South Korea today is still a hub for cryptocurrencies. In fact, Kimchi Premium was coined mainly because of the added price that people have to pay just to buy Bitcoin. Since the start of October 2018, trading volume has spiked in the country. According to CryptoCompare, there are some days when almost near 50% of the total market share belonged to South Korea.
Could this be a good sign for South Korea’s crypto market? At the beginning of the year, the trading volume has remained stagnant until the middle of the year. By June to September, it seemed that the trading volume has cooled off in the country. It was also the time when Bitcoin price was struggling the most.
Crypto Exchange Problems
There were a lot of issues surrounding the crypto market in South Korea. For instance, in June 2018, both Coinrail and Bithumb were hacked. And because of this, millions worth of cryptocurrency was lost. Because of the incident, deposits and withdrawals were suspended and have limited the trading until the issue was resolved. As for Bithumb, which is one of the largest crypto exchanges in the country, it had an impact on the local trading volume.
It has been dealing with crypto hacks wherein North Koreans are behind such attacks. Unfortunately, North Korea has been known for the damage that they’ve done in terms of hacking crypto exchanges.
There is a belief among crypto experts that the current turbulence within the stock market has been causing investors to rely on cryptocurrencies. This is quite logical considering how Bitcoin was conceived ten years ago. It was made as a reaction to the 2008 financial crisis. Bitcoin has also shown to be more stable even if it was compared to tech-related stocks such as Amazon and Netflix.
Another reason for the latest increase in trading volume in South Korea is the regulatory changes happening in the country. By mid-2018, regulators considered virtual currencies as legal entities. It has legitimized the crypto market. However, despite legitimizing cryptocurrencies, regulators decided to ban ICOs. The FSC chief even commented to the parliament saying the uncertainties with ICOs make regulation problematic.
Banks Working with Cryptocurrencies
Recently, Choi Jong-Ku who is the commissioner of the Financial Services Commission of South Korea reaffirmed that there are no issues with banks that provide accounts for local cryptocurrency exchanges.
The statement said that “There exists no issue in banks providing virtual bank accounts to cryptocurrency exchanges. If digital asset trading platforms have KYC and AML systems in place, there is no problem in issuing virtual bank accounts to exchanges”.
A virtual bank account is a unique system that is used in South Korea. It is employed on crypto exchanges which allow users to deposit and withdraw the South Korean won instantly. Here, the users hold the cash on exchanges in a more secure manner.
It is possible that interest in cryptocurrencies will go up in the coming months especially when Bitcoin price goes up. There are those experts that are anticipating the entry of institutional investors in the early parts of the year.