Sam Reynolds

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 <li>The CEO of Korea’s stock exchange, the KRX, has said that it&#8217;s time to embrace virtual assets and called for proper regulation to help institutionalize the asset class</li>
 <li>He also revealed that trading volume for crypto might soon catch up to equities in the country</li>
 </ul>
 
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Sohn Byung-doo, a former regulator and now CEO of Korea Exchange, the operator of the country’s sole stock exchange, has called for a comprehensive set of regulations for cryptocurrency. He said that it&#8217;s time to “embrace digital assets” as any other component of capital markets.&nbsp;



“The virtual asset market is no different from the capital market in that it must support investor protection and transaction stability,” Sohn said during a speech at the 2021 Global ETP Conference.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Since virtual assets have become &#8216;major&#8217; investment assets, it is time to prepare an institutional framework.&#8221;</blockquote>



Sohn believes that Korea’s regulatory patchwork, which categorizes digital assets as something similar to intellectual property or patents — intangible assets, in accountant speak — isn’t conducive to domestic development of the sector.&nbsp;



Within Korea, the government is set to implement a <a href="https://cms.blockworks.co/macro-factors-driving-koreans-to-crypto-lending/" target="_blank" rel="noreferrer noopener">steep capital gains tax</a> on capital gains from digital assets next year. In addition, in order to push for higher KYC/AML compliance, local exchanges will <a href="https://cms.blockworks.co/morgan-stanleys-rumored-bithumb-play-shows-institutional-interest-in-koreas-digital-asset-infrastructure/" target="_blank" rel="noreferrer noopener">soon be required to partner</a> with legacy banks. 



In turn, this has driven many traders offshore, as they don’t feel confident with the Korean regulatory regime.&nbsp;



“Now is the time for exchanges to compete directly with overseas exchanges,” he said, saying that the world is now in a “global one market era” which requires competition between regulators.&nbsp;



Sohn said that there are an estimated five million onshore digital assets traders in Korea, with more offshore.&nbsp;



And these millions of traders are able to push nearly $12 billion in daily volume. For comparison, Korea’s composite index, the KOSPI, has a daily volume of $16.1 billion.



In some ways, Korea finds itself in a <a href="https://www.thejakartapost.com/news/2021/08/05/indonesia-now-has-more-crypto-investors-than-stock-market-investors.html" target="_blank" rel="noreferrer noopener">similar situation to Indonesia</a>, where there are more digital asset traders than stock traders. Indonesia’s daily turnover of trading is around <a href="https://www.idx.co.id/en-us" target="_blank" rel="noreferrer noopener">$900 million</a> a day while its cryptoasset volume <a href="https://kr-asia.com/over-6-5-million-indonesians-bought-or-sold-crypto-in-first-5-months-of-2021-ministry-of-trade-says" target="_blank" rel="noreferrer noopener">is about $166 million</a>, showing that digital assets trading in-country is the domain of small, retail investors. Unlike in Korea, Indonesia’s digital asset trading industry is facing headwinds from the country’s <a href="https://cms.blockworks.co/indonesian-religious-council-says-crypto-is-forbidden/" target="_blank" rel="noreferrer noopener">national religious council</a>, which, in mid-November, said that Muslims are forbidden to trade crypto.



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