In the first quarter of 2024, the South Korean won took the lead as the most widely used currency for crypto-currency trading, surpassing the US dollar, research firm Kaiko reveals. During this period, the total volume of won trading on centralised crypto-currency exchanges reached $456 billion, while the US dollar recorded $445 billion.
South Korea is home to one of the world's most active crypto-currency markets. During the crypto-currency surge in March, the volume of local crypto-currency trading even briefly surpassed that of the country's stock market.
Five fully licensed exchanges - Upbit, Bithumb, Coinone, Korbit and Gopax - dominate the local market. Upbit, the market leader, controls more than 80% of market share on most days, according to Kaiko. Bithumb, in second place, sought to attract new users by organising campaigns with no transaction fees at the end of 2023.
Major global exchanges such as Crypto.com and Binance are also looking to penetrate the burgeoning South Korean market. Earlier this month, Crypto.com announced the launch of its retail platform in the country on 29 April. Binance, meanwhile, had already acquired a major stake in Gopax in 2023. However, local regulators have repeatedly delayed approval of the transfer of ownership of Gopax to Binance, apparently due to Binance's legal problems in the US.
In South Korea's general election on 10 April, the opposition Democratic Party won a major victory, taking 175 of the 300 seats in the national parliament. The Democratic Party made several election promises aimed at boosting the local crypto-currency sector, including the approval of local crypto-currency exchange-traded funds.
The government is also working to establish a regulatory framework for local investors. In July 2023, South Korea enacted the Virtual Asset User Protection Act, its first crypto-currency-focused legislation, which is set to come into force this July. The legislation aims to stamp out illegal acts in the market, such as using undisclosed information for crypto-currency investments, manipulating market prices and participating in fraudulent transactions. It also requires crypto-currency service providers to protect more than 80% of deposits in cold storage to secure user funds and enrol in insurance programmes for potential compensation to users in the event of security breaches.
South Korea is currently working to develop the second part of the User Protection Act, which is expected to focus on standardising the issuance of crypto-currency tokens and disclosure of information for investors.
