Why Is Cryptocurrency Trading Popular In South Korea?
What Is the Allure of Cryptocurrencies for South Korea?
Cryptocurrencies are popular investments among South Korea’s younger generations. Generally, they view them as an alternative path to financial security due to a high youth unemployment rate, a way to feel more secure about their finances under political uncertainties, and because they are familiar with electronic payment systems.
There are likely many reasons cryptocurrency is so popular in South Korea, but here are three of the most noteworthy.
- Cryptocurrencies are popular investments among South Korea’s young generation who see them as a path to prosperity in a context of persistently high unemployment.
- South Korea has long been an early adopter of new technology, and the culture is such that people are quick to embrace new technological innovations and opportunities.
- Cryptocurrencies are stateless investments that appeal to South Korean investors wary of the political climate and their proximity to the threat posed by North Korea.
Youth Unemployment
The first reason for the popularity of cryptocurrencies is the prevailing economic conditions in the country. Even though it is a prosperous one, the South Korean economy suffers from a youth unemployment problem.
However, the key issue behind the youth unemployment rate is that there are more secondary and tertiary school graduates than there are jobs available. In a July survey by Statistics Korea, slightly less than 43% of South Koreans aged 15 to 29 not in education, employed, or in training (NEET), who responded “yes” to wanting to work couldn’t find jobs that met their criteria for conditions and pay.
Micropayment Familiarity
Familiarity with micropayment transactions is another reason for the popularity of cryptocurrencies. South Koreans have long been early adopters of technological innovation, whether it is social networks or video games. It has some of the world’s fastest Internet speeds and a well-developed telecommunication system to facilitate mobile payment systems.
A robust gaming industry made South Koreans comfortable with electronic micropayments, an idea that has begun to take hold in the West. Businesses had cropped up around its games as well as black markets.
Political Unease
The third reason for cryptocurrencies’ popularity is political uncertainty. South Korea’s neighbor, North Korea, has labeled its southern neighbor a hostile state, making its population uneasy about the country’s stability and future.
Because Bitcoin and other cryptocurrencies are not attached to any state, they appeal to investors who are wary of North Korea’s intentions.
South Korea Crypto Trading Regulations
In March 2020, the South Korean National Assembly passed new legislation that paved the way for the regulation and legalization of cryptocurrencies and crypto exchanges.
This action was taken in recognition of the burgeoning growth of the cryptocurrency ecosystem, even amid the COVID-19 epidemic. The legislation was designed to oversee an emerging industry and develop rules around anti-money laundering processes.
South Korean investors were eager to invest in digital assets and cryptocurrency markets. According to 2021 survey data, 40.4% of 1,885 workers polled noted that they had invested in cryptocurrency. Remarkably, about 49.8% of South Korean workers aged 30 years to 39 years said they have invested in cryptocurrencies. Workers in their twenties followed with about 37.1%. The excitement shared by South Korean digital asset investors did not come without consequence—as the excitement attracted the attention of criminals and regulators alike.
Virtual asset service providers became regulated in 2021 after a March revision of the Act on Reporting and Using Specified Financial Transaction Information was implemented. This revision included requirements for listing virtual asset prices in fiat currency, real-name accounts, and other reporting requirements.
Later Regulatory Developments
South Korea’s Virtual Asset User Protection Act took effect in July 2024. It lays out guidelines for publishing and enforcing decrees to protect traders from unfair and predatory trading practices. This act, combined with the earlier revisions to existing acts, provides more transparency and protection for South Korean investors.
Is Cryptocurrency Popular in Korea?
Cryptocurrency remains popular in South Korea, but North Korea’s stance is not known as the state is very secretive.
Is Crypto Trading Legal in South Korea?
Yes. Cryptocurrency, while not considered money in South Korea, can be traded as an asset on exchanges.
What Country Trades the Most Cryptocurrency?
According to Chainalysis’ Global Crypto Adoption Index, India has the most crypto exchange activity, followed by the U.S., Vietnam, and Pakistan. It’s important to note that this activity may not all be from trading but from people accessing exchanges to use cryptocurrency in daily financial activities.
The Bottom Line
A combination of political uncertainty, familiarity with micropayment systems, and economic problems have made cryptocurrencies an attractive option for South Korean investors. The country has always been an early adopter of key world-transforming technologies. It could be the case that the country may lead the way once again by incorporating cryptocurrencies into mainstream trading.