The top 1% of accounts in South Korea hold 70% of the total market investment, revealing the mysterious premium of kimchi.

The Financial Supervisory Service of South Korea recently released a report revealing that out of the 16.69 million accounts opened on the two largest digital asset exchanges in Korea, Upbit and Bithumb, the number of active users is actually less than half, with only 7.7 million active accounts.

Not to lose to South Korea! South Korea's Financial Services Commission: Cryptocurrency users reach 6.45 million, with 70% investing less than $800

The top 1% holds 70% of the market, is the cryptocurrency wealth more centralized than the stock market?

According to a report from South Korea, among the 7.7 million active users who have accounts on Upbit and Bithumb, accounts with a balance exceeding 100 million Korean won, approximately 75,000 US dollars, only make up 1% of the total accounts but account for 70% of the total investment. 92% of the accounts have investments of less than 10 million Korean won, with an average holding of 650,000 Korean won, indicating that the trading volume in South Korea relies mainly on a small number of whales.

Among the 3,400 high-value accounts with investments exceeding 1 billion Korean won, the average investment amount is as high as 9.45 billion Korean won, 7 million US dollars. These high-value investors, accounting for only 0.04% of the total accounts, hold 47% of the total investment. South Korean media describes the cryptocurrency market in South Korea as more concentrated in wealth compared to the stock market.

In the high-value accounts with investments exceeding 1 billion Korean won, those aged 40-49 make up the majority, and the age group with the largest average asset holding is 50-59, averaging 14.8 billion Korean won. The combined number of investors in the 40-49 and 50-59 age groups accounts for 60% of the total number of high-value accounts, with an average investment amount of 12.7 billion Korean won in these two age ranges. This may indicate that users of South Korean exchanges are not limited to a younger demographic but are mainly composed of affluent middle-aged individuals.

Profiting 5.2 trillion Korean won in 2021 with the Kimchi Premium

The total value of assets held by users of these two exchanges is approximately 68.8 trillion Korean won, with an average holding amount of 8.93 million Korean won. According to a study by Chainalysis, South Korea's digital asset income is expected to reach 1.04 billion US dollars, 1.4 trillion Korean won, by 2023, ranking 8th globally. It is estimated that in the relatively prosperous market of 2021, South Korea may have generated a profit of 39.3 billion US dollars (5.2 trillion Korean won) that year.

A member of the National Assembly pointed out that if a 20% tax is imposed on income from cryptocurrency assets, it could generate tax revenue of approximately 250 billion to 1 trillion Korean won annually. However, the implementation of the cryptocurrency income tax, originally scheduled for 2022, has been delayed for three years due to a lack of preparation, with the key being the need for transparent and systematic management of cryptocurrency assets to prevent misuse for criminal activities.