After a quiet start to 2018 and a significant contraction in the middle of the year, there is a considerable increase in Korean won (KRW) cryptocurrency trades. Despite this increase, the “kimchi premium” that existed in 2017 has yet to surface in cryptocurrency exchanges in South Korea.
Volumes increased since the start of Q4
Since the start of October 2018, the cryptocurrency trading volume in South Korea has spiked. A chart by CryptoCompare shows KRW trading volumes on certain days in October accounting for almost 50 percent of the total market share.
This recent trend is a marked departure from the norm established at the beginning of 2018. For most of the year, KRW cryptocurrency trading volume remained stagnant until the middle of the year when it contracted significantly. From June all the way to September, virtual currency trading volume in the country appeared to shrink.
Exchange Hacks and Stock market turmoil
This significant shrinkage in KRW cryptocurrency trading volume came after a series of hacks against virtual currency exchanges in the country. In June 2018, both Coinrail and Bithumb suffered cyber-attacks leading to the theft of millions in cryptocurrency.
In response, these platforms suspended deposits and withdrawals, severely limiting trading until they could resolve the issues. With Bithumb being one of the largest exchanges in the country, such a move would have an effect on local trading volume.
Some observers believe that one primary reason for the upswing in KRW cryptocurrency trading is the current turbulence in the stock market. Investors are reportedly moving to Bitcoin, which appears a lot more stable than the more traditional assets.
USDT Volume Depleting
BitFinex still has a lead over other exchanges in Bitcoin-to-dollar trades. It is further reflective in the dominance of Tether’s USDT – a BitFinex-supported stablecoin – over the bitcoin volume charts. Nevertheless, the coin is losing its sheen after being criticized for non-disclosure of US reserves. A considerable number of traders has shifted to other stablecoins. Many have parked their crypto assets in fiat also, which explains a volume shift towards the Won.
The deviation between USDT and Won volume is visibly more than the divergence between Yen and Won on half-yearly charts.
The legal Status of Crypto
In mid-2018, the country recognized virtual currency exchanges as legal entities. This move, in many ways, legitimized the burgeoning cryptocurrency economy in the country — seeing as these platforms constitute a significant portion of the digital currency ecosystem.
While the country continues to be a haven for virtual currency commerce and blockchain technology, financial regulators remain resolute on the ICO ban. According to the FSC chief, the uncertainties surrounding ICOs makes regulating them potentially problematic. The comments from the top financial regulator come despite persistent calls for a reversal of the ICO prohibition.