The surged popularity of blockchain technology and cryptocurrencies has opened many new doors for the traditional financial system.
Some nations have legalized the usage of crypto assets, but some others have leveraged blockchain and decentralization to develop their in-house central bank digital currencies (CBDCs).
In a recent development, the South Korean financial regulator has authorized seven national banks to take part in a pilot program testing digital financial services based on central bank digital currency and deposit tokens.
The development came following the surge in the popularity of blockchain-based currencies worldwide, the SK government is testing the potential of CBDCs in day-to-day transactions.
According to an official press release by the Financial Services Commission (FCA), participating banks including KB, Shinhan, Woori, and Hana will issue deposit tokens that serve as digital assets backed by bank deposits.
The SK FCA explains that while physical vouchers have traditionally been used to access public services, the country now intends to use digital vouchers stored on a distributed ledger to offer these services more conveniently and efficiently.
South Korea Poised to Become the Next Crypto Hub!
It is worth noting that South Korea has a considerable number of cryptocurrency users, but there is not a proper set of regulations for the crypto market. In SK, crypto can be easily traded as long as they are not banned, even though the government has yet to formally legalize it.
On October 10, South Korea’s Financial Services Commission announced plans to establish a digital asset community. This community will primarily focus on supporting spot cryptocurrency exchange-traded funds (ETFs) within the country.
The committee will serve as an advisory board to address issues such as major disruptions and provide guidance within the crypto sector. It will be supervised by FSC Vice Chairman Soyoung Kim, along with officials from various government departments and nine representatives from private enterprises.
According to Statista data, South Korea’s crypto market revenue is projected to reach $855 million by the end of 2024. However, it is expected to dip slightly to $823.4 million by the end of the following year.
The Financial Intelligence Unit (FIU) of South Korea, in its report titled ‘Virtual Asset Business Survey’ highlights a significant rise in domestic cryptocurrency users. The number of users grew from 6.45 million in Q3 2023 to 7.78 million by the end of Q1 2024.
The same report from the FIU also noted a remarkable 67% increase in cryptocurrency trading volume. It surged from 3.6 trillion won in the previous quarter to 6 trillion won by the time it was reported by the financial regulator.
Bitcoin leads crypto adoption among South Korean users, holding the top spot in popularity, followed by Ethereum as the second most traded asset, with Ripple and a few other altcoins also favored.
Notably, South Korea has a significant memecoin following, with Dogecoin being a top choice among enthusiasts.
Globally, Bitcoin similarly maintains its position as the most widely adopted cryptocurrency, reflecting strong market dominance. Currently, Bitcoin holds 60.23% of the total market share, underscoring its continued positive growth across diverse markets.
