Why Is South Korea Leading in Crypto?

In a handful of key markets, crypto adoption has surged in recent years due to the dramatic rise in cryptocurrency price. South Korea is one such market. South Korea has long been a leader and a key participant in the digital asset market.

South Korea has strict capital control laws that make it seem isolated. But, the crypto market grew exponentially to reach a $46 billion valuation at the close of 2021. According to a report, South Korea is home to roughly 5.58 million crypto users, accounting for more than 10% of the country’s population.

It is impressive how South Korea’s crypto market continued to grow and advance in crypto development despite the fact that the government had imposed crypto license regulation that forced over 60 Korean exchanges to shut down and caused a dent of almost $2.8 billion to traders.

South Koreans have always been early to emerging technologies

Most countries have a younger population that is more open to digital assets, such as cryptocurrency. The older generation shuns high-risk assets. South Korea however, has many age groups that actively take part in this market. In 2021, nearly 50% of top Korean exchanges users are in their 40s or 50s according to an analysis.  South Korea was responsible in 2018 for over 30% of crypto trading worldwide, as bitcoin’s price spiked.

Due to high demand, the supply of cryptocurrencies in South Korea was exhausted. Investors were unable to purchase crypto assets without paying an exorbitant premium. This is known as Kimchi Premium in South Korea.  South Koreans paid $15,000. For a bitcoin that was worth $10,000 to trade, South Koreans would pay $15,000. Many investors around the world saw this opportunity and took advantage of it, including Sam Bankman Fried, founder and CEO at FTX.

South Korea is also home to some of today’s most innovative DeFi protocols, dating back to the dawn of crypto. One of these is Konstellation Network. Konstellation, a company based out of Seoul’s capital, is creating a unique infrastructure that uses Cosmos SDK. This allows its users to explore cross-chain capital markets effortlessly.

A native token called $DARC is also available that powers the whole ecosystem. With the Hubble wallet, users can purchase $DARC tokens and receive passive income. They also have the ability to use the wallet to manage portfolios in different capital markets. This has put South Korea’s DeFi on the map, and encouraged further innovation from the top crypto markets.

Further propelling South Korea’s DeFi innovation is the nation’s pro-crypto government. Yoon Seok-yel, the president-elect for South Korea, has promised to introduce crypto-friendly regulations, and help unicorn-valuation companies. He pledged to avoid imposing a capital gains tax exceeding $40,000. He intends to remove the prohibition on Initial Coin Offerings or ICOs that has been in force since 2017.

South Korean institutions will see rapid growth with the proper regulation and low tax rates.

South Korea has all-in

South Korea set an example in the world with its swift adoption of cryptocurrencies and adaptation to this new paradigm for financial transactions. The nation’s supportive stance on cryptos is now attracting more crypto-focused companies to set up shop in this Asian subcontinent. South Korean officials announced plans to provide support for 40,000 workers and 200 companies involved in NFT and metaverse projects. It remains to be seen, however, how the government will prepare the regulatory framework to support this emerging technological landscape.

 

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