KOREA NEWS Korean crypto gains ground following global industry turbulence

Korean crypto gains ground following global industry turbulence

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Binance CEO Changpeng Zhao leaves the U.S. District Court in Washington, Tuesday (local time). AFP-Yonhap

By Lee Yeon-woo

Expectations are growing that Korea could gain ground in the global crypto industry, as Chinese crypto exchanges that once dominated the global coin market are faltering one after another.

On Tuesday (local time), Binance, the world’s largest crypto exchange, was ordered by the U.S. government to pay a roughly $4 billion settlement. Its CEO, Changpeng Zhao, was also required to step down, following allegations that the exchange allowed trades violating U.S. sanctions, including those linked to Hamas’ al-Qassam Brigades.

This was followed by HTX’s recent entanglement in security risks, following a hacking incident last month.

After the announcement, $1 billion worth of virtual assets flowed out from Binance in a single day.

“The market is still nervous about the recent legal implications against Binance,” said Greta Yuan, head of research at Hong Kong-based digital-asset platform VDX. “In the short term, we will see more users move funds to compliant or licensed exchanges for peace of mind.”

Amid the global crypto market turbulence, there is an expectation that more opportunities are emerging for the crypto industry in Korea, which is still recovering from the crypto winter, despite the global market capitalization of virtual assets increasing by more than 800 trillion won this year.

“It is anticipated that exchanges in other countries will receive indirect benefits following Binance’s collapse. Most assets (derived from Binance) are expected to flow into the U.S. exchanges like Coinbase, but there’s also a possibility that users may shift their focus to alternative markets in Asia,” a crypto industry official said.

A man looks at an electronic board showing the price movement of Bitcoin at a customer center of Bithumb in Seoul, Nov. 16. Yonhap

He also cited the expected approval of a Bitcoin spot-exchange-traded fund (ETF) as another favorable factor, and suggested that domestic exchanges enhance their management and operations in preparation.

Mike Belshe, CEO of Bitgo, a digital asset trust company based in California, spoke highly of Korea’s management in the crypto industry.

“Korean financial authorities are actively forming regulations, with a keen interest in ensuring the proper functioning of the (crypto) industry,” Belshe said during his visit to Korean Blockchain Week 2023 in September.

Belshe then announced plans to enter the Korean market in cooperation with Hana Bank, noting that Korea ranks in the top 2 or 3 globally in Bitcoin trading volume and is on the path to becoming a crypto hub in Asia.

Major blockchain projects such as Astar Network, Chainlink, Avalanche, Polygon, Solana and NEAR Protocol have also entered or announced plans to enter the Korean market.

This trend is thought to be influenced by Korean investors’ keen interest in virtual assets, particularly in altcoins. In the U.S., altcoin transactions account for approximately 43 percent of Coinbase’s total trading, whereas in Korea’s largest virtual asset exchange, Upbit, altcoins represent 95 percent of the total 24-hour trading volume.

Additionally, the presence of a significant number of domestic blockchain companies specializing in content and service development is considered an asset for these foreign tech firms looking to expand their ecosystem.

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