2023 Second Half Year Survey Implementation
In the second half of 2023, the virtual asset market prices turned upward, resulting in a 24% increase in the average daily trading volume compared to the first half. As prices surged, the total market capitalization also grew to 1.5 times the previous level. However, many coins were delisted from the coin market, which had not received approval for Korean won trading, causing the total number of listed assets to decrease by about 3%. Four virtual asset service providers announced business closures, signaling a need for user caution.
Market Boom Pushes Market Cap to 43.6 Trillion Won... More Than 1.5 Times the First Half
The Financial Intelligence Unit announced on the 16th that it conducted a survey on the actual conditions of 29 registered virtual asset service providers in the domestic market for the second half of 2023.
The subjects included 29 virtual asset service providers, of which 22 were exchanges (trading operators) and 7 were wallet and custody operators. This excludes 8 out of a total of 37 registered providers. Four providers had ceased operations, and four did not submit data. The closed providers included two coin market operators and two wallet/custody operators.
In the second half of 2023, the virtual asset market saw continued price and trading volume increases centered on Bitcoin. For example, the price of Bitcoin rose 39% from $30,077 at the end of June last year to $42,265 at the end of December. The virtual asset industry’s victory in litigation against the U.S. Securities and Exchange Commission (SEC) and the anticipated launch of Bitcoin spot exchange-traded funds (ETFs) also acted as positive factors. In fact, the U.S. SEC approved the listing of Bitcoin spot ETFs earlier this year.
Market capitalization also increased. The domestic virtual asset market cap reached 43.6 trillion won, up 15.2 trillion won (53%) from the first half. This growth rate significantly exceeded the global virtual asset market cap increase of 39% (based on CoinMarketCap). Domestic virtual asset trading volume also rose 24% to 649 trillion won.
The number of virtual asset listings decreased by 66, and excluding duplicate listings, the number fell by 22. This was because while the Korean won market saw many new listings, the coin market experienced a significant increase in delistings. Overall, the total number of assets slightly declined. Notably, the number of singly listed virtual assets (handled by only one domestic operator) decreased sharply by 34 to 322 compared to the previous half.
Price volatility dropped by 0.9 percentage points to 61.5% compared to the first half. The average price volatility in the Korean won market was 63%, while the coin market recorded 55%. The average Max Draw Down (MDD) per operator ranged from a minimum of 25% to a maximum of 79%. Singly listed virtual assets showed higher price volatility at 67%.
By market, the Korean won market’s average daily trading amount increased after August, whereas the coin market saw a decline after July. The Korean won market’s average daily trading volume was 3.58 trillion won, up 24% from the first half, while the coin market’s was 4.1 billion won, down 44%.
Regarding user classification, the number of users able to trade reached 6.45 million, an increase of 390,000 (6.4%) from the first half. The largest user age group remained the 30s. Males numbered 1.33 million, more than twice the 560,000 females. Small holders with less than 1 million won also increased by 120,000 (2.8%) to 4.55 million.
The number of individual and corporate users who completed customer verification and were able to trade was 6.45 million (including duplicates), up 390,000 (6%) from the end of June 2023. Individuals increased by 6%, making up the vast majority, while corporations numbered 177, down 25% from before. By market, the Korean won market had 6.4 million users, and the coin market had about 47,000.
Virtual Asset Trading Operators See 18% Increase in Operating Profit
Amid the market boom, the average daily trading volume of virtual asset trading operators reached 3.6 trillion won, up 700 billion won (24%) from the first half. Total operating profit rose by 41.3 billion won (18%) to 269.3 billion won, and Korean won deposits increased by 900 billion won (21%) to 4.9 trillion won.
The number of employees at trading operators decreased by 250 (13%) to 1,665 compared to the end of June. During the same period, the number of dedicated anti-money laundering (AML) personnel dropped by 70 (26%) to 199. The ratio of AML personnel to total employees also fell by 2 percentage points to 12%. The rate of AML personnel holding concurrent positions in other duties decreased by 7 percentage points to 24.6%, and the average AML work experience was 5.4 years.
The external transfer (withdrawal) amount by trading operators was 38.1 trillion won, up 8.4 trillion won (28%) from the first half. Among this, transfers to registered providers (subject to the Travel Rule) surged to 10.4 trillion won, an increase of 3.8 trillion won (57%) from the first half. The Travel Rule requires virtual asset service providers to provide sender and receiver information when transferring virtual assets worth 1 million won or more to another provider and was introduced in March 2022. Transfers of 1 million won or more per transaction to overseas providers or personal wallets totaled 26.9 trillion won, up 4.8 trillion won (22%) from before.
The Financial Intelligence Unit explained, "Due to events such as free virtual asset trading fee policies by some Korean won market operators, transfers between registered providers may have been active."
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