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Unveiling the truth behind the frenzy in the Korean crypto market.

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South Korean financial regulatory authorities reveal the true face of the South Korean virtual asset market, including trading volume, revenue status, number of practitioners, number of users, and user preferences.

Original Title: "The Truth Behind the Madness | Data Reveals the True Face of the Korean Crypto Market"

Source: Foresight News

This week, the Financial Intelligence Analysis Institute of the Financial Services Commission of South Korea released a report on virtual asset enterprises for the first half of 2023. The 20-page report surveyed 35 virtual asset enterprises (26 exchanges and 9 wallet and custodian providers) to present the current state of the virtual asset market in South Korea.

This report was written by the Korea Financial Intelligence Analysis Institute based on information submitted by 35 virtual asset companies, which is relatively true. Foresight News has compiled and summarized the top ten key points for readers to explore the real situation of the virtual asset market in Korea and the asset preferences of Korean users.

TL;DR：

During the first half of the year, the average daily trading volume of 26 Korean exchanges was 2.168 billion US dollars, a decrease of 1.3% compared to the previous period. The Korean won market dominates, while the trading volume of non-Korean won markets can be ignored.

The total operating profit of 26 virtual asset exchanges is 170 million US dollars, an increase of 82% compared to the previous period.

There are a total of 1915 employees in 26 exchanges, with a part-time ratio of 32.8%.

The market value of virtual assets in South Korea is approximately 21.2 billion US dollars, an increase of 46% from the end of last year.

XRP has a very strong appeal to Korean users, second only to Bitcoin.

There are approximately 9.5 million registered users (including duplicates) across 26 exchanges in the encryption industry, with 6.06 million trading users.

73% of Korean users hold virtual assets worth less than $747, while 0.7% of Korean users hold virtual assets worth more than $74,600.

Virtual asset wallet and custody business: The operating profit in the first half of the year was 2.61 million US dollars, a decrease of 71% compared to the previous period.

1. In the first half of the year, the average daily trading volume of Korean exchanges was 2.168 billion US dollars, a decrease of 1.3% compared to the previous period.

In the first half of 2023, the average daily trading volume of 26 virtual asset exchanges was 2.9 trillion Korean won (approximately 2.168 billion US dollars), a decrease of 1.3% compared to the second half of last year.

Among them, the trading volume of the Korean won market occupies an absolute dominant position, and the trading volume of the token market (non-Korean won market) can be ignored. There are 5 exchanges in the token market with a daily average trading volume of less than 1 million Korean won (747 US dollars).

From the chart below, which shows the average daily trading volume by month, it can be seen that the trading volume of Korean exchanges has been declining continuously since February of this year.

2022 年 10 月至 2023 年 6 月韩国交易所日均交易规模变化趋势（按月份统计）

Trend of daily trading volume changes in Korean exchanges from October 2022 to June 2023 (monthly statistics)

二、韩国交易所总营业利润为 1.7 亿美元，环比增加 82%

Translation:

II. The total operating profit of Korean exchanges is 170 million US dollars, an increase of 82% compared to the previous period.

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

Quarterly summary of operating profit trends (purple represents the Korean won market, green represents the token market)

From the above table, it can be seen that the operating profit of the Korean won market occupies an absolute dominant position. Among the 21 exchanges that operate token markets, the trading fees of 10 exchanges' token markets are 0, and 18 exchanges are in a state of complete capital loss.

The transaction fee rate of Korean exchanges ranges from 0.01% to 0.25%, with an average fee rate of 0.15%. Compared to the second half of 2022, it has decreased by 0.01%. The average transaction fee rate in the Korean won market is also 0.15%.

Three, the Korean won deposits of the exchange are close to 3 billion US dollars, an increase of 11% from the end of last year.

As of the end of June, the Korean won deposits of exchanges reached 40 trillion won (nearly 3 billion US dollars), an increase of 11% from the end of last year.

Monthly summary of average daily Korean won deposit balance (unit: trillion won)

Four, there are a total of 1915 employees in 26 exchanges, with a part-time ratio of 32.8%.

The average number of employees in 26 exchanges is 74, with a total of 1915 employees, a decrease of 178 compared to the end of last year. Among them, there are 269 employees related to anti-money laundering (AML), accounting for 13.5%. In addition, the proportion of part-time employees is 32.8%.

Status of Exchange Industry Personnel (Green represents data as of June 2023, Purple represents data as of the end of November 2022. The left chart shows the average number of employees and AML-related employees in exchanges, while the right chart shows the proportion of AML employees and part-time employees.)

Five, 26 exchanges have listed a total of 622 virtual currencies

After excluding duplicate currencies, a total of 622 virtual currencies have been listed on 26 exchanges, which is not much different from the second half of last year. The exchange with the most virtual assets listed on a single platform has 236, while the one with the least has 3. The average number of supported tokens in the Korean won market is 163, and the average number of supported tokens in the token market is 28.

