Despite a turbulent close to 2022, the South Korean cryptocurrency market appeared to have picked up momentum in 2023. According to a report by the Korean Financial Intelligence Unit (KOFIU), the South Korean crypto market surged 46% to a valuation of 28.4 trillion won (about $21.08 billion) between January and June 2023. This comes after a disappointing 2022 which saw the market valuation dip to 19.4 trillion won. Although there has been an upswing, KOFIU notes that crypto investments have not yet reached the highs of 2021.
Decline in Market Performance
Despite the positive growth in the first half of 2023, KOFIU states that the performance is still significantly lower compared to its peak in 2021. The market closed at 55.4 trillion won (about $40.9 billion) during the crypto boom of 2021, indicating that the upswing of 2023 is still down by 48.5%. KOFIU conducted a thorough survey on 26 highly liquid cryptocurrency exchanges, investment firms, and crypto wallet and custody providers to gather data for their report.
Increase in Listed Assets
KOFIU’s report also revealed an increase in the number of listed assets. In the first months of 2023, there were 1,399 cryptocurrency listings compared to 1,362 in 2022. This growth reflects the expanding landscape of cryptocurrencies in South Korea.
Trading Volume and Investor Participation
The average daily trading volume from January to June 2023 was approximately 2.9 trillion won (about $2.19 billion), representing a slight decrease of 1.3% from the final quarter of 2022. Additionally, the number of cryptocurrency investors dropped from 6.27 million in 2022 to 6.06 million in 2023, indicating a 3% decline in investor participation in the decentralized economy.
Challenges Faced by the Industry
2022 was a challenging year for crypto-facing businesses in South Korea. The industry faced major macroeconomic events and industry-related issues that affected market confidence. The Terra blockchain collapse resulted in a significant loss of market value, and the collapse of the FTX exchange, along with the charges against its CEO, further dampened investor confidence. KOFIU reported that around 10 surveyed crypto trading firms struggled to maintain operations due to a decline in trading volumes and transaction fees earned.
Hope for the Future
Despite the difficulties faced, there is a glimmer of hope for the South Korean crypto market. The total operating profit increased by 82% from its 2022 close, showing potential for recovery and growth in the coming years.
