The South Korean government has for the first time obtained data of the total amount of fiat deposits made at cryptocurrency exchanges. At the end of last year, the amount of deposits was 64 times higher than in the previous year.
Koreans Deposited Over 2 Trillion Won
On January 1 the Korean Financial Supervisory Service (FSS) obtained data on deposits made at cryptocurrency exchanges for the year 2017. Sedaily reported:
The balance of deposits as of December 12 last year amounted to 2.067 trillion won [~USD$1.95 billion]. This is a 64-fold surge from 32.2 billion won [~$30.3 million] at the end of 2016. This is the first time that the total amount of deposits in the virtual money market has been confirmed.
The publication revealed that the total amount of deposits in 2014 was 2.5 billion won (~$2.35 million) and it was 9 billion won (~$8.46 million) in 2015.
State-Owned vs Commercial Banks
According to the news outlet, approximately 1.4 trillion won of the deposits went through state-owned banks, such as the Industrial Bank of Korea (IBK), while deposits totaling 743 billion won went through commercial banks last year.
Most major Korean cryptocurrency exchanges use commercial banks and not state-owned banks. Bithumb uses Nonghyup Bank and Shinhan Bank, Coinone uses Nonghyup Bank, and Kobit uses Shinhan Bank.
However, newcomer Upbit uses IBK. This exchange is backed by Kakao Corporation, which owns the country’s most popular chat app, Kakao Talk. The publication detailed, “The reason why the deposits through national banks are larger than commercial banks is that the virtual accounts that were mainly used in the Upbit business, [which] started from August last year, passed through IBK.” Upbit is now reporting the largest 24-hour trading volume of all South Korean crypto exchanges.
Lawmakers Look to Act Fast
Democratic Party lawmaker and a member of the House of Representatives of the National Assembly, Park Yong-jin, obtained the data above. He was quoted commenting, “the risk of losing assets will increase if there is a problem with the exchange due to excessive funding due to the overheating of virtual currency speculation,” adding that:
The National Assembly and the financial authorities are trying to strengthen the management and supervision of exchanges. We have to hurry.
In August, Park submitted a proposal to revise the Korean Electronic Financial Transaction Act to provide a regulatory framework for bitcoin, as news.Bitcoin.com previously reported. However, this bill has not been adopted.