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South Korean Won Dominance in Cryptocurrency Trading
The South Korean won has emerged as the leading fiat currency for cryptocurrency trading, surpassing the US dollar in the first quarter of 2024. According to a recent research report by Kaiko, the South Korean won accounted for over $456 billion in trading volume on centralized crypto exchanges, exceeding the $455 billion volume in US dollars.
Factors Contributing to South Korean Won’s Dominance
Kaiko attributed the growing dominance of the South Korean won to the “fee war” among Korean crypto exchanges. The report highlighted that the improving macroeconomic environment and intense competition between exchanges in South Korea have fueled trade volumes, reaching their highest level in over two years in early March.
Euro-denominated Trading Pairs Volume
In comparison, Euro-denominated trading pairs recorded only $59 billion in cumulative volume, securing the third position for the first quarter of 2024.
Competition Among South Korean Exchanges
Upbit, as the leading crypto exchange in the region, has maintained a stronghold on over 82% of South Korea’s crypto market share since 2021. However, the recent bullish market conditions intensified competition among rival exchanges. Bithumb and Korbit launched zero-fee campaigns in late 2023 to attract users. While Korbit’s market share remained below 1%, Bithumb witnessed a threefold increase in its market share following the introduction of zero-fee trading in October 2023.
Market Response to Zero-Fee Strategy
The aggressive zero-fee strategy led to a significant revenue drop for Bithumb, with its annual revenue declining by 60% in 2023. Consequently, Bithumb discontinued its zero-fee campaign on February 5, just five months after its launch.
Future Outlook and Regulatory Developments
Despite a decline in trade volume in early April, the recent approval of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong may lead to a rebound in volumes. South Koreans are increasingly turning to crypto and stocks as alternatives to the national pension system.
South Korea’s Regulatory Environment
South Korea is set to introduce stricter regulations for token listings on exchanges, including blocking tokens that have been hacked. The country’s financial authorities are preparing to release guidelines for virtual asset trading support, expected to be published by the end of this month or early next month.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
