# South Korean Crypto Trading Volume Surges, Yet Transition to DeFi Remains Minimal

In Q1 2024, cryptocurrency trading volume in South Korean won (KRW) surpassed that of the U.S. dollar, marking a significant milestone. During this period, KRW trading volume reached $456 billion (611 trillion KRW), outpacing the U.S. dollar volume, which stood at $445 billion (596 trillion KRW). This shift highlights why crypto companies are increasingly focusing on the Korean market.

To aid these companies in entering South Korea, Myosin released a report in August titled “10 Insights for Entering the Korean Market.” Myosin is a New York-based marketing network aimed at onboarding one billion Web3 users.

The comprehensive Myosin report is available in English, and Block Media exclusively provides a summary in Korean.

# Global Significance of the Korean Crypto Retail Market

## World-Class KRW Crypto Trading Volume

The South Korean crypto market is pivotal for Web3 project teams looking to expand their ecosystems. In Q1 2024, KRW trading volume reached $456 billion, surpassing the USD trading volume of $445 billion. According to CoinMarketCap’s exchange ranking as of July 1, 2024, South Korea’s largest crypto exchange, Upbit, ranked fifth in the world for spot trading volume, following Binance, Coinbase, OKX, and Bybit. Upbit recorded a 24-hour trading volume of approximately $420 million.

Notably, Upbit’s ranking is not just in terms of trading volume but also liquidity, where it ranks fourth globally. Interestingly, all transactions on Upbit are executed by retail investors, as corporate accounts are not permitted for investment purposes.

## High Altcoin Trading Volume

The South Korean market is distinguished by its high altcoin trading volume compared to the global market. While BTC and ETH dominate global trading volumes, their share in the Korean market is comparatively lower. For instance, Stacks (STX) saw 90% of its global trading volume on Korean exchanges on August 5, 2023, and Blur (BLUR) saw 60% on January 4, 2023.

Most of the crypto transactions in South Korea occur in KRW pairs, highlighting the local market’s dominance. Given this context, Korean retail investors significantly influence the global Web3 project’s market expansion.

## Centralized Exchange (CEX) Dominance

In South Korea, operating a crypto exchange requires a Virtual Asset Service Provider (VASP) license from the government. Only five exchanges hold this license: Upbit, Bithumb, Coinone, Korbit, and Gopax. Upbit alone holds over 80% of the market share, making the market nearly monopolistic.

# Limited Web3 Ecosystem Participation

## Low Liquidity Inflow into Web3 Native Ecosystems

Despite high CEX trading volumes, the inflow of liquidity into Web3 native ecosystems remains low. According to a Financial Services Commission report in May 2023, only 0.25% of total crypto transactions were transferred to non-custodial wallets. This translates to just KRW 1.6 trillion out of KRW 649 trillion in total transaction volume, underscoring the minimal shift towards Web3 native ecosystems.

## Low Engagement in Web3 Native Platforms

Google Trends and Naver Data Lab also reveal minimal interest in Web3 native platforms among South Koreans. While interest in keywords like Bitcoin and Upbit remains high, terms like Ethereum, Solana, and Metamask garner significantly less attention.

# Reasons Behind the Low Transition to Web3

## Aggressive Investment Style

South Korean investors are known for their aggressive investment strategies, focusing on short-term gains rather than long-term value accumulation. This trend is evident not only in the crypto market but also in stock and real estate investments. This preference for quick, straightforward transactions over complex DeFi mechanisms contributes to the low transition to Web3.

## Impact of the “Kimchi Premium”

The “Kimchi Premium” refers to the higher cryptocurrency prices on Korean exchanges compared to global ones. For example, on March 20, 2024, Bitcoin was 9.12% more expensive on Upbit than on Binance. This premium discourages participation in Web3 ecosystems, as investors prefer to capitalize on higher prices within the domestic market.

# Listing Guidelines for Korean Crypto Exchanges

Post the Terra-LUNA incident, the Digital Asset Exchange Association (DAXA) was formed to outline listing and delisting guidelines for Korean crypto exchanges. Web3 project teams looking to enter the Korean market must adhere to these guidelines, which consider factors like team capability, fairness for investors, technological prowess, user activity, and trading levels.

The “10 Insights for Entering the Korean Market” report by Myosin aims to help Web3 projects navigate these complexities and succeed in the South Korean market.

# About Myosin

Myosin is a New York-based marketing network aiming to onboard one billion Web3 users. It includes over 100 Web3 marketers from 26 countries, offering expertise across PR, KOL, social media, community, core content, growth strategy, execution, and design.

# Disclaimer

The information provided in this report comes from Myosin. It is intended solely for informational purposes and does not constitute financial, investment, or legal advice. Myosin does not guarantee the accuracy, completeness, or timeliness of the information and accepts no liability for any losses or damages arising from its use. Readers should conduct their own research and consult qualified professionals before making any financial or investment decisions.