All about Cryptocurrencies in South Korea
2022.11.29 10:09
All about Cryptocurrencies in South Korea
Budrigannews.com – It could be the language barrier or the barriers erected by authorities to stop money from leaving the country. But whatever it is, South Korea has created a cryptoverse that is unlike any other in the world in its own special way.
Doo Wan Nam, a MakerDAO delegate who also co-founded the research and advisory firm StableNode, chuckles as he talks about how crazy intense crypto gambling and speculation can get in South Korea.
According to him, this is a nation where stablecoins like Dai and USD Coin can sometimes trade at sky-high prices because speculators will jump in on the momentum trade if the price begins to rise slightly above the $1 peg for some reason.He elaborates, “They sometimes trade for $20 because they don’t know it’s a stablecoin.”They say, “I bought it because it was pumping, it was trading at $10, I don’t know, I didn’t read, I just bought.”
“So, I think that kind of tells you whether people knew what Terra was.”
The entire ecosystem is doomed by the spectacular $60 billion collapse of the Terra ecosystem, led by the charismatic but ultimately deluded Korean developer Do Kwon
Terra is also instructive about some of the distinctive features of the crypto culture in Korea, which places a greater trust in project leaders like Kwon and places less emphasis on decentralization.
In this nation, which is obsessed with the most recent technology, cryptocurrencies are huge.
Seoul, the country’s capital, is a futuristic metropolis with enormous high-resolution screens and lightning-fast internet access everywhere.The government has unveiled an ambitious plan to make the nation the fifth most metaverse-friendly in the world, where one in three people own cryptocurrency.
South Korea technology
Even though English is taught in schools, not many people can talk to each other in the language. Although this is true of many nations, it helps to explain why many Koreans do not have access to the same information resources as crypto enthusiasts in the United States.
Forget Western tech giants like Reddit, Google, Twitter, and Facebook; in the country, Google Maps barely works, and it’s hard to get an Uber.
Instead, the local giants Kakao and Naver are used by South Koreans to access the internet, chat, search, order food, and call for rides.
Sangmin Seo from metaverse blockchain Klatyn. Source: Andrew Fenton
Sangmin Seo, who prefers to be referred to as Sam, explains, “More than 90% of Koreans are using (social media app) KakaoTalk every day.”The Klatyn Foundation, Kakao’s blockchain and metaverse offshoot, has him as its representative director. In South Korea, Naver is the most popular search engine. Naver has a 70%–80% market share for search engines, while Google has a 10%–20% share.
Kakao, which was established in 2011, is currently the 15th largest company in a nation that is dominated by approximately 40 megacorporations. Samsung alone produces one-fifth of the country’s exports, while LG, Hyundai, SK, and Samsung collectively account for half of the value of the local stock market.
Nathan Lenga, an analyst at Zerocap, has conducted extensive research into the South Korean market and reveals that the nation is home to a whole new crypto industry. Zepetto, a blockchain-based video game and Roblox rival, is cited.
He states, “People haven’t really heard about it, but it has 20 million users (on a monthly basis), which is mind-boggling.””There is a whole other aspect of cryptocurrency that is based on Asian culture that we never hear about. All of this originates in South Korea, which is why they are such early adopters: they have their own versions.
S. Korean crypto news
According to Seonik Jeon, CEO of Financial News and the founder of Factblock, prior to 2017, South Korea was only made international news when North Korea fired missiles.
However, he explains, “the amount of searching for blockchain and Korea together increased significantly” as the blockchain market began in Korea around 2017 and 2018.
According to Seonik Jeon, CEO of Financial News and the founder of Factblock, prior to 2017, South Korea was only made international news when North Korea fired missiles.
However, he explains, “the amount of searching for blockchain and Korea together increased significantly” as the blockchain market began in Korea around 2017 and 2018.
Cryptocurrency and gambling
Korea’s complicated relationship with gambling, which is mostly illegal for locals (with the exception of lotteries and horse racing), is intertwined with crypto.
According to a study by the Korean Center on Gambling Problems, the average Korean is two to three times more likely than people of other nationalities to be addicted to gambling, and gambling is viewed in a very negative light in Korea.
According to Nam, “a lot of people with a speculative [nature] then tend to go into stocks or cryptocurrency” because “gambling itself is illegal in Korea.”Cryptocurrency is rapid, high-risk, high-reward.
After completing his military service and joining a blockchain company, Nam entered the industry during the initial coin offering boom of 2017.
“It was quite crazy. In Korea, it was very, very, highly speculative. Like, there were people literally — especially middle-aged or the elderly, who didn’t know much about blockchain — they just had money, and they go to different events and say, ‘I want to invest; how can I invest?’”
At the end of 2017, South Korean authorities outlawed initial coin offerings (ICOs). At the time, reports that the country was considering a complete crypto ban sent Bitcoin’s price plunging in January 2018 from a record high in December 2017.
Crypto bull run
However, the complete ban was never implemented, and adoption skyrocketed in 2021 due to skyrocketing prices that were comparable to the ICO boom.At the beginning of 2021, the Financial Services Commission (FSC) of Korea estimated that only 1.9 million people owned cryptocurrency.That number had increased to 15.25 million citizens by the end of the year.
