South Korea's Financial Supervisory Service: 20% of cryptocurrencies in the Korean market cannot last for a year, data reveals the liquidity behind the kimchi premium.

According to a report from the Financial Supervisory Service of South Korea, out of the 1,482 digital assets listed by the top five Korean exchanges Upbit, Bithumb, Coinone, Korbit, and Go Pax since 2018, 517 assets, or 34.9%, have been delisted. This data highlights the high failure rate behind the trading frenzy in South Korea. Additionally, there has been a recent trend of Korean exchanges listing meme coins, leading to a listing effect and boosting the prices of related assets. However, considering the logic behind these listings, it may be difficult to see meme coins being listed on Korean exchanges in the near future.

Behind the Scenes of the Coin Trading Nation: 20% of Listed Coins in the Korean Market Delisted Within a Year

According to data submitted by the Financial Supervisory Service to the National Assembly on the 22nd, out of the 1,482 digital assets listed on five domestic exchanges Upbit, Bithumb, Coinone, Korbit, and Go Pax from January 2018 to August 2024, 517 coins, or 34.9%, were delisted. This data sheds light on a less noticed aspect behind the kimchi premium.

Among the 517 delisted digital assets, the average time listed was 748 days, or 2 years and 18 days. However, about 54% did not survive for even two years, with 107 coins failing to survive for a year. The shortest listing period was for DigixDAO (DGD), which was delisted in January 2018 after being listed for only 77 days. At that time, the industry criticized Upbit for accepting digital assets from overseas exchanges without proper due diligence, leading to investor losses.

No Delistings in the Korean Stock Market During the Same Period, Experts Point Out Exchanges Taking Money Without Fulfilling Responsibilities

Although the Virtual Asset User Protection Act has been enacted, exchanges still have the autonomy to decide which digital assets to list, resulting in many assets being silently delisted shortly after listing. A report pointed out that during the same period, there has not been a single stock delisted from the KOSPI in the past seven years.

Experts have pointed out that while exchanges collect fees, they often fail to fulfill the basic duty of reviewing listing standards. Hwang Seok-jin, a professor at Dongguk University, stated, "If the listing review is inadequate, the losses fall on the investors," and emphasized the need to reduce the harm caused to investors during delistings.

Decoding Upbit's Listing Strategy: Will There Be No More Meme Coins Listed in the Short Term?

Recently, when Upbit listed meme coins like BONK and MEW, it triggered significant listing effects. The Crypto Pojangmacha, focusing on the Korean market, suggested that by observing the logic behind Upbit listing meme coins, it can be seen that these coins have already been listed on Bithumb. This led to the speculation that Upbit's strategy is to choose coins that have already been listed on Korean exchanges to reduce regulatory risks.

Under the Virtual Asset User Protection Act, meme coins and similar coins that lack a backing team and rely purely on community participation need to be listed on overseas major exchanges for at least two years to be listed on Korean exchanges. However, three meme coins listed by Upbit after the regulation came into effect, $MEW, $BRETT, and $PEPE, do not meet this requirement.

By observing the listing times of Bithumb, it can be noted that most listings occurred before the enactment of the Virtual Asset User Protection Act on July 19. In other words, it may be a while before Upbit lists new meme coins.

The Truth Behind the Kimchi Premium: Liquidity Shifts in the Korean Market More Frequently and Intensely

Earlier in a market report by DeSpread, it was noted that the number of listings on the top five Korean exchanges significantly decreased in the third quarter. The total number of listings was 71 in the first quarter, 75 in the second quarter, and dropped to 45 in the third quarter. This decline was particularly noticeable on Korbit and Gopax, with Korbit not listing any new coins from July 12 to October. This change can be attributed to the enactment of the Virtual Asset User Protection Act on July 19.

Additionally, according to a compilation by the Korean community minchoisfuture, whenever Upbit prepares to list new coins, Bitcoin tends to decline. Koreans refer to this as "Seok Woo Day," with Seok Woo being the owner of Upbit. This suggests that behind the kimchi premium is not reckless speculation, but rather Koreans are more willing to sell existing positions to chase new assets. In other words, it is not that they have an endless source of liquidity, but rather that liquidity shifts in the Korean market are more frequent and intense.