Strategic Research & Implementation Plan

Prepared: April 12, 2025

Executive Summary

This report evaluates the potential for Spark Finance to enter the Chinese cryptocurrency and DeFi market, particularly focusing on expanding the adoption of its stablecoin, sUSDs, in the region. Despite regulatory challenges, China represents a significant untapped opportunity with its massive tech-savvy population, growing interest in digital assets, and increasing cross-border transaction needs.

The strategy proposes a phased approach that respects regulatory boundaries while establishing Spark's presence through strategic partnerships, community building, and product adaptations tailored to Chinese users' needs. The plan emphasizes Hong Kong as an initial entry point, leveraging its status as a crypto-friendly special administrative region with close mainland connections.

The following analysis details market conditions, potential obstacles, partnership opportunities, and a structured implementation timeline to guide Spark's expansion into one of the world's largest potential DeFi markets.

1. Market Analysis

1.1 Chinese Crypto Landscape Overview

Current Regulatory Environment:

• Mainland China maintains a ban on cryptocurrency trading and mining operations since 2021
• However, Hong Kong has established a regulated crypto framework with retail trading allowed since June 2023
• The "One Country, Two Systems" policy creates a potential gateway to indirectly access the mainland market
• Recent signals suggest potential softening of hardline stance with China's Civil Code recognizing cryptocurrencies as virtual property

Market Size & Potential:

• China has over 900 million internet users, representing the world's largest digital population
• Despite bans, an estimated 20 million Chinese citizens actively participate in cryptocurrency markets through VPNs and offshore exchanges
• Chinese users account for approximately 13% of global cryptocurrency holdings by value
• P2P and gray market trading volume involving Chinese users exceeds $50B annually

Cultural & Technical Factors: