Trading volumes are shrinking at South Korean crypto platforms – where it has now also become illegal for the staff and executives of crypto exchanges to trade on their employees’ platforms.
As previously reported, the vast majority of crypto trading platforms in the country have either closed down or removed fiat trading in the past few days – in order to comply with regulators’ new operating permits system.
The firms that chose to stay open without fiat KRW markets appear to have paid a huge price. The Chosun Ilbo reported that in the case of Flybit, 24-hour trading volumes shrank from USD 97.4m on September 24 to just USD 5.8m on September 26 – and were down a whopping 99% from September 8 figures of USD 692m.
The picture was equally grim at another of the nation’s biggest exchanges, Gopax. Here, trading volumes fell from USD 78m on September 24 to USD 2.1m on September 26. Gopax saw USD 155m worth of transactions go through its platform on September 3, making for a trading volume decrease (from September 3 to 26) of almost 99%.
Rivals like Coinbit and GDAC saw similar slumps.
By contrast, the four platforms that are still trading KRW are enjoying rude trading volume health – particularly Bithumb, whose transaction rate in the past 24 hours is the ninth-highest in the world, per CoinMarketCap data (USD 984m). Rival Coinone is also in the top 20 with around USD 202m.
Chosun added that industry sources predicted that the profitability of crypto-to-crypto-only exchanges – whose main source of income is transaction fees of 0.1%-0.2% – will “deteriorate” forcing yet more “closures.”
Chosun noted that mitigating measures from these exchanges, many of which have added tether (USDT) and bitcoin (BTC) pairings as a replacement for KRW markets, have borne little fruit thus far. This is because, per the report, it is hard to find USDT-trading exchanges in South Korea – a fact that leaves traders with no option other than to seek out overseas platforms. Most of these platforms, though, are trying to limit their dealings with South Korean customers after being warned of regulatory retaliation.
Bitcoin-to-cash conversions via the four platforms that are still offering fiat on/off ramps are also problematic, with liquidity issues and withdrawal limits possible spanners in the works, the report added.
Meanwhile, KBS reported that the cabinet had signed off on an amendment a decree of the Specific Financial Information Act at the request of the regulatory Financial Services Commission, with the new measure promulgating “immediately.” This means that trading platform staff will need to use rival exchanges if they wish to take part in crypto markets, and will limit exchanges’ abilities to hand out coin bonuses to their employees.
Exchanges have also been told they are no longer allowed to buy or sell the coins they issue or are affiliated with on their own platforms.
Exchanges have been given a month to formulate protocols outlining how they will enforce the measures.
The regulator stated that the amendment would help “prevent market manipulation and unfair trade practices,” avoiding “potential conflicts of interest” and artificial token trading volume inflation.
– Crypto in Chaos, but Blockchain-powered Pay and Stablecoins Thrive in S Korea
– South Korean Taxman to Be Granted Right to Search Crypto Tax Evaders’ Homes
– South Korean Police Forces to Form Dedicated Crypto Teams
– S Korean MP Tells Gov’t: ‘Don’t Let a Crypto Monopoly Emerge’
– Think Tank Tells South Korean Banks: Start Offering Crypto Custody Services
– Regulator Identifies ‘Fake’ Crypto Exchange Bank Accounts