Bitcoin prices showed a strong rise in the stock market on Wednesday after the US Consumer Price Index (CPI) for April showed that inflation had slowed from the previous month. According to Coin Metrics, the price of Bitcoin jumped more than 7% to reach $66,124.59, the best single-day performance since March 25, and breached the 50-day moving average for the first time since April 13. However, retail investors from South Korea flooded into current digital asset exchanges long before the global cryptocurrency boom drove prices to record highs in early 2024.

According to the semi-annual report of the Korea Financial Intelligence Service (KOFIU), by the end of 2023, the number of active users of registered exchanges in Korea had increased by 390,000, to a total of 6.45 million, accounting for more than 10% of the country's total population. Of these, 99% are individual investors, and nearly 60% are between the ages of 30 and 40. Over this period, South Korea's average daily cryptocurrency trading volume increased by 24% to 3.6 trillion won (about 2.6 billion US dollars), while the total value of cryptocurrencies held by registered exchanges soared 53% to 43.6 trillion won.

It's worth mentioning that despite the collapse of TerraUSD, a stablecoin created by Koreans Do Kwon in 2022, South Korea's enthusiasm for cryptocurrencies has not waned. A major political party promised during last month's parliamentary election that it would allow South Koreans to use a Bitcoin ETF in the US.

In the first quarter of 2024, the won surpassed the US dollar to become the largest cryptocurrency traded currency in the world. Upbit, Korea's major exchange, sometimes ranks among the top five global exchanges due to its huge trading volume. KOFIU pointed out that due to the rise in cryptocurrency prices and the recovery in investor sentiment, trading volume, market capitalization, exchange revenue, and won deposits all increased compared to the first half of the year, and the number of cryptocurrency trading users also rebounded.

Therefore, starting in July, South Korea will implement the Virtual Asset User Protection Law, put forward stricter requirements for exchanges, and increase penalties for misconduct. This law may inadvertently strengthen Upbit's control over the Korean market. Upbit is the largest exchange in Korea. Its trading volume accounts for more than 80% of Korea's total trading volume, and it occupies an unrivaled dominant position among global exchanges. Last year, Upbit's customers accounted for almost one-fifth of the total deposits of its major banking partners.

Simon Seojoon Kim, CEO of Korean venture capital firm Hashed, said that complying with the new regulatory requirements could be expensive, and it would be easier for resource-rich exchanges such as Upbit to meet the new standards. Smaller exchanges, on the other hand, face greater challenges.

Even Crypto.com was originally scheduled to launch in Korea, but was delayed due to the need for more communication with regulators. Earlier, there were reports that the Financial Intelligence Unit found worrying issues in the documents submitted relating to anti-money laundering.

According to information, Upbit is operated by fintech company Dunamu Inc. and since its launch in 2017, it has accounted for nearly 5% of total global cryptocurrency transactions. Dunamu was founded by Song Chi-hyung and Kim Hyoung-nyon, former executives of mobile payment company Danal, and was supported by South Korean internet giant Kakao Corp. Upbit gained an early advantage by partnering with Kakao, and traders can sync their KakaoTalk and Upbit accounts for seamless onboarding.

Despite many challenges, South Korea's cryptocurrency market is still vibrant and has attracted the attention of global exchanges.