Overview of the Growth
On January 1, 2018, South Korea's Financial Supervisory Service (FSS) released deposit data for cryptocurrency exchanges in 2017. The report revealed that as of December 12, 2017, deposit balances reached 2.067 trillion KRW (~$19.5 billion), marking a **64-fold increase** from the **322 billion KRW** (~$300 million) recorded in 2016. For context, deposits in this sector were merely 25 billion KRW (~$235 million) in 2014 and **90 billion KRW** (~$846 million) in 2015.
Breakdown of Deposit Sources
- State-owned banks (e.g., Industrial Bank of Korea/IBK): 1.4 trillion KRW
- Commercial banks: 743 billion KRW
Most exchanges relied on commercial banks:
- Hithumb: NH Bank & Shinhan Bank
- Coinone: NH Bank
- Kobit: Shinhan Bank
Notably, Upbit—backed by Kakao (operator of Kakao Talk)—used IBK for its virtual accounts launched in August 2017. Upbit later dominated 24-hour trading volumes among Korean exchanges.
Regulatory and Political Context
Democratic Party lawmaker Park Yong-jin warned that speculative cryptocurrency trading could lead to over-leveraging and increased financial risks. In August 2017, he proposed amendments to the Electronic Financial Transactions Act to establish a Bitcoin regulatory framework, though the proposal was rejected.
The National Assembly and financial institutions continue to strengthen oversight of exchanges to mitigate risks.
Key Takeaways
- Exponential Growth: Funds surged from 322B KRW (2016) to 20.67T KRW (2017).
- Bank Preferences: Exchanges predominantly used commercial banks; state banks held larger deposits due to Upbit.
- Regulatory Gaps: Calls for clearer frameworks persist amid trading volatility.
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FAQs
Q: Why did cryptocurrency deposits grow so rapidly in South Korea?
A: Increased public interest, accessibility via major banks, and speculative trading drove the 64-fold surge.
Q: Which banks did Upbit use?
A: Upbit utilized the state-owned Industrial Bank of Korea (IBK), diverging from peers on commercial banks.
Q: What regulatory actions followed the 2017 boom?
A: Lawmakers proposed stricter oversight, though initial reforms were rejected. Monitoring efforts intensified in 2018.
Source: Adapted from Weiyangx.com. Redundant promotional content and non-English elements removed for clarity and compliance.
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