According to a poll conducted by the country’s major financial regulatory agency, South Korean virtual asset service providers (VASPs) made a large net profit of more than KRW 3.3 trillion (US$2.78 billion) from trading activities last year.
The poll, which was announced on Tuesday, is the first of its sort since VASPs were forced to register with the Korea Financial Intelligence Unit (KoFIU) under the modified Reporting and Using Specified Financial Transaction Information Act last year.
The survey’s goal, according to KoFIU, is to obtain a better knowledge of the bitcoin market through statistical data provided by individual business operators.
A total of 29 VASPs had been approved as of the end of December 2021, including 20 “coin-only” exchanges, five crypto wallets, and four Korean won-based exchanges. Since then, two more wallets and coin-only exchanges have joined the list, bringing the total number of VASPs functioning lawfully in South Korea to 33.
Korean won-based exchanges surpassed their coin-only counterparts in terms of market share, with a 99.3 percent hold on domestic operational earnings vs 0.7 percent. According to the watchdog, some coin-only exchanges may be restructured.
The KoFIU, which was established in 2001, is a division of the Financial Services Commission tasked with monitoring and policing financial markets as well as implementing anti-money laundering policies.
According to the poll, total transactions across 24 “virtual asset exchanges” were KRW2.073 quadrillion (US$1.7 trillion) in the second half of 2021, with an average daily transaction amount of KRW11.3 trillion (US$9.4 billion).
Since the FSC barred the use of ICOs to raise cash in 2017, regulation in the country has been gradually building. Though some local officials fear that present regulations are insufficient to combat money laundering techniques, especially if crypto trading volumes continue to catch up to stocks.
“Despite the fact that the virtual asset market offers significant money laundering risks, the current amount of AML staff (8 percent) is insufficient and has to be increased.”
According to data from payments provider Triple A, South Korea ranks 16th in terms of crypto usage, with 1.9 million people, or 3.79 percent of its 55.7 million-strong population, owning some type of cryptoasset.