South Korea's cryptocurrency market may be the most active and mature. Almost no one in South Korea does not know BTC, and people are more friendly to emerging projects. In particular, young people are much more enthusiastic about cryptocurrency than older groups. At the same time, because of South Korea's market economy environment, young people have a stronger FOMO emotion.
South Korea is a high-income developed country and the most industrialized member of the OECD. South Korean brands such as LG Electronics and Samsung are internationally renowned and have earned South Korea's reputation for its high-quality electronic products and other manufactured products. South Korea became a member of the OECD in 1996.
South Korea, also known as the Republic of Korea (ROK), is located in the southern part of the Korean Peninsula, extending about 1,100 kilometers from the Asian mainland, bordering North Korea along the Korean Demilitarized Zone, with its western border formed by the Yellow Sea and its eastern border defined by the Sea of Japan. South Korea (including all its islands) is located between 33° and 39° north latitude and 124° and 130° east longitude, with a total area of 100,410 square kilometers (38,768.52 square miles). The country claims to be the sole legitimate government for the entire peninsula and adjacent islands.
South Korea's population is estimated to be around 51.7 million in 2022, but the country's birth rate became the lowest in the world in 2009, and it has the largest decline in the working-age population among OECD countries, with the proportion of the population aged 65 and over expected to reach more than 20% by 2025 and close to 45% by 2050.
In addition, South Korea is known for its population density, which is estimated to be 514.6 people per square kilometer in 2022, more than 10 times the global average, making it the third most densely populated country in the world, excluding microstates and city-states. South Korea is also one of the most ethnically homogeneous societies in the world, with ethnic Koreans making up about 96% of the total population. Since many immigrants are ethnic Koreans themselves, the statistics do not record ethnicity, making it difficult to estimate accurate figures.
South Korea is a mixed economy whose main industries include textiles, steel, automobile manufacturing, shipbuilding, and electronics. South Korea's rapid growth over the past few decades has been driven primarily by exports of electronics and telecommunications equipment, which have earned the country a reputation as a top global producer and innovation hub.
The country has a significant or even dominant position in many major global industries, such as nuclear power, consumer electronics, and biotechnology, and is committed to becoming a major player in several other areas, such as smart grid technology, the Internet of Things (IoT), and robotics.
The South Korean economy is heavily dependent on international trade, and in 2014, South Korea was the world's fifth-largest exporter and seventh-largest importer. However, economic growth is expected to be modest but slowing in the near term, against the backdrop of a tightening interest rate environment and weaker external demand for South Korean exports. In particular, semiconductors, South Korea's main export, fell 41% in April 2023, and the International Monetary Fund predicts real GDP growth of 1.5% in 2023.
As of 2023, there are 82 chaebols in South Korea. These business groups are usually run by a family and have total assets of more than 5 trillion won (3.69 billion U.S. dollars). South Korean chaebols are large South Korean industrial groups run and controlled by individuals or families. Samsung, with a market value of more than $375 billion, is one of the most valuable chaebols and is larger than the economy of Qatar. According to Statista.com data, as of May 2023, the top five business groups (also known as chaebols) Samsung, SK Group, Hyundai Motor Company, LG and POSCO accounted for nearly 53% of the total revenue of South Korea's 82 major business groups.
The South Korean economy is one of the largest and most advanced economies in the world, with the 13th largest nominal GDP and the 14th largest purchasing power parity GDP in the world. According to the World Bank, South Korea's gross domestic product (GDP) in 2022 was US$1.67392 trillion. South Korea's GDP accounts for 0.72% of the world economy.
South Korea's annual inflation rate slowed to 2.9% in April 2024, from 3.1% last month, slightly below the market forecast of 3%. This was the lowest reading since January as the cost of food and non-alcoholic beverages (5.9% vs 6.7% in March) and restaurants and hotels (3% vs 3.4%) rose at a slower pace.
Meanwhile, the cost of housing, electricity, gas and water rose at the same rate (1.8%), while prices rose faster (2.9% vs 2.8%). On a monthly basis, inflation stagnated after edging up 0.1% last month, below market expectations for a 0.2% rise.
The Korean won is the official currency of South Korea. Its currency code is KRW and its symbol is won. The conversion factor for the won is 6 significant digits. It is a legal tender. According to research firm Kaiko, in the first quarter of 2024, the won became the leading currency for global cryptocurrency transactions, with a cumulative trading volume of $456 billion, reflecting South Korea's growing speculative interest in high-risk crypto assets.
According to the semi-annual report on crypto asset business released by the Korea Financial Intelligence Agency (KOFIU), as of the second half of 2023, the number of active users of registered crypto asset exchanges in South Korea has increased by 390,000, with more than 6.4 million (11% of the population) in South Korea.
