SEOUL, November 04 (AJP) - The number of South Korean investors holding large sums in overseas cryptocurrency exchange accounts has more than doubled in a year, reflecting both the global market’s resurgence and growing frustration with South Korea’s restrictive trading environment.
According to data from the National Tax Service, 2,320 South Koreans reported offshore crypto accounts exceeding 500 million won (about $360,000) by the end of last year — a two-fold increase from the previous year. The number of such investors was 1,043 in 2021 and 1,432 in 2022, before surging amid last year’s cryptocurrency boom.
Under South Korea’s foreign financial account reporting system, individuals and corporations must declare any overseas accounts that hold more than 500 million won at any point during the year. Crypto holdings were newly included in this requirement beginning in June 2023.
Of all the accounts reported last year, 75.3 percent were linked to Binance, the world’s largest cryptocurrency exchange — a sharp rise from 52.7 percent in 2022. Industry sources say Binance’s popularity stems from its wide range of trading products and high leverage options, which appeal to risk-tolerant investors but are restricted or banned in South Korea.
Binance allows derivatives trading with leverage of up to 125 times, offers low fees, and lists 437 cryptocurrencies — compared with 294 on Upbit, South Korea’s dominant exchange. Upbit, constrained by local regulations and the 2021 enforcement of the Financial Information Act, focuses mainly on conservative spot trading.
The gap underscores a broader concern that South Korea’s digital asset market could become increasingly isolated as tighter regulations limit innovation and investment opportunities. Capital inflows to domestic exchanges have slowed in recent years, while global platforms have continued to expand.
“Expanding institutional participation and allowing foreign investors into the local market are essential to boost liquidity,” said an official from a domestic exchange who requested anonymity because of the sensitivity of the issue. “Without structural reform, South Korean exchanges will lose their competitiveness.”
Industry officials and lawmakers have urged regulators to ease restrictions and encourage market openness, warning that continued rigidity could push more investors offshore — and leave the country’s crypto sector behind.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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