The cryptocurrency wind is blowing strongly in South Korea, where the South Korean won recently overtook the US dollar in terms of volume traded on centralized exchanges (CEX). This trend is largely due to the competition between the country’s major exchanges, such as Upbit, Bithumb and Korbit, which compete to attract users with low or no-fee campaigns.
Cryptocurrencies are on the rise in South Korea
According to recent analysis conducted by Kaiko, The South Korean won has overtaken the US dollar as the most traded cryptocurrency currency on centralized exchanges (CEX).
The KRW thus surpassed the USD to the tune of $11 billion in terms of transaction volumes in the first quarter of the year.
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Cumulative trading volume for major currencies in the first quarter of 2024
According to Kaiko, these significant volumes must be attributed to the competition established between the various South Korean CEXs.
While crypto exchange Upbit remains largely the leader in its sector in South Korea with around 82% market share over the past 3 years, its main rivals Bithumb and Korbit have launched “0 fees” campaigns on trading operations carried out on their platforms in an attempt to reverse the trend.
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A policy that has borne fruit for Bithumb, where the cryptocurrency exchange has seen its market share triple after the introduction of zero fees last October.
Anyway, Bithumb suffered an operating loss of 14.9 billion won in 2023, or about $11 million.
Figures that led the exchange to end its zero-fee campaign earlier this year so it could once again generate profits on trading operations. However, this prompted South Korean investors to return to Upbitalthough Bithumb managed to capture up to 40% of the market share in February.
Market shares of the main cryptocurrency exchanges in South Korea
In any case, all this has benefited South Korean investors, which therefore allowed the South Korean won to surpass the dollar in terms of volume traded on cryptocurrencies for at least a quarter.
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It is expected the South Korean government is implementing new measures regarding cryptocurrency exchange from next July as a result of the collapse of the Terra (LUNA) ecosystem, which caused the loss of 40 billion dollars.
These measures include, among other things, prison sentences in the event of a criminal act or the obligation to separate customer crypto from exchanges.
However, the South Korean government is far from closed to cryptocurrencies. Last February, the party indicated that cryptocurrencies would not be taxed until at least 2027 to contribute to tax relief for South Koreans.
According to Kaiko, the recent approval of Bitcoin and Ethereum ETFs in Hong Kong could also promote the development of markets in the Asia-Pacific.
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Source: Kaiko
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