Address identify stablecoins, tokenized finance, and central bank digital currencies (CBDCs) as strategic priorities. The city issued its first stablecoin licenses in 2026 and has moved into market testing with institutional participants. QCP Group notes that this direction of travel will likely “favor larger, well-controlled and properly licensed operators,” raising the bar for smaller firms while strengthening market credibility overall.
The framework has drawn a distinct kind of participant. Institutional platforms, which include over-the-counter (OTC) desks, custody providers, and market makers, captured 16% of Hong Kong’s service inflows in the 2026 period, up from around 9% two years earlier. No other Eastern Asian market cracks 6%.
Hong Kong pulled in nearly $24 billion in inbound service-to-service transfers during the 2026 period, roughly six times what Japan received and 44 times South Korea’s total. Outbound flows are also substantial, at roughly $11 billion, suggesting that Hong Kong operates as a two-way corridor for institutional capital moving across Asia.
Cumulative net B2B inflows climbed from mid-2022 onward, reaching $17.4 billion by mid-2026, meaning institutional capital has been arriving in Hong Kong through licensed services at an accelerating pace. Over the same window, non-B2B channels ran consistently negative on a net basis, meaning wallet-based flows were leaving the city while service-to-service flows were arriving. Institutional capital is not just passing through Hong Kong, but rather, it is settling there, inside the regulated perimeter, and the city is capturing that positioning at the expense of unregulated wallet activity.
Hong Kong’s inflow patterns stand in direct contrast to those of China, where unregulated peer-to-peer activity is growing rapidly.
China’s stablecoin use surges as social credit system expands
China’s crypto economy remains difficult to track. The government’s official, longstanding ban on crypto services suppresses local flows. Still, the crypto economy exists. Using available data, we estimate that, in the 2026 period, it was at least $176 billion. The true size may well be higher.
We derive our estimates on China primarily from its peer-to-peer economy. Unlike its nation-state peers in the region, and unlike the majority of crypto-using countries in the world, the majority of China’s crypto economy is driven by flows between people, instead of into and out of exchanges, which remain banned in the country. China’s domestic P2P economy represented 59.1% of its all-in economy in the 2026 period, a 3.5x growth in share over the prior period.
What happened during the 2026 period to boost China’s P2P market so dramatically? One clue may rest in China’s social credit policy. In March 2025, a few months before our study period began, state officials expanded the social credit system into finance and the internet. The system, which uses behavioral scoring and blacklists to restrict access to travel, credit, employment, and financial services, has been steadily integrated with banking compliance infrastructure over the past several years.
What we see in the data is a clear shift in the adoption rate of stablecoins for domestic payments around March of 2025. Month-over-month activity shifted decidedly positive after slightly negative January-February monthly changes and, from March forward, it sustained a fairly dramatic increase for 13 complete MoM periods. Because each bar shows what the month added rather than the total, the rising bars mean China was adding more every month than the month before: roughly $240 million in March 2025 to nearly $5 billion a year later. This pattern is broadly indicative of a systemic change that did not lead to a step change in activity, but rather a slow and steady push towards using crypto within China.
The social credit system could potentially catalyze crypto adoption in two ways: first, individuals who have been blacklisted by the system and lost access to traditional payment rails might turn to crypto alternatives that offer greater censorship resistance and, second, individuals who are trying to avoid violating existing monitoring systems might choose to transact in crypto rather than formal channels, such as advertising the sale of goods on domestic e-commerce platforms and then concluding payment after sharing a crypto address via telegram.
While it remains only a working hypothesis, the rapid adoption of stablecoins for domestic P2P payments in China dates back to March 2025, when volumes sent in the under $100 range grew 996%, with 1,057% and 1,321% growth in the $100-$1,000 and $1,000-$10,000 ranges, respectively.
We can also get some insights into the nature of this activity by looking at the velocity of money in China, which economists define as the turnover of currency units within a given period. Higher velocity implies the same dollar is circulating between economic participants, as you might expect within a well-established monetary regime. China turns its self-custodied stablecoin holdings over at a remarkable rate: 33.2x per year.
