[Reporter’s Notebook] A Perennial Prospect

"Korea is a young, highly advanced society in terms of technology, and its consumers have a strong understanding of tech." "Korea is a very important market because it has a deep affection for crypto."
These were the respective remarks of Joseph Shalom Sharplink, chief executive, and Jeffrey Zirlin, co-founder of Sky Mavis, in an interview with this reporter. In the global virtual asset industry, Korea is viewed as a market with "burning passion." That reputation is not unfounded: the Korean won is the second most traded currency in the global virtual asset market after the U.S. dollar. Because participation is so high, many see virtually limitless potential for growth.
Yet Korea is still described only as "promising." The main reason is that the Korean virtual asset industry is effectively confined to operating within the domestic market. When Korean virtual asset exchanges try to expand directly overseas, they face numerous restrictions, because cross-border sharing of the order book (bid-ask book) is prohibited. In the meantime, global exchanges such as Binance have begun their push into Korea, and outflows of domestic users are accelerating, with roughly 160 trillion won transferred to overseas exchanges last year.
Even their activities at home are heavily constrained. Most revenue at Korean exchanges currently comes from trading fees. As earnings depend on investment fever, they are highly volatile and swing with market conditions. On top of that, services directly tied to trading, such as leverage and coin lending, are completely banned. Efforts to diversify business lines are also hampered, as there is still no legal framework for corporate investment in virtual assets or for the issuance and circulation of won-denominated stablecoins.
This is why the industry is calling for enactment of the General Act on Digital Assets. The view is that regulators should move away from blanket prohibitions and instead allow a range of innovation within clear rules. Authorities, however, appear to be dreaming of something very different from the industry. They have focused on "regulation" rather than "innovation," seeking to cap controlling shareholders’ stakes in exchanges and to center issuance of won-based stablecoins on banks. Industry players criticize this as "Galápagos-style regulation" that runs counter to global trends.
The global virtual asset market is constantly evolving and expanding. Integration with virtual assets is advancing across many areas, including virtual asset exchange-traded funds (ETFs), stablecoin payments, and security tokens. As the line between traditional finance and virtual assets continues to blur, setting the right rules could turn Korea from a "perennial prospect" into a "global leader." Shalom, who led the launch of virtual asset ETFs at BlackRock, the world’s largest asset manager, said in the interview, "Korea has the potential to become a leader in the digital economy. The real risk is halting progress."
yimsh0214@fnnews.com Reporter