[Getty Images Bank]
[Getty Images Bank]

The share of active users at South Korea's major virtual asset exchanges has fallen to the teens, as a prolonged market slump and diminishing investment appeal have swelled the ranks of "dormant users" — account holders who no longer trade.

According to Yonhap, the active user rate at South Korea's five largest virtual asset exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — stood at 19.5 percent as of the end of June.

That figure means fewer than one in five users who completed know-your-customer identity verification and are eligible to trade actually bought, sold, exchanged or staked virtual assets even once during June.

The rate had reached 35.7 percent at the end of January last year before sliding to the mid-20 percent range. It fell further to 19.5 percent at the end of March and 19.2 percent at the end of April, and has held at roughly that level since.

New user inflows also appear to have nearly dried up in the second quarter of this year.

The number of KYC-verified, trade-eligible users across the five exchanges hit a record high of about 11.56 million at the end of March, but growth slowed sharply thereafter. The figure dropped to about 11.15 million by the end of June — a decline of more than 400,000.

The primary factor behind both the shrinking user base and the falling active-user rate is the broader slump in the virtual asset market.

According to CoinMarketCap, the total market capitalization of virtual assets fell nearly half — from $4.28 trillion in October last year to $2.18 trillion at the end of last month.

As virtual asset prices broadly declined and trading volumes thinned, the total holdings and exchange deposits of domestic investors consistently shrank.

The total value of virtual assets held by South Korean investors fell from 125.75 trillion won ($87.3 billion) at the end of January last year to 56.96 trillion won at the end of June — a 54.7 percent drop over 18 months.

Over the same period, deposits held by domestic investors at South Korean virtual asset exchanges fell from 10.66 trillion won to 5.22 trillion won.

Industry observers attributed the decline to virtual assets losing ground to domestic and foreign equities — including Samsung Electronics and SK hynix shares — which have drawn investors once attracted by the high volatility of the crypto market.

In response, overseas virtual asset exchanges have moved to differentiate their offerings by launching perpetual futures and tokenized products tied to SK hynix with leverage of up to several dozen times. Analysts note that South Korean exchanges, restricted to spot trading only, were even less able to weather the bear market.

Industry voices argue that regulatory reform is needed to open new avenues for domestic virtual asset exchanges to survive periods when investment sentiment turns sour.


kimstar@heraldcorp.com