Crypto rose up to 2.3 % due to South Korea’s vague regulation

Crypto rose up to 2.3 % due to South Korea's vague regulation

South Korea is one of those countries that has been deprived of crypto regulation. However, Korea has gained fame as one of the largest crypto markets in the world.

According to the Tiger research report, the migration of talent, capital, and companies to the crypto industry is increasing in South Korea. 

The crypto industry has shown a considerable turn over the years, from being limited to technology enthusiasts to becoming a trillion-dollar industry. South Korea built a regulatory framework for cryptocurrencies and provided a way for sub-sectors to use coins like (USDT, USDc, USDe), DeFi, Web3 gaming, etc.

With friendly cryptocurrency policies highlighted in the recent crypto executive order signed by the President of the US, this disparity widens further, encouraging crypto companies and talent to migrate to the US. They spread their adoption across the globe. Global countries except South Korea have not yet formed clear regulatory policies for the crypto industry.

Despite the growing adoption of cryptocurrencies, most countries have introduced suitable regulations for cryptocurrency. China, India, South Korea, and the UK are the major countries on this list. These countries are facing migration of crypto companies and investors to other countries.

Financial service commission 

According to the Financial Services Commission’s VASP Survey in 2024, more than 2.3x funds were transferred to non-local VASP wallets in 2024 compared to 2023. The crypto market in South Korea is growing at a faster pace. They are recording substantial trading volumes. Around 15.6 million crypto investors are recorded in the country. However, the domestic centralised exchanges are moving to other countries because of abstract regulations

Along with crypto funds, Korean Web3 firms are also moving their headquarters to crypto-friendly countries. Several countries moving to Abu Dhabi and Dubai are alarming for South Korea, as the country is losing out on innovation and development of crypto.

While Korean  companies move to other countries, the crypto talent also wastes no time seeking better opportunities in other countries over the globe 

Previous legislation on crypto in Korea

In March 2024, South Korea issued a new regulation to increase the supervision of virtual assets. Under the new legislation, all asset management providers, including cryptocurrency exchanges and other virtual asset service providers, must revalidate themselves with KFIU. The Korea Financial Intelligence Unit is a sector which operates in South Korea to regulate financial businesses.

In January, South Korea also began enforcing a requirement that the name on cryptocurrency investors’ bank accounts matches the name on their accounts at a cryptocurrency exchange to deposit money into their virtual wallets. With exchanges now required to ensure their customers have real-name bank accounts, they must also partner with domestic banks to establish real-name accounts for their clients.

South Korean banks, however, have been unwilling to collaborate with cryptocurrency exchanges due to specific hazards.

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