Key Insights:

• South Korea’s crypto trading volume hit $2.6 billion daily, leading global markets.
• Active crypto users in South Korea soared to 6.45 million by the end of 2023.
• New legislation in South Korea aims to enhance crypto market security and transparency.

South Korean retail investors significantly contributed to the global crypto boom that drove Bitcoin prices to record highs in early 2024. The rapid increase in trading activity and user base in South Korea set a strong foundation for Bitcoin’s ascent.

By the end of 2023, active users on registered South Korean exchanges increased by 390,000, reaching a total of 6.45 million. This figure represents more than 10% of the country’s population, with 99% of these users being individual investors. Notably, nearly 60% of the investors fell within the age range of 30 to 40 years.

More than 10% of South Koreans are trading crypto as local retail investors pile into digital assets https://t.co/nh4Mm5WUVa

— Bloomberg (@business) May 16, 2024

The daily average crypto trading volume in South Korea surged by 24% to 3.6 trillion won ($2.6 billion) during this period. Simultaneously, the total value of crypto assets held by registered exchanges increased by 53% to 43.6 trillion won. These metrics underscore the growing enthusiasm and participation in the crypto market among South Koreans.

Dominance of the South Korean Won in Global Crypto Markets

In the first quarter of 2024, the South Korean won emerged as the most traded currency against crypto-assets globally, surpassing the US dollar. Upbit, the leading exchange in South Korea, frequently ranked among the top five exchanges worldwide by trading volume. This increased activity indicates South Korea’s pivotal role in the global crypto market.

Despite the collapse of TerraUSD, a stablecoin created by South Korean native Do Kwon, local investor interest remained robust. This enduring enthusiasm led a major political party to pledge access to US Bitcoin ETFs for South Koreans during the recent parliamentary elections.

Legislative Changes and Market Regulation

Starting in July, South Korean regulators will implement the Virtual Asset User Protection Act. This new legislation introduces stringent requirements for exchanges and harsher penalties for misconduct in the sector. The regulatory changes aim to enhance the security and transparency of the crypto market and ensure investor protection.

The Korea Financial Intelligence Unit (KOFIU) released a report highlighting the growth in trading volume, market capitalization, operating income of exchanges, and deposits in Korean won. According to KOFIU, the increase in crypto prices and the recovery of investor sentiment drove these improvements. The number of crypto trading users rebounded from the first half of 2023, reflecting renewed confidence in the market.

Market Capitalization and Bitcoin’s Price Surge

The South Korean crypto market reached a new height of $32.4 billion by the end of 2023. This surge was fueled by heightened interest in digital assets, particularly Bitcoin (BTC), which hit $73,000 in March following a two-year rebound. Although Bitcoin prices dipped below $57,000 in April, they rebounded to $66,000, continuing to attract investors.

A survey by KOFIU revealed that licensed exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax recorded an increase in market capitalization, amounting to $11.2 billion in the last six months of 2023. The survey covered 22 local exchanges and seven wallet and custodial service providers, illustrating the comprehensive growth of the sector.

Individual Investors Drive Market Expansion

The growth in South Korea’s crypto market was predominantly driven by individual investors. This group, making up 99% of the total active registered users, primarily engaged in trading Bitcoin, Ethereum (Ether), and other altcoins. The influx of these investors significantly contributed to the increased daily trading volumes and overall market activity.

In addition to trading volume, the average daily trading volume in the KRW market rose by 24% to $2.6 billion. However, the coin market, which involves crypto-to-crypto transactions without national currencies, experienced a decline of 44% to $30,000.

The survey findings indicate that traders exploring South Korea’s crypto sector gained substantial traction between July and December 2023. The increased trading volumes and daily activities highlight the sector’s growth and the pivotal role of individual investors in driving this expansion.