South Korea became East Asia’s largest crypto market from July 2025 through June 2026, with its crypto economy totaling $449.1 billion, according to a Chainalysis report. The market grew 12.3% year over year as retail investors actively traded tokens linked to artificial intelligence, putting South Korea ahead of Japan and Hong Kong.

Japan’s crypto economy totaled $228.3 billion, followed by Hong Kong at $192.2 billion, China at $176.3 billion and Taiwan at $140.4 billion.

Retail traders favor AI tokens

Chainalysis said growth in South Korea was largely driven by centralized crypto exchanges, where volume rose 16.3%. Institutional participation remained limited because of legislative barriers.

“South Korea is famously retail-driven crypto market,” said Francis Kan, executive director of Korea Blockchain Week.

Kan said large financial institutions were only beginning to prepare for a broader expansion into the crypto sector. “Every major bank and securities firm now has a digital asset team, and most are running stablecoin, tokenization, or custody pilots,” he added.

By June 2026, AI tokens had become the largest thematic category by share of Korean won trading volume, surpassing categories including payment tokens such as XRP. Trading volume in AI cryptocurrencies against the won was 19.5 times the equivalent volume against the Japanese yen.

Worldcoin (WLD) recorded $7.41 billion in volume, followed by SAHARA at $3.2 billion, VIRTUAL at $2.7 billion, BIO at $2 billion and NEAR at $1.7 billion.

The segment’s leaders also changed quickly. VIRTUAL and KAITO, which were popular in 2025, gave way to Worldcoin and SAHARA. Chainalysis said Korean retail traders rotated between AI assets more quickly and actively than participants in other markets covered by the report.

Japan shifts toward decentralized exchanges

Japan remained East Asia’s second-largest crypto market. Decentralized exchanges accounted for 34.5% of its crypto-services segment, the highest share among East Asian countries with mature centralized markets.

Activity on Japanese decentralized exchanges has increased by more than 200% since 2022, while centralized exchange use has remained nearly unchanged. About one in four users withdrawing funds from Japanese crypto exchanges later transferred them into decentralized finance protocols.

“The most visible activity is in perps,” said Taishi Sato, DeFimans CEO.

Sato said Japanese traders use venues such as Hyperliquid alongside their stock portfolios “to manage directional and macro exposure, rather than treating them purely as crypto-native trading venues.”

Hong Kong leads institutional activity

Hong Kong became East Asia’s main institutional crypto hub. Institutional platforms, including over-the-counter desks, custodians and market makers, generated 16% of inflows into the city’s crypto-services segment, nearly three times the share in any other East Asian market.

Hong Kong received nearly $24 billion in domestic business-to-business transfers during the study period. Net cumulative institutional capital inflows through regulated services reached $17.4 billion from mid-2022.

Peer-to-peer trading dominates in China

Peer-to-peer transactions dominated China’s crypto economy despite the country’s ban on crypto services. The domestic peer-to-peer segment accounted for 59.1% of the crypto economy, while the number of unique wallets sending stablecoins between users increased 43-fold from the first quarter of 2024 to the second quarter of 2026.

South Korea plans to pass a digital-assets law in the second half of 2026.

Source: Incrypted