Crypto Traders Shift 70% to Digital Banks for Convenience and Compliance

Nearly 70% of crypto traders in the region have shifted their preferences from traditional exchanges to digital banks. This transition is driven by several key factors, including convenience, regulatory compliance, and ease of access. Digital banks offer a seamless and user-friendly experience, allowing traders to manage their crypto assets alongside their traditional financial services. This integration provides a more cohesive and efficient approach to financial management, appealing to a growing number of traders who seek simplicity and security.

The shift towards digital banks also reflects a broader trend in the financial industry towards digitalization and innovation. As regulatory frameworks evolve, digital banks are better positioned to adapt to new requirements, providing traders with a more compliant and secure environment. This regulatory compliance is a significant factor for traders who prioritize the safety of their investments.

Moreover, the ease of access offered by digital banks is a major draw for traders. With digital banks, traders can access their accounts and manage their assets from anywhere at any time, using a variety of devices. This flexibility is particularly appealing to traders who need to stay connected to the market and make quick decisions. The convenience of digital banking solutions, combined with their regulatory compliance and ease of access, makes them an attractive option for crypto traders in the region.

According to the survey, nearly 70% of respondents believe that clearer rules around cryptocurrency will encourage more people to join the market. A majority also said they would like more trading flexibility. Over 81% said they want digital banks to support crypto-to-crypto transfers, which would make it easier to move between assets. This indicates a growing demand for more integrated and flexible financial services that can accommodate the evolving needs of crypto traders.

Despite concerns around past market failures, such as the collapse of FTX in 2022, many respondents said they are more comfortable using exchanges that are licensed. The study showed that around 20% more investors trust regulated platforms over unregulated ones when it comes to storing their funds. This shift towards regulated platforms highlights the importance of trust and security in the crypto market, as traders seek out reliable and compliant options for managing their digital assets.

Bitcoin remains the most favored cryptocurrency among investors. More than 80% of those surveyed said they were interested in Bitcoin, a 7% rise compared to earlier results. In contrast, interest in NFTs has dropped by 11%, reflecting shifting trends in digital assets. This trend suggests that while Bitcoin continues to dominate the market, there is also a growing interest in other types of digital assets, such as tokenized products and central bank-issued digital currencies.

However, awareness of emerging digital financial tools remains low among residents. About 72% of participants said they had little or no knowledge of central bank-issued digital currencies. Meanwhile, 65% were unfamiliar with the local e-HKD project, and 81% had not heard of tokenized deposit systems. This lack of awareness highlights the need for greater education and outreach efforts to promote the adoption of new digital financial tools and technologies.

As more users adopt digital banks for crypto trading, the line between traditional finance and digital assets continues to narrow. This trend is supported by new policies that allow companies to offer tokenized products and licenses being issued to compliant exchanges. The Hong Kong Monetary Authority introduced the “Project Ensemble Sandbox” in August 2024 as a trial platform to explore how tokenized money can be used in bank-to-bank payments and transactions involving digital assets. The initiative forms part of Hong Kong’s broader efforts to strengthen its position in the digital finance space.