Korean Won Bought Crypto, Beats Dollar Despite Asian Exchange Fee War

Key Takeaways

• South Korean Won overtakes USD in crypto trading.
• Exchanges in the Asian nation are reportedly engaging in competitive zero-fee campaigns.
• Despite aggressive marketing strategies, exchange revenues have seen declines.

The South Korean Won (KRW) has eclipsed the US Dollar (USD) in crypto trading in the first quarter of 2024. According to a report from research firm Kaiko, the shift happened on the back of local exchanges intensifying fee competition. With the general elections concluded for the region, crypto ETF approval comes in Q2.

South Korea Rises Above USA 

During the first quarter of 2024, the cumulative trading volume for the South Korean Won on centralized crypto exchanges reached $456 billion, as per the report. Meanwhile, USD touched $445 billion in trading volume.

Kaiko said: “The improving macroeconomic environment and fierce competition among Korean exchanges has boosted trade volume on Korean markets which hit its highest level in more than two years in early March.”

Upbit, a leading South Korean exchange, has maintained 82% dominance in the local crypto market since early 2021. Despite this dominance, other exchanges like Bithumb and Korbit are trying to catch up. Kaiko finds that both exchanges launched aggressive zero-fee trading campaigns to capture a larger market share. Bithumb’s share has reportedly tripled following its zero-fee policy initiation in October 2023.

However, the surge in trade volumes brought about by these fee waivers did not translate into profitability. Bithumb, for example, reported a 60% drop in annual revenue in 2023, leading to the discontinuation of its zero-fee campaign early in February 2024.

Suspension of Ten&Ten Travel Rule

While fee reductions can increase trade volume, they may not be sustainable in the long run without sufficient compensatory revenue streams.

Meanwhile, tighter regulations are also changing how crypto exchanges function. Upbit has halted crypto deposits and withdrawals of over one million Won due to the suspension of the Ten&Ten Travel Rule. One million won is hardly $700.

The release  said: “The measure is based on the circumstances of the relevant VASP and suspends deposits and withdrawals of more than one million won regardless of whether or not actual digital asset deposits and withdrawals are supported.”

On the sidelines, the opposition Democratic Party gained the majority in the general election in South Korea. The results will also impact the sector as the party had proposed the approval of spot ETFs. In Asia, Hong Kong has approved spot Bitcoin (BTC) and Ethereum (ETH) ETFs setting a tone for Asia-Pacific.

Where is the Region Headed?

The first quarter of 2024 marked a positive period for the South Korean crypto market. Since Won’s trading volume surpasses that of the US Dollar for the first time, tighter rules can potentially change that. However, Asia remains in growth mode on the back of intense competition among local exchanges, aggressive fee reduction strategies, and the potential of Bitcoin ETFs.

About the Author

Shraddha Sharma

Shraddha has around five years of experience as a financial journalist, focusing largely on the Asian markets. Starting her career in Mumbai, India, as a news trainee and producer, she quickly found her niche in crypto. She is keen on learning how emerging technologies affect the broader markets and enjoys explaining complex financial ideas in a way that's easy to understand.

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