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The south korean crypto market increased to 55 trillion won ($45.9 billion) at the end of 2021, under a new study from the country's chief financial regulator, the financial services board.
South Korea is considered among the strictest crypto markets in terms of regulatory policy implementations and made regular headlines throughout 2021 for its new travel rule and Know Your Company requirements. However, Korea's cryptography market reached new highs despite the regulatory review in 2021.
The fsc analysed the transaction data of the 24 authorised crypto exchanges and revealed that the daily transactions on the Korean crypto exchanges reached 11.3 trillion won (9.4 billion dollars). The combined operating profit of 24 businesses was 3.37 trillion won ($2.8 billion). A total of nine cryptography awards reported a net loss over the past year.
The crypto trading market was dominated by national Korean fiat-won which accounted for 95% of the total crypto transactions that came mostly from upbit, bithumb, coinone and korbit.
The domination of won in the Korean crypto market is attributed to a new crypto license regulation issued in 2021, that required crypto exchanges to open real-name bank accounts of traders in association with a certified bank. The particular regulations have forced nearly 200 small and medium-sized crypto exchanges to close, as banks have refused to partner or offer any of their services.
Related: Korea’s crypto market is among the strongest — and the strangest — in the world
The FSC report published by The Korea Herald suggests there are a total of 15.3 million registered crypto exchange users, out of which only 5.58 million people participated in trading in 2021. On the 5.58 million crypto users, nearly 3.1 million users own crypto assets worth less than 1 million won ($850), while 15% of traders own virtual assets worth more than 10 million won ($8,500).
South Korea’s crypto license regulations wiped the majority of the medium and small exchanges out of the country and those who survived had to adhere to strict privacy laws, banning transactions from the private wallets and flagging transactions above a certain amount. Another proposal was issued in November for token issuers aimed at recovering illegally gained funds, doling out criminal punishments, and protecting investors from future malfeasance.
Another proposal was issued in November for token issuers aimed at recovering illegally gained funds, doling out criminal punishments, and protecting investors from future malfeasance.
By the last quarter of 2021, Korean regulators have moved towards cryptotaxation, with a proposal to impose a 20% tax on crypto profits. However, in absence of clear regulations for the market, the tax policy was delayed for another year.
The country has also shifted its focus on nonfungible tokens in the recent past and might become one of the first nations to issue NFT tax regulations.