This value is more than three times the world average of 9.3x and higher than any regional peer. Japan turns its stablecoins 9.9x a year, Hong Kong 6.1x, South Korea 5.1x, and Taiwan 3.5x. On $3.1 billion in average holdings, China moved $104.1 billion across 18.1 million transfers during the 2026 period. Broadly, China’s high velocity of money is consistent with a user base that treats stablecoins as working capital, rather than a store of value, and is something one would expect to see if an asset were becoming a functional domestic payment rail.
How crypto regulation is shaping East Asia
“The center of gravity in a market long driven by retail is shifting toward institutions,” said Kim of Tiger Research. Regulation is forcing the shift.
East Asia offers an uncommonly clear test of what regulation actually does to crypto markets. China prohibited it and activity just moved –– unique wallets sending stablecoin P2P transactions grew 43x in two years. Japan, Hong Kong, Singapore, and South Korea went the other way, building supervised-access regimes designed to bring activity inside a licensed perimeter. The early results vary: Hong Kong alone has attracted $17.4 billion in net institutional inflows since late 2024, while South Korea’s growth has been driven almost entirely by retail traders.
But, while we’ve seen the effectiveness of a prohibition play out live, the question remains whether supervised access channels activity into compliance across all these market types –– institutional, retail, and cross-border – or whether certain kinds of activity still move offshore. Next year’s data will add clarity.
FAQs
Which country leads Eastern Asia in cryptocurrency adoption in 2026?
South Korea leads Eastern Asia with a $449.1 billion all-in crypto economy between July 2025 and June 2026, growing 12.3% period over period. Japan ranks second at $228.3 billion, followed by Hong Kong at $192.2 billion, China at $176.3 billion, and Taiwan at $140.4 billion. Each market is driven by very different user bases, with South Korea dominated by retail traders, Hong Kong by institutional platforms, and China by peer-to-peer activity.
Why are AI tokens so popular in South Korea?
South Korean retail traders have rotated heavily into AI-linked cryptocurrencies in parallel with the AI equity trade led by SK Hynix. By June 2026, AI tokens made up the single largest thematic category of Korean won trading volume, with Worldcoin (WLD) alone reaching $7.41 billion in volume over the 2026 period. Korean won trading activity in AI tokens is 19.5x the Japanese yen rate and far higher than the Brazilian real, British pound, or euro.
What is making Hong Kong Eastern Asia’s institutional crypto hub?
Hong Kong’s regulatory framework, including its stablecoin licensing regime and VATP rules, has attracted a concentrated institutional user base. Institutional platforms, including OTC desks, custody providers, and market makers, captured 16% of Hong Kong’s service inflows in the 2026 period, up from around 9% two years earlier and nearly three times the share of any other market in the region. Hong Kong also received nearly $24 billion in inbound business-to-business crypto flows, roughly six times what Japan received and 44 times South Korea’s total.
Why has China’s peer-to-peer stablecoin activity grown so quickly?
China’s domestic peer-to-peer crypto economy grew to 59.1% of its all-in economy in the 2026 period, a 3.5x increase in share over the prior year, with the sharpest acceleration beginning in March 2025. That timing aligns with the Chinese government’s expansion of the social credit system into finance and the internet, which may have given retail users an incentive to conduct crypto activity outside banking channels. Unique wallets sending stablecoin peer-to-peer transactions in China grew 43x between Q1 2024 and Q2 2026.
How is Japan’s crypto market structured, and what role does retail play?
Japan’s $228 billion crypto economy is often described as institutional, but its retail footprint is significant and growing. Roughly one in four people who withdraw from Japan-domiciled exchanges later deposit into DeFi protocols, and decentralized exchanges hold nearly 35% market share of Japan’s services industry, the highest share in the region. DEX activity has risen more than 200% since 2022, while centralized exchange activity has remained flat.
This website contains links to third-party sites that are not under the control of Chainalysis, Inc. or its affiliates (collectively “Chainalysis”). Access to such information does not imply association with, endorsement of, approval of, or recommendation by Chainalysis of the site or its operators, and Chainalysis is not responsible for the products, services, or other content hosted therein.
This material is for informational purposes only, and is not intended to provide legal, tax, financial, or investment advice. Recipients should consult their own advisors before making these types of decisions. Chainalysis has no responsibility or liability for any decision made or any other acts or omissions in connection with Recipient’s use of this material.
Chainalysis does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity of the information in this report and will not be responsible for any claim attributable to errors, omissions, or other inaccuracies of any part of such material.
