Image to help understand the article
Stablecoin trading reaches 7.3 trillion won
South Korea’s five largest cryptocurrency exchanges had 11.155 million registered investors at the end of June, according to data obtained by the office of lawmaker Lee Jong-wook of the conservative People Power Party.
Stablecoin trading on Upbit, Bithumb, Coinone, Korbit and GOPAX totaled 7.3 trillion won in June, or about 240 billion won a day. Trading declined during the first half of the year compared with the previous year as investors turned more attention to the stock market.
Park Joon-hong, head of payment systems policy at the Bank of Korea, said South Koreans hold and trade a significant amount of stablecoins by global standards. Most appear to hold them primarily to invest in cryptocurrencies such as bitcoin, he said.
Money waiting on the sidelines
Stablecoins are designed to maintain a steady value, unlike bitcoin and ether, whose prices can swing sharply. For many South Korean investors, they serve as ready cash for cryptocurrency purchases — similar to money kept in a brokerage account while a stock investor waits for a buying opportunity.
One 56-year-old financial company executive identified only by his surname, Kim, said he trades stablecoins after getting into bitcoin early. He described his holdings as tens of millions of won and said his return from the stablecoins themselves was roughly break-even. Their main purpose, he said, is to remain available for buying bitcoin or ether.
Investors generally download a domestic exchange’s app, complete identity verification and deposit won into an affiliated bank account before purchasing a listed stablecoin such as Tether. Some then transfer those coins to overseas exchanges, including Binance and Bybit, to convert them or trade cryptocurrency futures.
Investors can buy bitcoin directly with won held in a linked bank account, but transferring the money can take time and carry fees. Holding stablecoins allows them to move quickly when bitcoin prices fall.
Dollar stability does not eliminate risk
Stablecoin issuers seek to keep each token worth $1 by holding cash-like reserves equal to the amount issued. Those reserves often include U.S. Treasury securities, directly tying much of the market to the dollar and American government debt.
Park cautioned that even dollar-linked stablecoins can fluctuate more than conventional currencies because the dollar’s value changes and the prices of reserve assets, including U.S. Treasurys, can move.
Tether accounts for about 70% of the stablecoin market. Its weighted-average price on South Korean exchanges rose from 1,440 won at the end of last year to 1,545 won at the end of June, then fell to about 1,359 won at the end of September. The shifts largely reflected changes in the won-dollar exchange rate. In overseas cryptocurrency markets, Tether generally remains close to $1, though small fluctuations can occur.
Comments
Post a Comment