In Monday’s Korea Insider, we linked to a piece by Joseph Young at LongHash that pointed to the precipitous drop in trading volume at Korea’s major cryptocurrency exchanges.
He noted that daily volume at Bithumb has dropped 83% since October 2018.
Young pointed to a number of factors. They include:
- Regulatory uncertainty, which includes confusing and unhelpful comments by high-ranking officials.
- Problems with the exchanges themselves. Bithumb supports Korean won deposits and withdrawals through Nonghyup bank only. UPBit supports a majority of Korea’s big banks, but legal troubles in early 2018 led to an 80% decline in trading on that exchange.
Meanwhile, the Korean-language blockchain news website The Bchain reports that the number of visitors to Korea’s top five exchanges are falling, further evidence that Korean exchanges are in a funk.
Visitors to Bithumb fell 54% between May and October, while visitors to UPBit fell 61%.
Another Korean-language blockchain news site, The Nodist, reports that between September and October alone, traffic at Korea’s exchanges fell by 20%.
The BChain blames declining interest in cryptocurrency investment.
The situation has exchanges scrambling to diversify their operations. Blockchain company Dunamu, which operates UPBit, launched the corporate custody service “UPBit Safe” and is currently pushing a staking service for holders of PoS cryptocurrencies.
Bithumb Korea, which runs Bithumb, is trying to become a global digital financial services company with plans to add digital assets custody service, an STO and distribution platform, and an integrated exchange that would support matching and clearing cryptocurrency transaction orders between exchanges.
There are reasons for optimism, however.
Young pointed to improvements in infrastructure and transparency, as well as to moves in Korea to establish a clearer regulatory framework. This could create a more stable environment for investors.
And despite the downturn in volume, the Korean won was still the third most traded national currency for Bitcoin. Regional governments such as Jeju and Busan have set up blockchain zones, too, that may encourage growth in the crypto industry and help keep Korea a major player in Asia’s blockchain space.