Cryptocurrency News

Korea’s crypto market is one of the strongest – and weirdest – in the world


The day Bitcoin briefly crashed into a large bear market to $ 30,000, the leading cryptocurrency never came anywhere close to it on Korean exchanges. where did it go “Kimchi Premium“He observed, to keep the price of bitcoin at over $ 5,000 above its level on major US exchanges.

The main reason for this kimchi premium is that the Korean exchanges are largely isolated. similarity The country’s strict capital control laws prevent money from leaving the country, and tax codes and anti-money laundering (AML) regulations that make it difficult for foreigners to use Korean exchanges – even Bithumb and Upbit Giants like – without local Korean bank accounts.

Nor is that premium the only part of South Korea’s crypto industry that sets it apart from the rest of the world. Among other things, the isolation of the market combined with the extraordinary stability of the Korean won has kept down the use of stable currency and put decentralized finance, or defi, far ahead of the rest of the world.

Korea’s bitcoin boom

Despite this separation, Korea’s embrace of bitcoin in particular and cryptocurrency in general is very strong. In April, more than five million unique cryptocurrency users – about 10% of the nation’s population – reportedly bought or sold digital assets at least once since early 2021.

According to CoinMarketCap, on May 19, the day the Kimchi premium reached $ 5,000, Upbit’s 24-hour transaction volume of just one Korean exchange, was over $ 31.5 billion. Add in the rest of the country’s “Big Four” cryptocurrency exchanges, Bithumb, Corbit and Coinone, and it was $ 38.1 billion – much higher than recently traded on KRX, the major Korean stock exchange.

An interesting aspect of Korea’s cryptocurrency craze is how widely it is spread across age groups. 1 february Survey Showed that nearly half of the users of the major Korean exchanges Bithumb and Upbit were in their 40s or 50s – many of them mothers. He said, a Comprehensive survey In March, the Korean crypto exchange app showed that young people dominate the ranks of new Korean crypto users, with about two-thirds of new monthly app users in their 20s and 30s in the first three months of the year. However, they are investing in small amounts, often less than $ 100.

All of this is clearly making an impact. Bithamb Korea recently announced that its Q1 2021 Net profit was 876% higher than the previous year.

Government constraints

At the same time, the Korean government and regulators are far from being fans of cryptocurrency. In February, Bank of Korea Governor Li Xu-Yolo Told A National Assembly committee heard that “a crypto asset is an asset that has no intrinsic value.” He added that “it is difficult to understand why the price of bitcoin is so high.”

Korea’s crypto regulations also make it difficult for foreign competitors. In December 2020, the world’s largest exchange, Binance, closed its Binance Korea operation less than a year after its launch, thanks to a large part that banned exchanges in the country from sharing order books Dia – meaning that Binance Korea can no longer bow down to the liquidity of Binance.

The law went into effect in March 2021, the same month when another major cryptocurrency exchange – OKX – announced that it was closing its Korean operations. New aml rules. It has also been suggested that these rules will make it difficult for smaller Korean exchanges to compete with the big four.

Not a fan of stable stock?

Despite this rapidly growing crypto market, Korea is far behind the rest of the world in adopting stable coins, as the Korean won is so stable that there is not as strong a need for stable coins in the largely closed crypto market. .

In addition, the Korean government relies on stable stocks, according to Oleg Smagin, head of global marketing at Dalio, a leading Korean crypto lending and wagering firm. They said that this leads to their exchange.

In addition, exchange fees are low – broadly in the range of 0.15% to 0.25% in the big four. While the withdrawal fees in WIN are flat and very low – around $ 1 – the fees for directly shutting down cryptocurrencies can be very high. The Big Four’s withdrawal fees for withdrawing bitcoins range from 0.0005 to 0.0015 BTC – $ 20 to $ 60 for one BTC at $ 40,000.

Which can help explain why the Korean won Fourth highest turnover The national currency for bitcoin, behind only the Japan yen, euro and major US dollar.

CeFi-DeFi Hybrid

Smagin says a victim of Korea’s closed cryptocurrency market and unfamiliar with the steady stock that the fast-growing Defy industry has not had a chance to hold there.

“2019 became a turning point for widespread adoption of DIFI globally, but it was barely recognized in Korea, with most local retail investors not having experience using foreign crypto services and adopting stable stock less Was, “he says.

Delio’s solution is a hybrid centralized-decentralized finance model that uses CEFI to build an initial crypto lending ecosystem that will become more and more decentralized over time. Meanwhile, the firm felt that “CEFI is a huge space for crypto-to-crypto loan service that can meet the needs of local merchants,” says Smagin.

The firm currently has four CEFI lending offerings, as well as a new payment service that lets Dalio wallet holders pay with bitcoin on a network of more than 70 retail firm services by payment app MoneyTree. In addition, it Delio liquidity Arm offers digital asset loans of between $ 800,000 and $ 45 million to institutional customers.

Dalio provides bitcoin and Ethereum loans for up to 90% of a borrower’s BTC or ETH collateral, and also offers lending services Beth subscriber, Which can use BTC or ETH, or Korean Won as collateral. Staking and produce farming are also available. Dalio recently surpassed $ 2 billion in total used value.

Delio’s Daffy Hybrid Plans Are Focused Ducato, A won-based fixed currency project scheduled to be launched in the third quarter of 2021. The KRWD fixed currency – fixed at a win – will be generated by collateralizing cryptocurrency. Ducato is a DeFi protocol with its own token, DUCATO, which is used to pay and govern fees. But the CeFi Delio platform provides stable currency with a user-friendly interface.

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