Driven by a tech-savvy population and a strong interest in financial innovation, South Korea's cryptocurrency ownership and adoption rates are significant and growing. Most of these investors are mainly engaged in investment activities centered on centralized exchanges, which makes centralized exchanges have a significant influence in the Korean cryptocurrency market. At the same time, the ownership of cryptocurrencies in South Korea has increased significantly, especially among individuals in their 40s and 50s and young investors in their 20s and 30s.
In addition, with the advent of a new cycle and the rise in BTC prices, the cryptocurrency trading craze in South Korea has risen again. In March 2024, the trading volume of domestic cryptocurrency exchanges in South Korea reached a record 11.8 trillion won (about 9 billion US dollars), exceeding the trading volume of the Korean stock market at that time, 11.47 trillion won (about 8.7 billion US dollars).
According to recent data, the ownership of cryptocurrencies in South Korea has increased significantly. This includes a diverse demographic range, with significant adoption among individuals in their 40s and 50s and young investors in their 20s and 30s. According to Forkast's report, 31% of Korean investors are in their 30s, 27% are in their 40s, and a quarter are in their 20s.
According to Kucoin's 2023 survey:
26% of adult Internet users aged 18 to 60 in South Korea have invested in cryptocurrencies in the past six months;
Among the entire crypto investor population, the participation rate of men (56%) is higher than that of women (44%);
The investment of young women aged 18–30 (Generation Z) has increased significantly, accounting for 67% of female crypto investors;
This trend suggests that women, especially those in Generation Z, may play a more important role in future cryptocurrency investment.
The survey also analyzed people's different motivations for investing in cryptocurrencies:
Older people are motivated by long-term wealth accumulation (47%);
Generation X prefers long-term investment (55%) and portfolio diversification (38%);
Generation Z prefers quick returns, with 38% aiming to "get rich overnight", while the overall average is 30%;
In addition, Generation Z showed a higher interest in the entertainment value of crypto investing (27%), believing it to be a fun activity with more than just financial returns.
South Korea is one of the largest and most active cryptocurrency markets in the world. According to CoinGecko, as of May 14, 2024, its five licensed exchanges Upbit, Bithumb, Coinone, Korbit and Gopax processed more than $2 billion worth of crypto transactions.
Upbit is the largest exchange in South Korea, dominating the market with over 80% of trading volume (1.5 billion USD as of May 17, 2024), making it one of the top five cryptocurrency exchanges in the world. It also operates in Singapore, Thailand and Indonesia, and focuses on the major crypto markets in Southeast Asia.
Bithumb was founded in 2014 and has grown into one of the largest and most influential cryptocurrency exchanges in South Korea, headquartered in Seoul, South Korea. According to Coingecko data, as of May 14, 2024, it ranked second with a daily trading volume of 411 million USD.
According to Coingecko data: As of May 17, 2024, other CEXs have a small market share compared to Upbit and Bithumb, as their daily trading volumes are 5 million USD (Korbit) and 2 million USD (Gopax) and 29 million (Coinone).
Zeat is a gaming social platform designed to connect players, facilitate finding gaming partners, chat with friends and share content. It supports clans with features such as sparse matches, tournaments, and quests. ZEAT aims to integrate Web3 elements such as NFTs, SocialFi, and tokens to enhance the gaming experience. The platform's AI recommendation system helps players discover like-minded people and build communities.
CXT.Tax, also known as CryptoTax, is a platform designed to effectively manage cryptocurrency assets and taxes. It provides features such as transaction data aggregation of various trading platforms, real-time monitoring of assets, and the latest news and disclosures. Users can preview and report taxes, estimate future tax liabilities, and receive notifications about important updates on their assets. CryptoTax aims to simplify digital asset management and tax compliance for investors.
DSRV is a blockchain infrastructure company headquartered in Seoul, South Korea. It provides a range of services, including node operation, staking, and blockchain development tools. DSRV supports more than 40 major blockchain networks and operates more than 4,000 nodes. The company also offers products such as Welldone Studio, an integrated development tool for multi-chain environments, and All That Node, a comprehensive multi-chain development suite. DSRV aims to simplify blockchain access and promote sustainable growth within the industry.
Hyperithm is a digital asset management company based in Tokyo and Seoul, specializing in quantitative trading and venture capital. They use advanced trading strategies and investment expertise to provide institutional-level services in the digital asset field.
