Markets
FSC Research: South Korea’s Crypto Market Sees Significant Growth in Late 2023
South Korea’s Financial Services Commission released a research report from the Korea Financial Intelligence Unit.
Research overview and methodology
The research highlights significant growth in the country’s virtual asset market during the second half of 2023, revealing that 12% of South Korea’s population, totaling 6.45 million, were involved in crypto trading, however, just US$734 cryptocurrencies held by small investors.
The survey covered the second half of 2023, from July 1 to December 31, 2023, targeting 29 virtual asset business operators, including 22 exchanges and 7 wallet/custodian services.
The research conclusions were possible due to the data presented by these companies. However, responses from individual companies remain confidential.
Key findings from the FSC survey
Growth in turnover and market capitalization
The average daily transaction size for virtual asset traders increased by 24% to reach 3.6 trillion won, compared with 2.9 trillion won in the first half of 2023.
At the same time, the total market capitalization of virtual assets saw a whopping 53% increase, from 28.4 billion won to 43.6 billion won at the end of December 2023.
Operating profits and deposits earned
The research found that virtual asset companies saw an 18% increase in total operating profit, from 228 billion won to 269.3 billion won. Furthermore, won deposits held by these companies grew by 21%, from 4.0 billion won to 4.9 billion won, indicating an increase in investment sentiment and market activity in the latter part of the year.
User demographics and investment patterns
The number of people transacting increased by 6.4%, from 6.06 million in the first half to 6.45 million by the end of 2023. The survey found that the most active age group in crypto trading were people in the of 30 years. Interestingly, around 4.55 million users were small investors who held less than 1 million won (around US$734) worth of cryptocurrencies.
Virtual Asset Listings and Price Volatility
The number of virtual assets traded decreased slightly by 3.5%, from 622 to 600. This was due to an increase in new listings and trading suspensions.
The number of independently listed virtual assets, managed by just one national business operator, decreased by 9.3%, indicating market consolidation. Despite these changes, virtual asset prices remained highly volatile at 61.5%, signaling ongoing market risks.
Business Closures and Regulatory Concerns
The survey showed that more virtual asset companies are closing, with four operators closing by the end of December 2023. This highlights the importance of being cautious when trading and storing virtual assets with these operators.