Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market

Originally written by Karen, Foresight News

This week, the Financial Intelligence Analysis Institute of the Financial Services Commission of Korea released the 20-page survey of virtual asset companies for the first half of 2023, which presents the current situation of the Korean virtual asset market with 35 virtual asset companies (26 exchanges and 9 wallets and custodians) as the survey subjects.

This report is relatively true based on information submitted by the Korea Financial Intelligence Analysis Agency (FIA) based on information submitted by 35 virtual asset companies. Foresight News has compiled and summarized ten key points for readers to get a glimpse of the real situation of the Korean virtual asset market and the asset preferences of Korean users.

TL; DR:

• The average daily total trading size of 26 South Korean exchanges in the first half of the year was US$2.168 billion, down 1.3% sequentially, with the won market dominating and non-won market trading volume negligible.
• Combined operating profit from the 26 virtual asset exchanges was $170 million, up 82% sequentially.
• The 26 exchanges have a total of 1,915 employees, accounting for 32.8% of the part-time employees.
• South Korea's domestic virtual asset market is around $21.2 billion, up 46% from the end of last year.
• XRP is very attractive to South Korean users, second only to Bitcoin.
• 26 exchanges have approximately 9.5 million registered users (including double counting) and 6.06 million trading users.
• 73% of South Korean users hold virtual assets under $747, and 0.7% of South Korean users hold virtual assets above $74,600.
• Virtual Asset Wallet & Custody: Operating income for the first half was $2.61 million, down 71% sequentially.

First, the average daily trading volume of the Korean exchange in the first half of the year was US$2.168 billion, down 1.3% from the previous month

In the first half of 2023, the average daily trading size of the 26 virtual asset exchanges was 2.9 trillion won (about US$2.168 billion), down 1.3% from the second half of last year.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-062599a0f0-dd1a6f-69ad2a.webp)

Among them, the trading volume of the won market dominates absolutely, and the trading volume of the token market (non-won market) is negligible. There are 5 exchanges with an average daily trading volume of less than 1 million won ($747) in the token market.

As can be seen from the chart below of the average daily trading size by month, the trading volume of Korean exchanges has continued to decline since February this year.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-3016bc8841-dd1a6f-69ad2a.webp)

Trends in average daily trading size of Korean exchanges from October 2022 to June 2023 (by month)

Second, Korea Exchange's total operating profit was US$170 million, an increase of 82% sequentially

In the first half of the year, the total operating profit of the 26 virtual asset exchanges was US$170 million, an increase of 82% from US$93 million in the second half of 2022 (operating profit in the fourth quarter of 2022 was too low).

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-1ca88ff6a2-dd1a6f-69ad2a.webp)

Quarterly aggregated operating profit trends (purple for the won market, green for the token market)

As can be seen from the table above, the operating profit of the won market is absolutely dominant. Of the 21 exchanges running token markets, 10 have a token market transaction fee of 0 and 18 are in full capital loss.

Korean exchanges have a fee rate between 0.01% and 0.25%, with an average fee rate of 0.15%, down 0.01% from the second half of 2022, with the average fee rate of the won market being 0.15%.

Third, the exchange won deposits are close to $3 billion, an increase of 11% from the end of last year

As of the end of June, the exchange had 4 trillion won (nearly $3 billion) in Korean won deposits, an 11% increase from the end of last year.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-9fa3e8b9cb-dd1a6f-69ad2a.webp)

Average daily KRW deposit size by month (in trillion won)

4. The total number of employees of the 26 exchanges is 1915, and the proportion of part-time employees accounts for 32.8%

The 26 exchanges had an average of 74 employees and a total of 1,915 employees, down 178 from the end of last year, of which 269 were related to anti-money laundering (AML), accounting for 13.5%. In addition, the proportion of part-time jobs accounted for 32.8%.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-d588227f6b-dd1a6f-69ad2a.webp)

Exchange employee status (green represents data as of June 2023, purple represents data as of the end of November 2022, the chart on the left is the average number of employees of the exchange and the number of AML related employees, and the chart on the right is the proportion of AML employees and part-time employees. ）

5. A total of 622 virtual currencies have been launched on 26 exchanges

After excluding duplicate currencies, 26 exchanges launched a total of 622 virtual currencies, which is not much different from the second half of last year. The largest number of virtual assets listed on a single exchange platform is 236, the fewest is 3, the average number of tokens supported by the Korean won market is 163, and the average number of tokens supported by the token market is 28.

Among them, there are 366 virtual assets listed by only one Korean exchange, accounting for 59%. Specifically, in the first half of 2023, 169 new tokens (including duplicates) were listed on the Korean exchange, an increase of 128% month-on-month, and 115 tokens (including duplicates) were removed, an increase of 47% month-on-month. 66% of the delisted coins were listed by only one Korean exchange.

