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New Users Only Increased 3% in H2 Last Year…"Due to Service Restrictions"
The number of employees at domestic virtual asset exchanges has doubled in the past five years, but market growth has shown a noticeable slowdown.
According to the Financial Supervisory Service's electronic disclosure on the 10th, the number of executives and employees at Upbit (Dunamu) and Bithumb, the two largest domestic exchanges, increased from 682 at the end of 2021 to 1,334 at the end of last year.
In four years, Upbit increased from 370 to 696, and Bithumb increased from 312 to 638.
It is noteworthy that Bithumb has almost caught up with Upbit in terms of the number of employees.
It is analyzed that exchanges have expanded their size because the number of domestic virtual asset investors has significantly increased and the number of supported trading assets has also grown, leading to market expansion.
However, recently, with the decrease in the inflow of new investors, market growth has also shown a clear slowdown.
According to the Financial Services Commission's 'Survey of Virtual Asset Service Providers,' the number of tradable users who have completed Know Your Customer (KYC) obligations at KRW-denominated virtual asset exchanges approximately doubled from 5.58 million at the end of 2021 to 11.13 million at the end of last year.
However, looking at the growth rate of tradable users, it maintained a high level, such as 21% in H1 2024, 25% in H2 2024, and 11% in H1 last year, but then sharply dropped to 3% in H2 last year.
The dominant assessment is that the decrease in the inflow of new investors is due to the sluggish market conditions compared to domestic and international stock markets or commodity markets.
Kim Min-seung, head of Korbit Research Center, explained, "2021 was a boom, 2022 was a major crash, 2023 was a recovery, and in 2024, there were many users flowing into the market due to the approval of Bitcoin ETFs in H1 and the 'Trump rally' in H2."
He added, "The market has slowed down significantly since the major crash in October last year, and while virtual assets were consolidating or declining, Korean and US stock markets and gold showed astonishing strength, so I believe many investors and funds have moved."
The industry also points out that KRW-denominated exchanges are struggling to expand because the services they provide are limited to spot trading.
An industry official said, "Since we can only buy and sell spot assets under the current system, I understand that people are sending stablecoins to overseas exchanges for leverage trading rather than creating accounts at domestic exchanges."
He added, "Until regulations change to allow domestic exchanges to offer a wider range of services or products, or to attract corporate clients, it will be difficult to increase the inflow of new customers."
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