Bankruptcy Plagues South Korea Crypto Exchanges
Considerably low transaction volumes in South Korea for cryptocurrency trading has caused for 97% of exchanges to be near bankruptcy. This report comes from Business Korea, which also indicated that five of the exchanges operating in South Korea are listed on the worldwide markets. Unfortunately, due to the concerns relating to cryptocurrency in South Korea, most traders have opted out to avoid digital currency. SK could be the first country to lose markets due to low volatility.
There hasn’t been any significant data to defend these claims. However, one exchange has shut down their year, and many others are in the process of filing for bankruptcy. The low volatility isn’t the only factor that defines these exchanges, poor performance and layouts caused for drop-off inactivity as well. A CoinDesk representative stated: “A natural result of a decrease in trading volume. Regulatory issues and business decisions.”
Big Changes Coming
Due to the lower trading volumes occurring nationwide, these cryptocurrency exchanges in South Korea have begun to shut down their service and re-open in foreign jurisdictions. This has caused an increase in oversea firms in Europe, Australia & South Africa. Considering that all three of these markets are ripe with activity, it only makes logistical sense. However, setting up an exchange in a foreign nation as a South Korean is illegal.
There are also other exchanges operating in Europe & America that want to purchase the rights to these South Korean crypto firms. The following companies have expressed interest: Binance Labs, BW, Storichain, Sigma Chain, Payexpress and Ziktalk. Binance Labs have been the only firm to official comment on these rumours by saying, “Binance Labs, are directly accelerating Korean blockchain projects to attract Korean start-ups.”
Two Different Markets
Governing laws in South Korea that are continually being implored are causing these exchanges to look abroad. Currently, new legislation has come out that’s resulted in institutional clients being unable to deposit or withdrawn via cryptocurrencies. Furthermore, two hundred other exchanges cannot legally open real-name virtual accounts for professional clients. This paints a disgusting picture that is turning the cryptocurrency market in South Korea bleak. It’s also in stark contrast to a market that was booming in 2017/2018.
It was estimated by back in 2017, more than 20% of the world’s digital currency trading was going through South Kore. It was so prevalent in the country that multiple government officials were supporting the growth. It’s unknown what caused the society-wide shift in their feelings towards cryptocurrency.