According to the FSC, the country’s digital asset market cap is 55 trillion won (currently $40,719,445,990), making it the seventh largest country in the world for crypto ownership by market capitalization. This indicates that one in three citizens now owns cryptocurrency.
Lenga attributes the rise in adoption to the bull run in 2021 and Yoon Suk-yeol’s successful presidential campaign, which was strongly crypto-friendly and even offered supporters a collection of non-fungible tokens.This year, Yoon took office in May.
Jeon, on the other hand, thinks that the surge is being driven by tech-obsessed millennials.He elaborates, “I believe the younger generation’s curiosity and willingness to try new technologies is largely responsible for the popularity of crypto in Korea.”
Due to their familiarity with and acceptance of technology, the millennial generation in this country is frequently referred to as the “mobile native generation.”They have a lot of enthusiasm and passion, and they are prepared to quickly accept and change in areas like blockchain, Web3, NFTs, and GameFi.
The following fiscal year (June 2022), growth slowed to just 13.2% more transactions.
South Korean crypto exchanges
New licensing laws that went into effect in September effectively outlawed the vast majority of crypto exchanges in the country came along with the rise in adoption in 2021. The 63 exchanges in the country were reduced to just a few, including Upbit, Bithumb, Coinone, and Korbit, after each provider was required to obtain approval from both the FSC and the Korea Internet and Security Agency.
“They have practically complete control over the crypto business,” says Lenga. “I believe that more diverse exchanges will resume once the new president begins to implement legislation and regulations that are more favorable to the country. However, due to their inability to survive, the majority of them are simply gone forever
Although many in the crypto community outside of Korea thought it was too much, inside the industry, which Jeon said was fiercely competitive, there was more acceptance of the need to clean it up.
He explains, “There was a competition for listing coins in this small market, and all these scam coins were listed, which sometimes caused damage to investors.” There was also competition among exchanges for listing coins.“
Many insolvent coins with inadequate business viability were eliminated.Additionally, it provided investors with an opportunity to invest in a safer setting.
Doo Wan Nam from Stablenode. Source: Supplied
Nam attributes the problem more to the banks than to the government, pointing out that, despite the approval of forty distinct exchanges on the government’s side, “the ones that passed the bank’s side was only five.”Few banks were willing to do business, so exchanges needed a banking partner to move fiat.
Crypto taxation is yet another topic of regulatory discussion, with long-standing plans to impose an additional 20% tax on crypto capital gains.It was supposed to go into effect in January of this year, but it has been put off until 2025, so it may never happen.
Nam asserts that the banks are more to blame for the issue than the government, noting that, despite the government’s approval of forty distinct exchanges, “the ones that passed the bank’s side was only five.””Exchanges needed a banking partner to move fiat because few banks were willing to do business.
Crypto tax collection is one more subject of administrative conversation, with well established plans to force an extra 20% assessment on crypto capital additions.It was supposed to take effect in January of this year, but it has been delayed until 2025, so it might never come into effect.
According to Jeon, the government is frantically studying the industry to fully comprehend it and effectively regulate it.He adds, “I think many companies are ready to jump into crypto once they have these regulations ready.”
This week, reports surfaced that the FSC is considering implementing new regulations to more strictly regulate exchange tokens and to keep customer deposits separate from exchange assets in light of the rapid fallout from Terra.
Korean technology: Decentralization
Probably the biggest difference between the crypto community in South Korea and in the West is the lack of emphasis — and ideology — around the importance of decentralization.
Nam explains that while American conceptions of crypto are built around ideas of self-sovereignty and decentralization, “not your keys, not your coins,” those sorts of ideas are not widely embraced in Korea.
“We’ve done a lot of surveys and research, and most Koreans don’t really access crypto from, let’s say, MetaMask. Most of them just put it in the crypto exchanges, and they never withdraw to [a wallet]. In fact, we have some surveys and realize that a lot of them don’t even know [private cold wallets] exist.”
Nam attributes the problem more to the banks than to the government, pointing out that, despite the approval of forty distinct exchanges on the government’s side, “the ones that passed the bank’s side was only five.”Few banks were willing to do business, so exchanges needed a banking partner to move fiat.
Crypto taxation is yet another topic of regulatory discussion, with long-standing plans to impose an additional 20% tax on crypto capital gains.It was supposed to go into effect in January of this year, but it has been put off until 2025, so it may never happen.
Subscribeul_ @kbwofficial, and I frequently got this question: “Who are good Korean teams / leaders in the crypto space to meet?”There are many interesting teams, but here are 24 you should definitely meet or at least learn of 👇
— Doo | StableNode @Seoul (@DooWanNam) August 2, 2022
Sam, however, says that is starting to change — and he believes it must change to embrace the opportunity fully.
“Kakao and Koreans also care about decentralization, and we believe that our world will be more decentralized in the future, but we need time, and we need to educate people about the power of decentralization and how we lose from decentralization and what we get from decentralization,” he stated.
Keep an eye out for part 2 which will explore South Korea’s fascination with gaming, its blockchain game industry and ambitious plans to dominate the metaverse.
Andrew Fenton
Based in Melbourne, Andrew Fenton is a journalist and editor covering cryptocurrency and blockchain. He has worked as a national entertainment writer for News Corp Australia, on SA Weekend as a film journalist, and at The Melbourne Weekly.
