"Coin 'leverage trading' should be allowed... Inflow of overseas capital also possible"

There have been calls for allowing leverage trading in the domestic virtual asset market.

Professor Jongseop Lee of Seoul National University's Business School attended the seminar ‘Block 131 Trillion Won Outflow of National Wealth: Digital Asset Basic Law and Reshoring Strategies for Institutional Funds’ held at the National Assembly Members' Office Building in Seoul on the 26th, stating, “Considering the market size, permitting credit extension is essential.” Professor Lee added, “In the virtual asset market, spot investment is declining, and the market is being reorganized around derivatives such as futures,” and said that “if credit extension is allowed, funds from the derivatives market currently abroad could return to the domestic market.”

He pointed out that restrictions on leverage trading in virtual assets in Korea have led to continuous capital outflow. Professor Lee noted, “As of the end of last year, derivatives accounted for about 70–80% of total virtual asset trading volume,” but “direct trading of virtual asset derivatives in Korea is restricted, so individuals and corporations are being entrenched in using overseas exchanges.” He continued, “The ongoing offshore phenomenon is due to the lack of competitive derivatives and credit extension tools in Korea,” and, “this results in gaps in investor protection, decline in domestic liquidity, and outflow of tax revenue overseas.”

He also analyzed that the necessity of institutionalizing credit extension is growing as more companies adopt Bitcoin (BTC) financial strategies. The Bitcoin financial strategy refers to the approach of companies holding Bitcoin as capital, a concept first adopted by Strategy, a company listed on the U.S. Nasdaq in 2020. Professor Lee explained, “Companies holding digital assets provide investors with indirect opportunities for leverage investment,” but emphasized, “If it fails, offering structured option products through financial intermediaries is a safer approach for consumer protection.” He also remarked, “The introduction of a standardized futures market is important for securing stability in the (Bitcoin financial strategy) market.”

Professor Lee focused on the reshoring effect. He explained that institutionalizing credit extension and allowing leverage trading in virtual assets would absorb overseas investment demand back into the domestic market. Professor Lee said, “In the mid to long term, the introduction of a standardized virtual asset futures market is necessary,” and, “a ‘managed leverage policy’ that achieves both investor protection and competitiveness is the key to reshoring.” He added, “Through this, we can expand the depth and breadth of the domestic capital market,” and “it is also expected to foster virtuous capital circulation between the stock market and venture companies and promote the inflow of foreign capital.”