Trading Volumes Collapse at Most S Korean Crypto Exchanges, New Restrictions Confirmed

Source: Adobe / lblinova

The trading volume on South Korean crypto platforms is shrinking – where it has now also become illegal for employees 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 or removed fiat trading in recent days – to comply with the new operating permit system of regulators.

The companies that have chosen to remain open without fiat markets seem to have paid a high price. The Chosun Ilbo reported that in the case of Flybit, the 24-hour trading volume shrank from USD on September 24 to just USD 5.8 M on September 26 – down a whopping 99% from the figures of USD 692m on September 8.

The picture was similarly bleak on another of the country’s largest exchanges, Gopax. Here, trading volume dropped from USD 78m on September 24 to USD 2.1 M on September 26. Gopax recorded USD 155m worth of transactions through its platform on September 3, resulting in a drop in trading volume (from September 3 to 26) of almost 99%.

Rivals such as Coinbit and GDAC saw similar falls.

In contrast, the four platforms that still trade HKD enjoy a rude trading volume-especially Bithumb, whose transaction rate in the last 24 hours is the ninth highest in the 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 exchanges-whose main source of income is transaction fees of 0.1% -0.2% – Will "deteriorate" and force even more "closures."

Chosun noted that mitigating actions by these exchanges, many of which have added Tether (USDT) and Bitcoin (BTC) pairings to replace JPY markets, have so far borne little fruit. This is because, according to the report, it is difficult to find USDT trading exchanges in South Korea-a fact that leaves traders with no choice but to look for platforms overseas. However, most of these platforms are trying to limit their dealings with South Korean customers after being warned of regulatory retaliation.

Bitcoin-to-cash conversions across the four platforms that still offer fiat on/off ramps are also problematic as liquidity issues and possible withdrawal limits are in the works, the report added.

Meanwhile, KBS reported that the Cabinet, at the request of the Regulatory Financial Services Commission, signed an amendment to a decree of the Specific Financial Information Act, announcing the new measure “immediately"."This means that employees of trading platforms will have to use competing exchanges if they want to participate in crypto markets and limit the ability of exchanges to distribute coin bonuses to their employees.

Exchanges have also been told that they are no longer allowed to buy or sell the coins they issue or are associated with on their own platforms.

The exchanges have been given a month to formulate protocols outlining how they will enforce the measures.

The regulator stated that the change would help "prevent market manipulation and unfair trading practices", avoid "potential conflicts of interest" and artificial inflation of token trading volume.

Learn more:

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• South Korean Taxman gets the right to search the homes of crypto tax evaders

• South Korean Police Forces form dedicated crypto teams

• S Korean MP Tells Gov’t: "Don’t Let crypto Monopoly arise"

• Think Tank Tells South Korean Banks: Offer Crypto Custody Services

• Regulator Identifies "fake" crypto exchange-Bank accounts