• 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.

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  • Blockworks
    Senior Reporter, Asia News Desk
    Sebastian Sinclair is a senior news reporter for Blockworks operating in South East Asia. He has experience covering the crypto market as well as certain developments affecting the industry including regulation, business and M&As. He currently holds no cryptocurrencies. Contact Sebastian via email at [email protected]