Despite rigorous regulations, the South Korean crypto market arose to $45.9 billion in 2021

The South Korean crypto market arose to $45.9 billio

According to a new report from South Korea’s primary financial regulator, the Financial Service Commission, the country’s crypto market rose to 55 trillion Won ($45.9 billion) by the end of 2021. South Korea is one of the tightest crypto marketplaces in terms of regulatory policy execution, and its new travel rule and Know Your Company requirements generated regular news during 2021. Despite the regulatory monitoring in 2021, the Korean crypto industry has risen to unprecedented heights. The crypto trading market was dominated by national fiat Korean-won which accounted for 95% of the total crypto transactions which mainly came from Upbit, Bithumb, Coinone and Korbit. The domination of won in the Korean crypto market is attributed to a new crypto license regulation issued in 2021, that required crypto exchanges to open real-name bank accounts of traders in association with a certified bank. The particular regulations forced nearly 200 small and medium crypto exchanges out of business as banks refused to partner or offer any of their services. According to an FSC study released by The Korea Herald, there are a total of 15.3 million registered crypto exchange customers, but only 5.58 million of them traded in 2021. Nearly 3.1 million of the 5.58 million crypto users have assets worth less than 1 million won ($850), while 15% of the traders have assets worth more than 10 million won ($8,500). South Korea’s crypto license rules drove away the bulk of medium and small exchanges, and those that remained were forced to abide by severe privacy laws that prohibited transactions from secret wallets and flagged transactions above a specific value. Another proposal for token issuers was released in November with the goal of retrieving unlawfully obtained cash, enforcing criminal penalties, and safeguarding investors from future fraud. Another proposal was issued in November for token issuers aimed at recovering illegally gained funds, doling out criminal punishments, and protecting investors from future malfeasance. By the final quarter of 2021, the Korean regulators focus shifted towards crypto taxation, with a proposal to impose a 20% tax on crypto profits. However, in absence of clear regulations for the market, the tax policy was delayed for another year. The country has also shifted its focus on nonfungible tokens in the recent past and might become one of the first nations to issue NFT tax regulations.