South Koreans are riding the cryptocurrency wave, with the country seeing a surge in adoption following the victory of incoming United States President Donald Trump.
Local media outlet Yonhap News reports a rise in cryptocurrency users, now accounting for over 30% of the roughly 51.23 million people living in South Korea.
Bank of Korea data publicised by the Democratic Party of Korea Representative Lim Kwang-Hyun indicate that the total number of crypto users went up by 610,000, bringing the total number of such individuals to 15.6 million by the end of November.
This report marks the first time the central bank has disclosed crypto-related data.
The metrics show an uptick in both investors and the funds invested since July.
The Donald Trump effect
14.74 million held 58.6 trillion won (approximately $41.4 billion) worth of digital assets in July, with the investment amount almost doubling to 102.6 trillion won (around $72.5 billion) in November, right after Trump secured his return to the White House.
On Nov. 5, Trump clinched the US presidential election, solidifying hopes of a crypto-friendly administration in Washington.
The crypto market has rallied in response post-election, while the President-elect has continued to appoint pro-crypto allies to key positions.
However, South Koreans seemed to have been prepping for this surge ever since Trump began his campaign, with the market consistently onboarding roughly 100,000 new virtual asset investors every month since July, the report noted.
Further, it added that trading volumes, which were mostly concentrated across five of the country’s top domestic exchanges, had reached levels that challenged the stock market.
The average daily trading volume on domestic exchanges hit a staggering 14.9 trillion won, matching the combined totals of the KOSPI (9.92 trillion won) and KOSDAQ (6.97 trillion won) markets.
Commenting on the rapid growth of the virtual asset market, Lim Kwang-Hyun said:
Thorough preparations are needed at a government-wide level to enhance the stability of the virtual asset market and establish sound trading practices that protect users’ rights and interests.
Regulating the crypto sector
South Korea has tightened its grip over the crypto sector this year with the introduction of regulations aimed at enhancing user protection and mitigating illicit activities.
Specifically, exchanges, which form the backbone of any crypto economy, are monitored under the Virtual Asset User Protection Act.
The regulation came into effect on July 19 and requires exchanges to implement measures such as holding at least 80% of users’ assets in cold storage and segregation of customer funds from company assets.
Service providers are also required to report suspicious transactions and assess listed cryptocurrencies to maintain a healthy market environment.
Meanwhile, exchanges are also subject to periodic evaluations conducted by the Financial Supervisory Service.
However, the nation has yet to finalise its taxation laws for the sector.
A draft regulation on the matter has been repeatedly delayed and is now set for a 2027 implementation. The law proposes taxing crypto gains at 20%.
Several key regulations are still in the pipeline regarding the ban on initial coin offerings, permitting real-name accounts for crypto trading, letting local companies hold cryptocurrencies on their balance sheets, approving a Bitcoin spot ETF, and regulations for securities token offerings.
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