[Xangle & Chainalysis] South Korean Crypto Market Overview: Trends and Future Outlooks

South Korean Crypto Market Overview: Trends and Future Outlooks

• $93 billion in Tx volume 6/1 - 10/27; $12 billion from 10/1 - 10/27 on the 4 big exchanges
• Korea ranks second out of 6 East Asian countries in the global crypto adoption index 
• BTC accounts for 15% of total volume on the 4 big exchanges, well below global average
• South Korea ranks 17th out of 154 on global crypto adoption index
• 10 companies in top 50 by market cap on KOSPI doing crypto business (finance, IT, electronics)

Full downloadable report available here

The South Korean Crypto Market Overview, published jointly by Xangle and Chainalysis, revealed that the cumulative value of trading volume from the 4 big crypto assets exchanges in South Korea reached about $93 billion from June to October of this year.

Among the many interesting details to come out of the report was the fact that over those 5 months, altcoin trading volume exceeded the global average while Bitcoin trading volume fell short of the global average. According to CMC, Bitcoin accounted for 26% of global trading volume whereas Bitcoin only accounted for 15.3% of trading volume in South Korea.

From June 1st through October 27th, the cumulative $93 billion in trading volume was split 4 ways between Bithumb ($39 billion), Upbit ($37 billion), Coinone ($15.7 billion), and Korbit ($630 million).

South Korean exchanges tended to fall far behind the global trend in listing and trading Decentralized Finance (DeFi) coins from June through October. DeFi coins represented only 11.5% of the total listings at the 4 big exchanges and a mere 5.96% of the trading volume. The absence of significant DeFi and Bitcoin trading indicates that the lion’s share of trading volume went to altcoins.

Currently there are over 260 coins available for trade on the 4 big exchanges. 33% of those coins come from Korean projects. Divided by exchange, Coinone offers 130, Bithumb offers 116, Upbit offers 105, and Korbit offers 23 coins from projects based in Korea. Korean projects that constitute the top-ten traded Korean coins are from the top: TMTG, ANW, FLETA, KLAY, AHT, EGG, MLK, BORA, GOM2, and FCT.

Market maturity - letting go of the speculative past

The next section of the report includes portions of interviews with experts on the South Korean crypto assets industry. The general consensus from these experts is that the crypto assets market is undergoing a period of maturity as it is increasingly recognized as an area of finance.

An official from Bithumb, one of South Korea’s largest exchanges by trading volume, was the first to comment on the current state of the market. He said that in previous years, the digital asset market was flooded with investors who actively sought out high-risk / high-reward opportunities. Starting this year, however, the digital assets market began to earn its place in regulated finance.

He continued, “Furthermore, when the amendment to the Special Reporting Act comes into effect, the market will see tremendous changes because unqualified exchanges will be banned.” As authorities introduce more detailed regulatory frameworks for market players, Bithumb plans to expand their reach in the financial markets as part of a future growth strategy.

An official from Xangle, a crypto assets disclosure service, had comments about the state of the crypto assets market in South Korea. He noted, “The demand for and consumption of verifiable information is increasing as speculative trading decreases... The market is maturing both on the side of exchanges and individuals.”

Finally, officials from Chainalysis, a blockchain and crypto transaction analysis company, offered their outlooks on the current and future South Korean crypto markets. Kim Grauer, Head of Research, said “We find that our activities in South Korea are predominately driven by large on-chain transfers rather than P2P, retail, and others.”

She continued with her prediction about the future overall success of the market. “Ranked at number 17 in our index and number 8 in terms of on-chain activity, South Korea has a strong professional market that we expect to continue to grow over the coming years.”

Jesse Spiro, Global Head of Policy at Chainalysis also commented that the strict regulatory regime that is being rolled out in Korea has required special preparations. They have recommended that industry players introduce new compliance programs to aid their customers and internal operations. Spiro acknowledged that the programs may be quite costly but highlighted that their successful implementation would dramatically reduce fraud and ML schemes that have previously succeeded.

Contents

• Korean exchanges and crypto assets investment status
• Regulation and introduction of crypto assets in Korean market
• Interviews with experts about Korean crypto market

Summary:

1. Market overview by Statistics

- More than 77 crypto assets exchanges are based in South Korea. Accumulated transaction volume over the past 5 months of the 4 big exchanges(Bithumb, Upbit, Coinone, Korbit) is valued at $93 billion 

- More than 260 projects are available for trading in Korea

- Investment in altcoins is high and decoupled with global trends

- South Korea ranks 17th out of 154 countries on our global crypto asset adoption index, and 3rd place in Global rank in receiving on-chain transaction

2. Crypto Assets Market Services & Adoption Developments

- Regulations

• Crypto Assets TF, Transfers to Justice Department in concern of overheated trading and increased number of crimes during the 2017-2018 crypto asset market boom
• Although as of 2020, new Tax Law and Enforcement decree of the Act on the reporting and use of certain financial transaction information have passed the assembly, These are limited in terms of institutionalization of crypto assets, as they are intended to taxation and preventing money launder.

- Introduction

• 8 of the top-50 companies(16%) are engaged in crypto assets business.

3. Interviews

- Collecting views on the Korean market from experts in the crypto asset industry

• Xangle: Xangle is a global crypto asset disclosure platform aiming to bring transparency and trust to the crypto asset market so that users can easily access and understand the information.

• Chainalysis: Chainalysis is a blockchain analysis company that provides compliance and investigation software to the world’s leading banks, businesses, and governments.
• Bithumb: Bithumb is one of the most popular crypto assets trading platforms in South Korea. By trading volume, they rank among the top 2 most used exchanges between Korea and Japan.

Full downloadable report available here