Korea Digital Asset (KODA), South Korea's largest institutional crypto custody service company funded by KB Kookmin Bank (South Korea's largest retail bank), Haechi Labs and 2020 Korean VC Fund Hash, announced on February 22, 2023 that the value of its managed crypto assets expanded by nearly 248% in the second half of 2023.
Lecca Ventures is a venture capital firm based in South Korea that focuses on Web3 and cryptocurrency. They focus on investing in community-driven startups, especially those led by visionary founders. Lecca Ventures adopts a hands-on approach, not only providing capital, but also actively participating in the development and expansion of its portfolio companies.
Their investment strategy emphasizes quality over quantity and aims to support startups that provide unique and innovative solutions in the Web3 field. Their portfolio includes companies such as Airstack, Alloyx, Nibiru, Shield, Anima, and Mission ate Cash, which are known for their contributions to the crypto industry.
Hashed is a well-known blockchain investment company and incubator headquartered in Seoul, with offices in Silicon Valley. The company focuses on supporting and investing in innovative blockchain projects and Web3 startups. Founded by Simon Kim, Hashed is committed to building a decentralized future by supporting visionary entrepreneurs and providing comprehensive support to its portfolio companies. Hashed plays an important role in the global blockchain ecosystem, hosting events such as Korea Blockchain Week to promote community and collaboration within the industry.
South Korea has established a comprehensive cryptocurrency regulatory framework designed to ensure investor protection and market integrity. The key components of the framework include:
This upcoming legislation aims to provide a structured approach to regulating virtual assets. It includes regulatory provisions for virtual asset service providers (VASPs), standards for issuing and listing cryptocurrencies, and information disclosure requirements to prevent unfair trading practices.
The Financial Intelligence Unit (FIU) is stepping up its scrutiny of cryptocurrency exchanges. The FIU's strategy includes strict inspections and enforcement of strict regulatory standards to curb illegal activities such as money laundering and embezzlement. Exchanges must obtain real-name verification services and separate user funds from company funds.
Following high-profile events such as the collapse of Terra-LUNA, the regulatory focus has shifted to strengthening investor protection. This includes tighter controls on token issuance and listing, as well as mandatory disclosures by senior public officials to prevent conflicts of interest.
South Korea's regulatory efforts are aligned with global standards, such as those set by the Financial Action Task Force (FATF). This ensures that the country's regulations are aligned with international best practices, enhancing the reliability and security of its digital asset markets. These measures are intended to create a safer and more transparent environment for cryptocurrency trading in South Korea, balancing the need for innovation with the need to protect investors and maintain market stability.
South Korea's tax policy on cryptocurrencies is evolving, reflecting the government's efforts to balance regulation and market growth. Initially, South Korea planned to impose a 20% tax on cryptocurrency gains over 2.5 million won (about 2,300 USD) starting in 2022. However, this has faced several delays due to industry opposition and legislative changes. As of now, the implementation of the tax, which applies to income from cryptocurrency transactions and will require investors to report their gains for tax purposes, has been postponed to January 2025. In addition, the ruling People's Power Party has proposed to postpone the establishment of a comprehensive regulatory framework again to prioritize, possibly pushing the effective date to 2027.
The tax regulations classify cryptocurrency gains as "miscellaneous income" and any non-sale transfer of crypto assets, such as gifts or inheritance, is subject to statutory gift and inheritance tax rates of up to 50%. The South Korean government has also focused on increasing transparency and combating illegal activities in the crypto market, requiring exchanges to share transaction records and requiring senior public officials to disclose their cryptocurrency holdings starting in 2024.
In South Korea, capital gains tax varies depending on the type of asset and whether the seller is a resident or non-resident;
Non-residents are subject to capital gains tax on income from South Korea, and the tax rates and rules are generally similar to those of residents;
As a member of the G20 and with a strong economy supported by companies such as Samsung and Hyundai, South Korea plays an important role in the global economic landscape. At the same time, South Korea is also a market with a highly homogenous culture. It is difficult for a team to enter the Korean market without a real Korean team operating in South Korea.
On the other hand, South Korea's financial system has a very high degree of trust, which also leads to low enthusiasm among Korean users for decentralized self-custody and DeFi. However, due to the FOMO sentiment of investment, value preservation and the need to get rich quickly, South Korea's crypto market still performs well and stands out in the global crypto market, especially the large-scale adoption of licensed cryptocurrency exchanges and users.
As of 2024, South Korea's cryptocurrency market is indeed marked by a rapidly developing regulatory environment, increased government supervision and significant market activities. Coupled with high levels of market participation and strict law enforcement measures, South Korea has become a key player in the global cryptocurrency field. As the industry continues to develop, South Korea will likely play an even more important role in the global crypto market.
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