The main factors to consider for the removal of tokens include project risk, investor protection risk, market risk and technical risk.

6. Which tokens do Korean users prefer?

South Korea's domestic virtual asset market value is around $21.2 billion, up 46% from the end of last year. The market capitalization of domestic virtual assets given by the Korea Financial Analysis Institute is defined as the sum of the number of each virtual asset held by the Korean exchange multiplied by the market price of the underlying asset.

Among the top 10 virtual assets in South Korea by market capitalization, 6 are within the top 10 global virtual asset market capitalization rankings, including BTC, XRP, ETH, DOGE, ADA, and SOL. The table below shows the asset preferences of Korean users. It is worth mentioning that XRP is very attractive to Korean users, second only to Bitcoin.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-22003a4948-dd1a6f-69ad2a.webp)

Top 10 asset classes in the global and Korean virtual asset markets, from left to right, by market capitalization (in trillion won)

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-7becb5ab31-dd1a6f-69ad2a.webp)

From left to right, the top 10 asset classes in terms of market capitalization in the world, Korean won market, and Korean token market (unit: trillion won)

Among the top 10 capitalization assets in the Korean token market, except for W** assets, the remaining 9 assets are listed on a single exchange.

7. The amount of virtual asset transfers between Korean exchanges is US$22.2 billion, and 22% of the travel rule is applied

In South Korea, exchange users are required to provide sender and receiver information when transferring virtual assets worth more than KRW 1 million (USD 746) between Korean exchanges (effective March 25, 2022). External transfers to overseas exchanges or personal wallets, etc. in Korea can only be performed if the sender and receiver are the same and the wallet address is self-registered after authentication, etc.

South Korea reported transfers between exchanges that amounted to $22.2 billion in virtual asset transfers, down 3% from the second half of last year, with approximately $4.9 billion transferred under the Travel Rule rules.

Regarding transfers to overseas exchanges and personal wallets in Korea, a single transfer amount of more than 1 million won is worth a total of USD 16.5 billion based on pre-registered (whitelisted) overseas exchanges or personal wallet addresses, and it is speculated that this part of the transfer may be for arbitrage trading, etc.

VIII. Exchange users: 9.5 million registered users, 6.06 million trading users

In terms of users, in the first half of 2023, the 26 exchanges had a total of about 9.5 million registered users (including double counting and excluding dormant accounts), a decrease of 19% month-on-month, which may be due to the increase in dormant accounts and the conversion of multiple user accounts to single accounts.

However, the actual trading users of the exchange were 6.06 million (including double counting and excluding dormant accounts), a decrease of 3% month-on-month, of which the Korean won market had nearly 5.97 million users and the token market had only 95,000 users.

In terms of user age group in South Korea, the 30s age group has the largest number of users, accounting for 1.15 million, accounting for 30%, followed by 40s (29%) and 20s (19%). In addition, 4.14 million Korean trading users, accounting for 68%, and 1.92 million women.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-20f2a8e7ff-dd1a6f-69ad2a.webp)

73% of Korean users hold virtual assets below $747, and 0.7% of Korean users hold virtual assets of more than $74,600

In terms of user virtual asset holdings, 67% of users hold less than 500,000 won (US$373) in virtual assets, and 73% hold less than 1 million won (US$747) in virtual assets. 8% of users hold more than 10 million won ($7,463) and 0.7% (44,000) of users hold virtual assets of more than 100 million won ($74,600).

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-c35f20529f-dd1a6f-69ad2a.webp)

10. Status of virtual asset wallet and custody business: Operating profit in the first half of the year was US$2.61 million, down 71% from the previous quarter

The total custody value of the nine virtual asset wallets and custodian companies was $2.313 billion, an increase of 29% from the end of 2022. Among them, by user category, the custody value of legal persons reached 2.239 billion US dollars (the average value of virtual assets custody of 122 companies is 18 million US dollars, and the average value of 60 companies is 0.1 trillion won), and the personal custody value is about 0.1 trillion won (the average holding amount of 303,000 individual users is 268 US dollars); By service category, the custodial value of the custodian business reached $2.164 billion, and the deposit value of the wallet service was $75 million.

! [Behind the Frenzy: Data Reveals the True Face of South Korea's Crypto Market] (https://img-cdn.gateio.im/webp-social/moments-7f230462a9-707efeca0e-dd1a6f-69ad2a.webp)

In addition, the operating profit of the nine virtual asset wallet and custodian companies was KRW 3.5 billion (approximately USD 2.61 million), down 71% from KRW 11.8 billion in the second half of 2022.

There are 272 employees in virtual asset wallets and custodian companies, including 28 AML-related employees.

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