South Korean Won Triumphs over US Dollar as Cryptocurrency Trading Currency of Choice

In Q1 2024, the South Korean won displaced the U.S. dollar as the dominant currency for cryptocurrency trading, with a cumulative volume of $456 billion compared to the dollar's $445 billion. This shift reflects the robust crypto market in South Korea, which is dominated by five licensed exchanges, including Upbit with an 80% market share. Major exchanges Crypto.com and Binance are also entering the market, with the Democratic Party's election victory expected to boost the crypto sector further. The government is also strengthening regulations, including the Virtual Asset User Protection Act, to protect investors and establish a legal framework for the industry.

South Korean Won Surpasses US Dollar as Preferred Currency for Cryptocurrency Trading

Seoul, South Korea - In a groundbreaking development for the global cryptocurrency market, the South Korean won has emerged as the most widely used currency for crypto trading during the first quarter of 2024.

According to a comprehensive report by renowned research firm Kaiko, the cumulative won trade volume on centralized crypto exchanges during this period reached an astonishing $456 billion, eclipsing the $445 billion volume reported in US dollars.

"The South Korean won has surpassed the US dollar in terms of cumulative trade volume during Q1 2024, marking a significant milestone in the global crypto landscape," Kaiko stated in its data report.

South Korea's Booming Crypto Market

South Korea has long been recognized as a hotbed of cryptocurrency activity, boasting one of the world's most vibrant and active digital asset markets. During the crypto bull run in March, the local crypto trade volume briefly surpassed that of the country's stock market.

Five fully licensed exchanges dominate the South Korean crypto market: Upbit, Bithumb, Coinone, Korbit, and Gopax. Kaiko's research indicates that Upbit, the market leader, typically accounts for over 80% of the market share.

To further penetrate this lucrative market, major global exchanges Crypto.com and Binance have established a presence in South Korea. Crypto.com recently announced the launch of its retail trading platform in the country on April 29, while Binance previously acquired a major stake in Gopax in 2023. However, regulatory challenges have hindered Gopax's transfer of ownership to Binance, reportedly due to concerns regarding Binance's legal issues in the United States.

Upcoming Regulatory Framework

The South Korean government has made strides in developing a comprehensive regulatory framework for the local crypto sector. In July 2023, the Virtual Asset User Protection Act, the country's first law specifically tailored to cryptocurrencies, was enacted and is expected to come into effect in July 2024.

This legislation aims to combat illicit market activities such as insider trading, price manipulation, and fraudulent transactions. Moreover, crypto service providers are mandated to safeguard over 80% of deposits in cold storage to protect user funds and participate in insurance programs to compensate users in the event of security breaches.

The government is currently working on a second part of the user protection act, which will focus on standardizing crypto token issuance and information disclosure for investors.

Political Shifts and Future Prospects

The recent South Korean general election on April 10 resulted in a major victory for the opposition Democratic Party, which secured 175 seats in the national legislature. The Democratic Party has pledged to support the growth of the local crypto sector, including approving local spot crypto exchange-traded funds.

Industry experts believe that the South Korean won's ascendancy as the preferred currency for crypto trading reflects the country's vibrant crypto market, robust regulatory environment, and the government's commitment to fostering innovation in the digital asset space. As the global crypto market continues to mature and expand, South Korea is poised to remain a major player and a bellwether for the industry's growth and development.