South Korean Won Now Overpowers Crypto Trading Demand

Key Points:

• South Korean won becomes top currency for global crypto trading, hitting $456 billion in Q1 2024, surpassing dollar volume.
• Preference for altcoins over major cryptocurrencies is evident in South Korea, with over 80% of trading activity involving smaller tokens.
• Concerns over pensions and rising insurance costs among young Koreans, while politicians promise crypto-friendly policies.

According to Bloomberg, the South Korean won has emerged as the leading currency for trading against cryptoassets globally, reflecting a surge in speculative demand for risky tokens within the country.

South Korean Won Surges to Global Crypto Trading Dominance

Data from research firm Kaiko reveals that in the first quarter of 2024, the South Korean won accounted for a staggering $456 billion in cumulative trade volume on centralized crypto exchanges, surpassing the $445 billion traded in dollars.

This trend is partly attributed to a fee war among South Korean exchanges, with smaller platforms like Bithumb and Korbit offering zero-fee trading promotions to attract traders from dominant player Upbit, which commands over 80% of the local spot trading market.

In South Korea, preferences lean heavily towards smaller and more volatile tokens, known as altcoins, which constitute over 80% of trading activity on average, diverging from the global trend favoring larger cryptocurrencies like Bitcoin and Ether.

Political Promises and Regulatory Responses

Despite being a significant market for cryptocurrency, South Korea‘s strict regulatory environment has limited foreign competition, with only a select few companies permitted to offer services pairing cryptocurrencies with fiat currency.

A survey conducted by the Korea Women’s Policy Institute in July 2023 found that nearly 90% of respondents aged in their 20s and 30s expressed concern about their pensions due to fears of rising insurance costs amid a declining population.

The feverish demand for cryptoassets has even entered the political arena, with promises made during recent parliamentary elections to delay digital asset taxes or ease restrictions on investing in US Bitcoin ETFs in a bid to court voters.

Responding to concerns over user protection following the collapse of TerraUSD, South Korean regulators are set to introduce tighter rules from July onwards. The $40 billion collapse of TerraUSD, created by Do Kwon, has underscored the need for greater oversight in the cryptocurrency space.