Among them, there are 366 types of virtual assets that are only listed on a Korean exchange, accounting for 59% of the total. The number of newly listed and delisted tokens has changed significantly. Specifically, in the first half of 2023, Korean exchanges added 169 tokens (including duplicates), an increase of 128% compared to the previous period, and delisted 115 tokens (including duplicates), an increase of 47% compared to the previous period. Among the delisted tokens, 66% were only listed on a Korean exchange.

The main factors considered when delisting tokens include project risk, investor protection risk, market risk, and technical risk.

Sixth, which tokens do Korean users prefer?

The market value of virtual assets in South Korea is approximately USD 21.2 billion, which has increased by 46% since the end of last year. The definition of the market value of virtual assets in South Korea, as provided by the Korea Financial Investment Association, is the sum of the quantity of each virtual asset held by South Korean exchanges multiplied by the corresponding market price of the asset.

Among the top ten virtual assets by market value in South Korea, six are also ranked in the top ten globally, including BTC, XRP, ETH, DOGE, ADA, and SOL. The table below shows the asset preferences of South Korean users. It is worth noting that XRP has a very strong appeal to South Korean users, second only to Bitcoin.

From left to right are the top ten asset categories in terms of market capitalization in the global and South Korean virtual asset markets (unit: trillion Korean won).

From left to right are the asset categories with the top ten market capitalizations in the global market, the South Korean won market, and the South Korean token market (unit: trillion won).

Among the top ten market value assets in the Korean token market, except for the W** asset, the other nine assets are all assets listed on a single exchange.

Seven, the virtual asset transfer amount between Korean exchanges is 22.2 billion US dollars, and the proportion of those applying the Travel Rule is 22%.

In South Korea, when users transfer virtual assets worth more than 1 million Korean won (746 US dollars) between Korean exchanges, they need to provide information about the sender and receiver (effective from March 25, 2022). However, for external transfers to foreign exchanges or personal wallets in South Korea, it can only be done when the sender and receiver are the same and have pre-registered wallet addresses through identity verification and other means.

Regarding the transfer between Korean exchanges, the virtual asset transfer amount of exchanges is 22.2 billion US dollars, a decrease of 3% compared to the second half of last year. Among them, the transfer amount that applies the Travel Rule is approximately 4.9 billion US dollars.

Regarding the transfer to foreign exchanges and personal wallets in South Korea, based on pre-registered (whitelisted) overseas exchange or personal wallet addresses, the total amount of transfers exceeding 10 million Korean won in a single transaction is estimated to be 16.5 billion US dollars. It is speculated that this portion of the transfer may be for arbitrage trading purposes.

Eight, Exchange User Situation: 9.5 million registered users, 6.06 million trading users

Regarding users, in the first half of 2023, 26 exchanges had a total of approximately 9.5 million registered users (including duplicates and excluding dormant accounts), a decrease of 19% compared to the previous period. This may be due to an increase in dormant accounts and users consolidating multiple accounts into a single account.

However, the actual trading users of the exchange are 6.06 million (including duplicate calculations and excluding dormant accounts), a decrease of 3% compared to the previous period. Among them, the Korean won market has nearly 5.97 million users, while the token market has only 95,000 users.

As far as the age range of Korean users is concerned, the largest group is in their 30s, with 1.15 million users, accounting for 30% of the total. The next largest group is in their 40s (29%) followed by those in their 20s (19%). In addition, among Korean trading users, there are 4.14 million men, accounting for 68%, and 1.92 million women.

Nine, 73% of Korean users hold virtual assets worth less than $747, and 0.7% of Korean users hold virtual assets worth more than $74,600.

Regarding the holding of virtual assets by users, 67% of users hold virtual assets worth less than 500,000 Korean won (373 US dollars), and 73% of users hold virtual assets worth less than 1 million Korean won (747 US dollars). 8% of users hold virtual assets worth more than 10 million Korean won (7463 US dollars), and 0.7% (44,000 people) of users hold virtual assets worth more than 100 million Korean won (74,600 US dollars) or more.

Ten, current situation of virtual asset wallets and custody business: operating profit in the first half of the year was 2.61 million US dollars, a decrease of 71% compared to the previous period.

The total custody value of 9 virtual asset wallet and custody companies is 2.313 billion US dollars, an increase of 29% from the end of 2022. Among them, in terms of user categories, the custody value of corporations reached 2.239 billion US dollars (the average virtual asset custody value of 122 companies is 18 million US dollars, and 60 companies have 0), and the custody value of individuals is about 0.1 trillion Korean won (the average holding amount of 30.3 thousand individual users is 268 US dollars); in terms of service categories, the custody value of custody business reached 2.164 billion US dollars, and the deposit value of wallet services was 75 million US dollars.

In addition, the operating profit of 9 virtual asset wallet and custody companies was 3.5 billion Korean won (approximately 2.61 million US dollars), a 71% decrease compared to the operating profit of 11.8 billion Korean won in the second half of 2022.

There are a total of 272 practitioners in the virtual asset wallet and custody industry, of which 28 are employees related to AML.