The Korea Financial Intelligence Unit (KoFIU) conducted a survey on 36 registered virtual asset service providers (VASPs) in order to ascertain the current state of the domestic virtual asset market.
Survey Overview
(Respondents) 36 VASPs (27 exchange service providers and 9 other businesses)
(Survey Method) Data collected from VASPs by paper surveys
(Period Covered) July 1, 2022 to December 31, 2022
Key Survey Findings for H2 2022
The domestic market for virtual assets in H2 2022 was downsized significantly compared to that of H1 2022 in terms of market capitalization, trading volume, operating profits, etc. This seems to be caused by a contraction in the real economy due to interest rate and price hikes, as well as a decline in confidence following the Luna crash and the collapse of FTX.
According to the survey, the amount of deposits in KRW and the number of users, which show potential investment demands in the future, both declined. Investment in the global top ten virtual assets, such as Bitcoin, handled by the KRW-based exchange service providers increased from 46 percent in H1 2022 to 57 percent in H2 2022 (up about 11 percentage points), which is greater than that in non-mainstream virtual assets. New listing of virtual assets also dropped significantly by about 72 percent compared to H1 2022, showing a tendency of VASPs conducting their operations more conservatively following the Terra-Luna crash.
The newly analyzed items in the H2 2022 survey include the reason for suspending transaction (delisting of a virtual asset) and the VASPs’ compliance status with the travel rule. In H2 2022, the most prevalent reasons for delisting of virtual assets were in the order of project risk (50 percent), investor protection risk (22 percent) and market risk (22 percent). The amount of transactions between domestic VASPs that were subject to the travel rule amounted to KRW7.5 trillion, about 25 percent of all VASPs’ external transfer volume (KRW30.6 trillion) in H2 2022.
The KoFIU will continue to carry out these surveys every six months to accumulate data on the domestic virtual asset market.
* Please refer to the attached PDF for details.