Domestic exchanges' stablecoin holdings double in a year…inflow and outflow volumes also rise

Minseung Kang

Summary

The holdings of dollar-denominated stablecoins at the country's five major exchanges reportedly increased 2.2 times (121%).
From January to August this year, stablecoin outflow and inflow volumes each exceeded 63 trillion won, and rose by about 33% year on year.
The government and the ruling party are pursuing a regulatory framework and legislation for stablecoins.

Holdings of dollar-denominated stablecoins on domestic exchanges more than doubled in one year.

On the 5th, Choo Kyung-ho, a People Power Party lawmaker belonging to the National Assembly's Political Affairs Committee, submitted data received from the Financial Supervisory Service showing that as of the end of August this year, holdings of dollar-based stablecoins (USDT·USDC·USDS) at the country's five major exchanges (Upbit·Bithumb·Coinone·Korbit·Gopax) were 365,410,000 dollars.

This is 2.2 times (121%) the amount from the same month last year (163,920,000 dollars).

Stablecoins held in private wallets outside exchanges are not included, so the actual amount is expected to be larger.

From January to August this year, outflow and inflow volumes were 63.2 trillion won and 63.4 trillion won, respectively, about a 33% increase from last year's totals (outflow 47.5 trillion won · inflow 47.8 trillion won).

Because the inflow/outflow statistics include transfers between domestic exchanges, it is difficult to determine the scale of cross-border capital movements from them.

With discussions on stablecoin regulation advancing mainly in the United States and trading becoming more active domestically, concerns have been raised about opaque capital movements through blind spots in foreign exchange monitoring.

Lee Jung-do, a senior research fellow at the Korea Institute of Finance, estimated in a report that "a significant portion of domestic stablecoin trading incentives stems from offshore virtual asset trading and remittance demand," and "the scale of capital outflows carried out via dollar-denominated stablecoins without passing through foreign exchange monitoring systems is likely substantial."

He added that "application of foreign exchange regulations commensurate with payment functions and strict law enforcement are needed to address opaque capital outflow transactions."

Meanwhile, the government and the ruling party have formed a Digital Asset Task Force (TF) and are pursuing legislation such as the introduction of won-denominated stablecoins and a regulatory framework for domestically circulated stablecoins.

Reporter Park Seung-won magun1221@wowtv.co.kr