Millions More Koreans Fall for Cryptocurrency Frenzy

      May 28, 2021 12:58

      Some 5.87 million Koreans now have money in cryptocurrencies, up sharply from 1.63 million late last year. Last month alone, a whopping 1.91 million more people joined the frenzy.

      A total of W127.7 trillion has been invested in cryptocurrency exchanges in Korea since January 2018 and W105 trillion has been withdrawn since then, leaving W22.7 trillion in the market (US$1=W1,117). That means each investor holds an average of W3.87 million in cryptocurrencies.

      The calculation comes from a report by the Financial Services Commission submitted to the National Assembly two weeks ago. It was the first time that the actual size of the market has been revealed based on official data.

      But the figures were only derived from trades on the biggest and most respectable exchanges -- Bithumb, Coinone, Korbit and UPbit -- and since many other wild cards swirl around the unregulated market, the actual size could be even bigger.

      The number of investors has been increasing sharply since October of last year, rising by 13,000 that month, 102,000 in November, 367,000 in January this year, 849,000 in February, 1.12 million in March and 1.92 million in April. The amount of money they invested through bank accounts has also surged from W3.9 trillion in December last year to W33.2 trillion last month, a nine-fold increase.

      The figures raise fears that the bubble could burst soon, especially given the "kimchi premium" of digital assets being overvalued in Korea due to the speculative frenzy here.

      But the FSC is for some reason reluctant to tighten regulations, as most major economies have done, saying that would require "careful consideration."

      "The reason seems to be that rushing to regulate the cryptocurrency market while it's white-hot like this could send prices into freefall and lead to anger among investors," a lawmaker said.

      Bank of Korea Governor Lee Ju-yeol told reporters Thursday, "An excessive level of leveraged cryptocurrency trading puts households at risk of financial disaster considering the instability of cryptocurrencies."

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