Crypto Trading Surges in South Korea While Global Trends Decline

CMB International Securities, the brokerage and investment banking arm of China Merchants Bank (CMB), has acquired a virtual asset trading license and rolled out related trading services in Hong Kong.Photo by Traxer on UnsplashFirst Chinese bank-affiliated brokerage to add crypto servicesThe development is significant as it marks the entry of the first brokerage firm directly affiliated with a Chinese bank into the digital assets arena. It takes on further significance due to the importance of its parent company within financial services in Asia.Recent reports suggest that China Merchants Bank has assets under management (AUM) of RMB 15 trillion, equating to around $2.1 trillion. Headquartered in Shenzhen, the bank is China’s seventh largest in terms of AUM. Compared globally, an S&P Global Market Intelligence report published in 2024 positioned the bank in 25th place by measure of AUM. CMB International Securities disclosed that it started offering such services on Aug. 18 via a post on the Chinese social media platform WeChat. It explained that the launch followed the company’s acquisition of an upgrade to its existing trading license from Hong Kong’s Securities and Futures Commission (SFC) on July 11, authorizing the brokerage to offer virtual asset trading. 24/7 digital asset tradingThe company outlined that it has added virtual asset trading via its mobile application, offering qualified investors 24/7 digital asset trading. Following the launch, eligible investors can now trade Bitcoin (BTC), Ethereum (ETH) and the USDT stablecoin. These professional or eligible investors must open a CMB International Securities cash account before they can commence trading digital assets on the CMB platform. Given the ongoing ban on crypto trading activity within mainland China, CMB International has to ensure that its product offering doesn’t reach mainland residents. At the time of the company being awarded its virtual assets trading license last month, Hong Kong Web3 Association Co-Chair Joshua Chu spoke to that requirement. He stated:“By securing this licence, CMBI gains regulated access to Hong Kong’s dynamic crypto market, yet it must operate within strict boundaries that prevent direct mainland participation, reflecting the delicate balance of innovation and legal constraint.” ‘One country, two systems’“One country, two systems” is a constitutional principle of the People’s Republic of China that enabled the reunification of Hong Kong with China back in 1997. Many believe that while Beijing continues to impose a ban on crypto and hasn’t been vocal in its support of Hong Kong’s embrace of the crypto sector, there is an implied support nonetheless of Hong Kong’s development as a crypto hub.Hong Kong’s separate system allows China to let it develop as a proving ground for virtual assets. That tacit support has encouraged companies like Beijing-headquartered Tiger Brokers to pursue virtual asset trading licensing within the Chinese autonomous territory. Similarly, Victory Securities, a Hong Kong firm with a significant presence within the mainland Chinese market, has also pursued digital asset-related licensing in Hong Kong. This isn’t CMB International’s only crypto-related venture. Earlier this month, the company partnered with Singaporean digital asset exchange DigiFT in launching the Hong Kong-Singapore Mutual Recognition Fund. The development marked the first money market fund to be hosted on the Solana blockchain. 

