According to a new study by South Korea’s top financial regulator, The Financial Service Commission, South Korea’s crypto market had grown to 55 trillion Won (45.9 billion USD) by 2021.
South Korea is one of the most strict crypto markets. It has been featured in numerous headlines for its Know Your Company and travel rules. Despite the tight regulatory oversight in 2021, the Korean crypto market has grown to new heights.
FSC analysed transaction data from 24 licensed crypto-exchanges and found that daily transactions on Korean cryptocurrency exchanges exceeded 11.3 trillion won ($9.4 Billion). The total operating profit of all 24 businesses was 3.37 trillion won ($2.8 million). Nine crypto exchanges reported net losses over the last year.
National fiat Korean-won dominated the crypto trading market. This accounted for 95% total crypto transactions. These transactions mainly came from Upbit and Bithumb as well as Coinone, Coinone, and Korbit.
A new crypto license regulation, issued in 2021, required that crypto exchanges open real-name bank accounts for traders. This was in conjunction with a certified bank. Nearly 200 small and medium-sized crypto exchanges were forced out of business by these regulations. Banks refused to offer their services or partner with them.
Related: Korea’s crypto markets are among the strongest and most bizarre in the world.
According to The Korea Herald’s FSC report, there are 15.3 million registered users of crypto exchanges. Only 5.58 million of these people traded in 2021. Nearly 3.1 million of these crypto users have crypto assets below 1 million won ($850), and 15% of traders have virtual assets above 10 million won ($8,500).
South Korea’s crypto license regulations effectively wiped out most medium and small exchanges from the country. Those who survived had to follow strict privacy laws that banned transactions from private wallets and flagged transactions exceeding a certain amount. In November, another proposal was made for token issuers. It was aimed at recovering illegally obtained funds, imposing criminal penalties, and protecting investors against future malfeasance.
In November, another proposal was made for token issuers. It aimed to recover illegally obtained funds, impose criminal penalties, and protect investors from future malfeasance.
The final quarter of 2021 saw the focus shift to crypto taxation by Korean regulators, who proposed imposing a 20% tax upon crypto profits. The tax policy was delayed by the lack of clear regulations on the market.
In recent years, the country has shifted its focus to nonfungible tokens and could become the first nation to issue NFT tax regulations.