Insights from FSC’s Latest Survey: South Korea Witnessing a Surge in Cryptocurrency
The Korea Financial Intelligence Unit, under the Financial Services Commission, has published a report on the state of South Korea’s virtual asset market. The survey conducted during the second half of 2023 revealed that 12% of the country’s population, which amounts to 6.45 million people, were involved in crypto trading. However, it was found that these small investors only held $734 worth of cryptocurrencies.
The survey was conducted from July 1 to December 31, 2023, and included data from 29 virtual asset business operators, including 22 exchanges and 7 wallet/custodian services. While the data provided by these businesses formed the basis of the survey’s findings, the responses from individual businesses were kept confidential.
Key findings from the survey showed significant growth in trading volume and market capitalization. The daily average 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 experienced a remarkable 53% increase, rising from 28.4 trillion won to 43.6 trillion won by the end of December 2023.
The survey also revealed that virtual asset businesses saw an 18% increase in total operating profit, going from 228 billion won to 269.3 billion won. Furthermore, deposits in won held by these businesses grew by 21%, from 4.0 trillion won to 4.9 trillion won, indicating a boost in investment sentiment and market activity during the latter part of the year.
In terms of user demographics and investment patterns, the survey found that the number of people engaging in transactions increased by 6.4%, from 6.06 million in the first half to 6.45 million by the end of 2023. It was also observed that the most active age group in crypto trading was individuals in their 30s. Interestingly, about 4.55 million users were small investors holding less than 1 million won (approximately $734) in cryptocurrencies.
Regarding virtual asset listings and price volatility, the survey indicated a slight decrease of 3.5% in the number of items traded, going from 622 to 600. This decrease was attributed to a rise in new listings and trading suspensions. Moreover, the number of independently listed virtual assets, managed by only one domestic business operator, decreased by 9.3%, suggesting market consolidation. However, virtual asset prices remained highly volatile at 61.5%, indicating ongoing market risks.
The survey also shed light on the closure of virtual asset businesses, with four operators shutting down by the end of December 2023. This emphasizes the importance of caution when engaging in trading and storing virtual assets with these operators.