Korean Crypto Exchanges Struggle Despite Market RecoveryThe results of a recent study by the South Korean Financial Intelligence Unit (FIU) released on Monday revealed that ten domestic cryptocurrency exchanges have reported zero revenue from transaction fees, with half of them struggling to achieve a daily average trading volume of KRW 1 million ($740).Photo by Maxim Hopman on UnsplashTrends of growth and declineThe study looked into data from 35 registered virtual asset service providers (VASPs) for the first half of this year. The findings showed that compared to the second half of last year, the crypto market capitalization and Korean won deposits increased, but exchanges faced growing challenges, illustrated by a widening gap between leading fiat-to-crypto exchanges and smaller crypto-only exchanges.In the first half of this year, the operating profit of won-based exchanges reached KRW 259.8 billion (approximately $193 million), a 46% increase compared to the second half of last year, which recorded KRW 177.9 billion. In contrast, crypto exchanges recorded an operating loss of KRW 32.5 billion. Notably, out of 21 crypto-only exchanges, 10 of them reported no revenue at all from transaction fees, and 18 were in a state of complete capital impairment. Meanwhile, the operating profit of won-based exchanges was concentrated among the country’s top two exchanges, Upbit and Bithumb.But from a broader perspective, as of the end of June, this year’s total capitalization of the crypto market reached KRW 28.4 trillion — a 46% increase compared to the end of the second half of last year. Korean won deposits also increased by KRW 400 billion, or 11%, compared to the previous half. The overall operating profit was KRW 227.3 billion, up 82% from KRW 124.9 billion at the end of the second half of last year.“The first half of this year saw a rise in prices of virtual assets and investor sentiment, leading to an increase in Korean won deposits, overall market capitalization, and operating profits for exchanges, compared to the second half of 2022,” the FIU remarked.The number of new listings and delistings on virtual asset exchanges also surged with 169 new listings and 115 new delistings. These represented a more than double increase and a 47% increase, respectively, compared to the second half of last year. 66% of the delisted crypto assets were coins that had been exclusively listed on a given exchange.Despite the market’s recovery, trading volume and the number of users have slightly decreased. The daily average trading volume in the domestic crypto market for the first half of this year was KRW 2.9 trillion, down 1.3% compared to the second half of 2022. In addition, the number of registered accounts with VASPs also dropped by 19% to 9.5 million compared to the end of last year. This can be attributed to a growing number of dormant accounts and the removal of duplicate accounts.The quantity of verified users has also declined. The number of individuals and corporations that had completed the mandatory Know Your Customer (KYC) procedures needed to engage in trading decreased by 210,000 to 6.06 million (including duplicates) compared to the end of 2022. The majority of users, or those who own less than KRW 1 million in virtual assets, dropped by 7%.On the other hand, the amount of virtual assets leaving the country increased. In the first half of this year, a total of KRW 22.1 trillion was transferred to whitelisted overseas operators or individual wallet addresses, marking a KRW 500 billion increase compared to the second half of last year. This trend could be accredited to futures trading and arbitrage trading influenced by the so-called “kimchi premium” — a term used to describe the difference between trading prices of cryptocurrencies in Korea and in other foreign exchanges.Age demographicsOther findings showed that the age group that traded the most virtual assets is in their 30s, accounting for 30% of all users. Within this group, men make up 70%, with 1.27 million men recorded as engaging in crypto trading. Following closely with 1.2 million, men in their 40s were the second-largest demographic.

Metaverse gaming company Animoca Brands has recently announced a strategic partnership with Saakuru Labs, aiming to drive the adoption and integration of blockchain technology within Saakuru Labs' ecosystem. The collaboration is expected to bolster the expansion of the Web3 gaming industry, particularly in Southeast Asia, where the partnership officially kicks off. The initiative involves the incorporation of Web3 games developed with the Saakuru Protocol into the Animoca Brands ecosystem. Gasless transactionsAnimoca Brands will play a crucial role by providing gaming titles to its partners, while Saakuru Labs will facilitate Animoca Brands' expansion efforts in Southeast Asia. Developers stand to benefit from access to accelerated development processes and gasless transactions. Gasless transactions are particularly significant in regions like Southeast Asia, known for lower-income demographics. The market has shown a keen interest in blockchain technology and Web3 games, indicating promising growth potential. With gasless transactions, developers can seamlessly integrate critical functionalities into their gaming titles, including infrastructure components.Photo by Bastian Riccardi on UnsplashTransition to Web3 gamingThe Saakuru Protocol, known for its consumer-centric L2 infrastructure, enables major integrations of Web3 components into traditional gaming segments. This ensures a smooth transition from traditional gaming to Web3 gaming, enhancing the overall gaming experience. Yat Siu, Executive Chairman of Animoca Brands, emphasized the pivotal role of gaming in the evolution of the Internet and open metaverse, highlighting Southeast Asia's potential to lead in Web3 technology adoption. Jack Vinijtrongjit, CEO of Saakuru Labs, underscored the platform's capability to offer seamless engagement with multiplayer gaming titles without latency or transaction fees. The partnership between Saakuru Labs and Animoca Brands aligns with Saakuru Labs' recent collaboration with cloud computing infrastructure platform Aethir, aimed at enhancing blockchain gaming through GPU infrastructure. Notable partners of Animoca Brands, including GameGPT, W3GG and GameFi.org, have already expressed their commitment to adopting the gasless protocol. Experts believe that gaming presents an ideal avenue to accelerate blockchain technology adoption and advance Web3 gaming principles. With gaming becoming a mainstream form of entertainment, seamless integration of technology is crucial for user acceptance. The outcome of the Animoca Brands and Saakuru Labs partnership is anticipated to manifest results in the coming quarter or by the end of the year.