During the first three months of 2024, the South Korean Won became the most frequently used currency for cryptocurrency transactions worldwide. Based on statistics from research company Kaiko, the total trade value in South Korean Won amounted to an impressive $456 billion, surpassing the $445 billion transacted in US dollars.
According to Bloomberg’s report, there’s been a significant increase in South Korean trading using the won currency for cryptocurrencies. This surge suggests that South Koreans are increasingly drawn to “riskier digital assets.”
The Rise of Korean Won-Denominated Trading
Based on Bloomberg’s report, the increase in trading using the Korean won as currency is driven in part by intense competition amongst local cryptocurrency exchanges in South Korea.
Smaller cryptocurrency exchanges like Bithumb and Korbit are trying to draw in traders by providing them with zero-fee trading deals. This move is intended to rival Upbit’s stronghold of approximately 80% in the local spot trading market.
Traders have been attracted to swap higher fees on some platforms, causing them to increase their trading activity in Korean won on other platforms that offer better deals.
The report revealed an intriguing finding about high-risk cryptocurrency markets: South Korea emerges as a notable exception.
In the bustling crypto market, South Korea stands out as an exception, particularly in the high-risk sector. The population there exhibits a distinct preference for smaller, less stable digital tokens, also known as altcoins, over established cryptocurrencies such as Bitcoin and Ether. On a regular basis, transactions involving these smaller tokens account for over 80% of all crypto trading activity in South Korea.
Navigating South Korea’s Crypto Regulatory Maze
South Korea’s stance on digital currencies is intricate, featuring both interest and rigor. The nation keeps a close eye on the crypto market yet imposes strict rules to prevent illicit activities.
Significantly, the ongoing legal actions against Do Kwon, the founder of TerraForm Labs, highlight the regulatory efforts to ensure adherence within the industry. Recently, there have been disclosures that South Korea intends to extradite him for these infringements.
Furthermore, in an effort to control the cryptocurrency market within their jurisdictions, the heads of South Korea’s Financial Supervisory Service (FSS) and the United States Securities and Exchange Commission (SEC) are planned to hold a meeting in May.
At this meeting, we’ll talk about categorizing non-fungible tokens (NFTs) and endorsing Bitcoin exchange-traded funds (ETFs) as spot products. Both the financial regulators of South Korea and the US are considering acknowledging NFTs as virtual assets due to their blockchain-based proof of ownership.
In addition, South Korean crypto exchanges are now subject to stricter rules. A new regulation stipulates that these exchanges must keep at least 3 billion won ($2.3 million) in reserve.
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2024-04-17 05:12