What makes Korea’s Crypto market globally attractive?

Korea’s virtual asset market is under challenge due to strict regulatory constraints. The domestic exchanges are only open to Korean nationals, and the traded volumes are contributed mostly by local participants, with institutional investment and initial coin offerings prohibited.

Yet it remains attractive globally.

KBW 2024, co-hosted by Factblock and Hashed, became the largest Web 3.0 event during September 3-4, with 17,000 attendees on site, and among them, 35% were international, with over 300 speakers from all over the world.

Several global crypto projects announced during the event that they are expanding their presence in Korea. Ripple CEO Brad Garlinghouse stated on September 3, “We are doubling down on this region and will continue to do so.”

Lee Seung-hwa, head of research at DeSpread, said that the number of side events planned and held by different projects increased tenfold, indicating increasing interest from industry professionals in visiting Korea for KBW.

Apart from entertainment sectors, no country has interested the world market in Korea’s crypto as much as Korea’s, according to Daniel Kim, CEO and founder of Tiger Research. “Korea has never seen this level of interest from global markets in a specific industry vertical. It ranks among the top three countries worldwide where investors, enterprises, and developers are converging,”

What are some reasons for the robust standing of Korea in the global crypto market?

The strong retail enthusiasm of the country is also one of the prime reasons, given widespread access to the internet and a quite tech-savvy population. Many crypto projects refer to Korea as the “El Dorado of liquidity.” According to the Financial Services Commission, the number of virtual asset traders in Korea reached 6.45 million in 2023, which comprises 12.5% of the total population.

“Even now, Upbit consistently ranks among the top five exchanges by average trading volume, often coming in second only to Binance,” said Min Jung, analyst at Presto Labs, in a July report. This is particularly noteworthy as Korean exchanges are limited to residents, whereas more global platforms such as Binance, Coinbase, and HTX have the ability to reach a much wider audience.

As the Korean won became the most actively traded currency besides the U.S. dollar in Bitcoin transactions during November 2023, such currencies will not be long before they become one with the country’s financial scenario.

Another key reason is the sheer number of builders in both startups and giant companies. Companies like Samsung, LG, and Hyundai are already investing in blockchain with separate initiatives, where each has hired a Web 3.0 team or a manager under their R&D divisions. Samsung, for instance, invests in blockchain through its North American venture capital firm called Samsung Next, which have listed 30 blockchain companies under its portfolio.

Those efforts, however, are now reflected in the portfolio of Kim Jae-cheol, chairman of Netmarble, which has made some of the country’s biggest gaming hits. NETMARBLE CORPORATION According to him, however, local game development companies are also at the top of the list. Among them is Netmarble, which, in 2022, formed MARBLEX with the objective of rebuilding its flagship games on the blockchain. Its compatriot and rival, Nexon, also launched MapleStory Universe, bringing its iconic IP onto the blockchain.
“Gaming and entertainment represent foundational IPs that generate excitement abroad about Korea,” Kim said.

Moreover, emerging market-specific skilled developer focus is on blockchain technology, and companies like Sooho.io, that specifically focuses on blockchain development; and Haechi Labs and D’CENT, creating wallets. Smart contract developers in the blockchain sector have increasingly fueled growth. Negative public perceptions and regulatory uncertainty for cryptocurrencies offer much of the challenge.

“The erratic market actions, including coin price spikes when there are announcements of delisting, have simply reinforced the negative views,” Jung explained. “Therefore, the current emphasis is, once again on short-term speculation, not investment based on Web 3.0 fundamentals.” All this has prompted government officials to engage in developing regulatory frames that target investor protection the most and innovation and nurturing the industry the least, the executive stressed.

Industry insiders concede that this sector does need voluntary efforts aimed at improving the market, but they would like some incentives to sustain the sector, perhaps innovative programs within a regulatory sandbox.

“The prevailing sentiment in the domestic industry is that ‘we cannot raise the anchor despite the tailwind.’ Companies are busy concealing their involvement in crypto while secretly engaging in various activities,” Kim said. “Korea has strong fundamentals, and K-Web 3 can become the next K-drama or K-movie.”