Korea Has 566,000 Foreign Crypto Accounts, but Almost None Trade

Hundreds of thousands of corporate and foreign accounts are registered at South Korea’s crypto exchanges, but only a tiny fraction of them actually trade, as won-based trading by companies is restricted and foreign investment in domestic crypto is effectively blocked.

As of the end of last month, corporate accounts at the country’s five largest crypto exchanges totaled 6,590, while foreign accounts were far more numerous at 566,352, according to financial industry

Active accounts, by contrast, were rare. Among ordinary companies, only 29 accounts had been used at least once last month for trading, swaps, staking or crypto deposits and withdrawals. Of these, 22 belonged to Dunamu, accounting for most of the total. Foreign active accounts numbered just 90 as of last month. At Bithumb, which has 484,846 foreign accounts, there was not a single active account last month.

Although trading is scarce, the assets held in these accounts are substantial. Companies hold about 43.38 billion won in crypto assets. Holdings through Upbit came to 27.08 billion won, or 62.4% of the total. They were followed by Bithumb (6.30 billion won), Coinone (5.15 billion won), Gopax (3.08 billion won) and Korbit (1.77 billion won). Foreigners hold roughly 30.36 billion won in crypto assets and about 2.58 billion won in deposits.

The industry sees regulation as the reason for the wide gap between the number of accounts and actual usage. Ordinary companies can open exchange accounts, but crypto trading and deposits or withdrawals based on the won are restricted. After completing know-your-customer (KYC) procedures, they can use the “coin market,” where trades are made in bitcoin, tether and other cryptocurrencies.

Foreigners, too, have faced constraints on domestic crypto trading since the 2021 revision of the Act on Reporting and Using Specified Financial Transaction Information, which made it harder to obtain deposit and withdrawal accounts with verified real names. The industry believes many of the foreign accounts that remain were created before foreign investment in domestic crypto was effectively restricted.

The corporate market, however, is set for a phased opening. Financial authorities are preparing safeguards for investor protection and anti-money laundering to allow listed companies and firms registered as professional investors to trade crypto for investment or treasury purposes. Exchanges are also preparing stronger KYC, systems to automatically split large orders and custody arrangements.

The industry expects that wider participation by companies and institutions will expand demand into related sectors such as custody, over-the-counter (OTC) trading, stablecoins and real-world assets (RWA). Some also argue that opening the market to foreigners could boost exchange fee income while bringing in foreign currency and increasing tax revenue.

#KoreaCrypto#CryptoExchange#Bithumb#Upbit#Stablecoin#CryptoRegulation

Original reporting by Jung In-hyuk for Seoul Economic Daily.

AI-translated from Korean. Quotes from foreignxact original wording

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