South Korea Stablecoin Trading Jumps 62% Amid Won Drop

Generally, South Korea’s stablecoin market is experiencing a significant boom as the value of the won continues to decline against the dollar. Obviously, this trend is attracting a lot of attention from investors and traders alike. Normally, the won’s decline would be a cause for concern, but in this case, it seems to be driving growth in the stablecoin market. Currently, the stablecoin trading volumes are skyrocketing, with USDT volume on the five biggest won-based exchanges reaching 378.2 billion won, which is approximately $261 million.

Stablecoin Trading Volumes Skyrocket

Usually, when the won loses value, investors seek safe-haven assets, and stablecoins are one of them. Evidently, the data shows that the surge in stablecoin trading matched the won’s decline, with the currency slipping past 1,480 per dollar for nine consecutive days. Naturally, exchanges like Upbit, Bithumb, Coinone, and Korbit are trying to capitalize on this trend by offering fee waivers, reward drops, and special offers for USDC and USDe. Apparently, these strategies are working, as the activity in the stablecoin market continues to climb.

Banks and Government Step In to Stabilize the Won

Recently, the won’s rapid decline prompted banks and the government to take action. Specifically, Shinhan and Hana cut dollar-deposit rates to near zero, with Shinhan reducing its rate from 1.5% to 0.1% and Hana from 2% to 0.05%. Obviously, this move is intended to discourage dollar deposits and encourage people to convert their dollars back to won. Generally, this strategy seems to be working, as dollar balances at the five big banks fell 3.8% month-over-month to $63.25 billion on January 22.

Presidential Intervention and Market Reactions

Economic Challenges and Crypto Policy Reforms

Currently, South Korea’s economy is facing several challenges, including a slowing GDP growth rate, which missed the forecast at 1.5% YoY. Obviously, this is a cause for concern, and the government is trying to address these issues. Generally, the won has lost nearly 2% this year, making it one of Asia’s worst performers. Naturally, this has led to a surge in retail investors buying US equities, with a net increase of $2.4 billion up to mid-January, which is a 60% jump from last year. Apparently, the government is also taking steps to reform the crypto policy, including lifting the nine-year ban on corporate crypto trading and amending the Capital Markets Act and Electronic Securities Act.

What’s Next for South Korea’s Crypto Market?

Generally, the future of South Korea’s crypto market is uncertain, but one thing is clear: stablecoin trading is still climbing as the won stays under pressure. Obviously, investors will continue to watch currency moves and regulator steps, as the market’s future hinges on both. Normally, if the government can steady the won and clear crypto rules, South Korea could cement its role in the global crypto scene. Usually, this would require a coordinated effort from all stakeholders, including the government, banks, and exchanges.