FSC Report: Late 2023 Witnesses Remarkable Expansion in South Korea’s Cryptocurrency Market
South Korea’s Financial Services Commission (FSC) has published a survey report conducted by the Korea Financial Intelligence Unit, revealing significant growth in the country’s virtual asset market in the latter half of 2023. The survey found that 6.45 million South Koreans, equivalent to 12% of the population, participated in crypto trading during this period. However, small investors held only $734 worth of cryptocurrencies.
The survey, which took place from July 1 to December 31, 2023, involved 29 virtual asset business operators, including 22 exchanges and 7 wallet/custodian services. The data submitted by these businesses enabled the survey’s findings, although individual business responses remained confidential.
Key findings from the FSC survey include notable growth in trading volume and market capitalization. The average daily transaction size for virtual asset traders increased by 24%, reaching 3.6 trillion won, compared to 2.9 trillion won in the first half of 2023. Additionally, the total market capitalization of virtual assets witnessed a substantial 53% surge, rising from 28.4 trillion won to 43.6 trillion won by the end of December 2023.
The survey also revealed an 18% increase in total operating profit for virtual asset businesses, rising from 228 billion won to 269.3 billion won. Moreover, deposits in won held by these businesses grew by 21%, from 4.0 trillion won to 4.9 trillion won, indicating an upswing in investment sentiment and market activity in the latter part of the year.
In terms of user demographics and investment patterns, the survey found a 6.4% increase in the number of people engaging in transactions, rising from 6.06 million in the first half to 6.45 million by the end of 2023. The most active age group in crypto trading was individuals in their 30s. Interestingly, approximately 4.55 million users were small investors holding less than 1 million won (around $734) in cryptocurrencies.
Regarding virtual asset listings and price volatility, the survey indicated a slight decrease of 3.5% in the number of traded virtual assets, going from 622 to 600. This decline was attributed to an increase in new listings and trading suspensions. Furthermore, the number of virtual assets listed by a single domestic business operator decreased by 9.3%, suggesting market consolidation. Despite these changes, virtual asset prices remained highly volatile at 61.5%, indicating ongoing market risks.
The survey also highlighted the closure of more virtual asset businesses, with four operators shutting down by the end of December 2023. This emphasizes the importance of caution when trading and storing virtual assets with these operators.