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China has re-entered the top ten of Chainalysis’ countries in cryptocurrency adoption, the blockchain analysis firm has stated. Its latest summary indicates that the Asian country moved three places from its 13th spot on the 2021 Global Crypto Adoption Index and now sits at the 10th. The move is particularly interesting because crypto-related activities have been considered banned in China.
China has banned crypto
In September 2021, the Chinese government extended a crypto mining ban in May to related trading citing their risks to the financial system. There was a clampdown on mining activities in every part of the country thereafter until it was somewhat believed that the once-thriving industry has been crippled completely as far as China is concerned. Also, top crypto exchanges, including Huobi and KuCoin, were forced to retire a large chunk of their user base in China Mainland to ensure compliance to the government’s policy.
However, Chainalysis says its latest data “suggests that the ban has either been ineffective or loosely enforced.” “Our sub-indexes show that China is especially strong in the usage of centralized services, placing second overall for purchasing power-adjusted transaction volume at both the overall and retail levels,” a section of the report states.
China rebuilding crypto interest
The 2022 index puts Vietnam in the top spot, followed by Philippine, Ukraine and India. The U.S. has jumped to the fifth position. Chainalysis says global adoption reached current all-time high and leveled off in 2021 after growing consistently since mid-2019.
Using a framework based on World Bank categorization of countries into four categories: high income, upper middle income, lower middle income, and low income, the firm ranked 146 countries with sufficient data according to five metrics.
China, alongside Brazil, Thailand, Russia, and Turkey, are some of the eight are upper middle income countries from emerging markets that dominate the adoption index. There are ten others including Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, and Indonesia from lower middle income countries.
It says China was particularly ranked high in terms of two metrics: the centralized service value received and retail centralized service value received. The former seeks to rank each country by total cryptocurrency activity that occur on centralized services including exchanges, Chainalysis points out. The latter measures the activity of non-professional, individual cryptocurrency users at centralized services, based on how much cryptocurrency they are transacting compared to the wealth of the average person.
Expected based on developing trend
From indications, the Index is somewhat strengthening an outcome that has been expected from the developing trend in China’s crypto industry.
A joint peer-reviewed study in February had concluded that China’s supposed exit from the cryptocurrency mining space did not curb the carbon footprint left behind by its industry. The study’s focus is related to energy use hence did not explore whether mining activities was going on in the country until the report by the Cambridge Centre for Alternative Finance (CCAF) came out.
The CCAF had in a new mining map data confirmed the growing dominance of the US and revealed China’s surprising resurgence as a major contender in the Bitcoin mining field. At the time of the finding’s release, the CCAF put China as representing more than 20% of the Bitcoin network’s hash rate. The Centre’s figures suggest that China’s discreet mining activities resurged to be only behind the US but ahead of Kazakhstan, Canada and Russia thus introducing a new dimension to the crypto mining market competition.
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