South Korean Crypto Providers Book $2.7B Net Profit for 2021

The country is a well-known hub for trading, with about 3.8% of the population owning some form of cryptoasset

article-image

Traffic speeds through an intersection at night in Gangnam, Seoul in South Korea. Credit: Shutterstock

share

key takeaways

  • Regulated South Korean VASPs facilitated crypto transactions exceeding $1.7 trillion in value for the year ended 2021
  • Regulation in the country has been slowly building ever since the FSC prohibited the use of raising funds through ICOs in 2017.

South Korean virtual asset service providers (VASPs) took in substantial net profit last year, amounting to more than 3.3 trillion South Korean won ($2.78 billion) from trading activity, according to a survey from a unit within the country’s main financial regulatory agency.

Announced Tuesday, the survey is the first of its kind since VASPs were required to register with the Korea Financial Intelligence Unit (KoFIU) last year under the amended Reporting and Using Specified Financial Transaction Information Act.

The aim of the survey, KoFIU argues, is to gain a better understanding of the cryptocurrency market based on statistical data provided by individual business operators.

As of the end of December 2021, a total of 29 VASPs had received approval, including 20 “coin-only” exchanges, five crypto wallets and four Korean won-based exchanges. That number has since grown to include two more wallets and two more coin-only exchanges, bringing the total number of VASPs operating legally in South Korea to 33.

Of those, Korean won-based exchanges were found to have dominated their coin-only counterparts in terms of market share with a 99.3% grip on domestic operating profits versus 0.7%. Some coin-only exchanges may undergo restructuring, the watchdog said.

Established in 2001, KoFIU is an organization within the Financial Services Commission (FSC) whose role is to monitor and police financial markets as well as implement policy relating to anti-money laundering practices.

During the second half of 2021, total transactions across 24 “virtual asset exchanges” amounted to a staggering 2.073 quadrillion won ($1.7 trillion) with an average daily transaction amount of 11.3 trillion won, or $9.4 billion, the survey reads.

Regulation in the country has been slowly building since the FSC prohibited the use of raising funds through ICOs in 2017. Though some local regulators still believe current laws are not yet sufficient to counter money laundering practices, especially as the trading volumes for crypto begin to catch up to equities.

“Even though the virtual asset market poses high risks for money laundering, the current status on the proportion of AML staff (8%) is inadequate and needs to be improved,” the unit said.

South Korea ranks 16th in terms of crypto adoption, with 1.9 million people, or 3.79% of its 55.7 million-strong population, owning some form of cryptoasset, according to data by payments provider Triple A.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit