South Korea’s cryptocurrency market is experiencing notable growth, largely due to the increasing Korea Premium Index, according to a recent report by Chainalysis. This index, which tracks the price difference between digital assets on South Korean exchanges and global markets, has seen a significant surge, highlighting the strong local demand for cryptocurrencies like Bitcoin and Ether.
The Korea Premium Index often rises during periods of market uncertainty, and the report notes that both retail and institutional investors in South Korea are leveraging this discrepancy for potential profits. South Korean traders are paying above-market prices for crypto, indicating the country’s growing interest in digital assets.
This demand, coupled with the unique trading environment in South Korea, has led to significant price gaps between local and international markets.
Rise in Institutional Traders
Chainalysis also identified a close correlation between fund transfers from South Korean exchanges to global platforms, driven by the premium. South Korean investors, particularly institutions, play a key role in sustaining these price discrepancies by engaging in large-scale transactions.
Institutional traders are seizing arbitrage opportunities by purchasing cryptocurrencies at lower prices from global exchanges and selling them at a premium on local platforms. Additionally, South Korea has introduced its own Bitcoin and Ether-linked spot ETFs, further solidifying its position as a key player in the global crypto landscape.
“Institutional activity is a significant driver of the price discrepancies,” the report states, adding that the heavy involvement of institutional investors has contributed to the premium on South Korean exchanges.
Earnings of Crypto Market Employees
Beyond trading dynamics, the report also highlights the big earnings of employees in the South Korean crypto industry. A separate report from the Financial Supervisory Service (FSS) reveals that employees of Dunamu, the operator of the Upbit exchange, earn significantly more than their counterparts in major banks.
Dunamu employees received an average annual salary of 133.73 million South Korean won (approximately $99,500), compared to 116 million won ($86,700) earned by employees at major banks like KB Kookmin and Shinhan Bank.
Meanwhile, the South Korean government has taken steps to regulate the rapidly growing market. In July 2024, the Act on the Protection of Virtual Asset Users was enacted to ensure a safer trading environment and curb illicit activities such as money laundering.
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