New Opportunities in the Korean Crypto Market: Margin Trading May Be Opened

South Korea is at a critical turning point, with the new government proposing some bold ideas in the cryptocurrency sector. The two most discussed topics are the Korean Won-backed stablecoins and the legalization of Margin Trading. These proposals have already been included in the draft of the Digital Asset Basic Law.

If these policies are implemented, South Korea will fully advance the taxation of cryptocurrencies. Major trading platforms have already begun to promote their advantageous positions to international projects. Once Margin Trading is allowed, the South Korean market is likely to see a significant increase in trading volume in the second round.

Korean investors have a unique preference for Margin Trading. Data shows that among the ten stocks with the highest trading volume in the Korean stock market, six are leveraged ETFs. Among the overseas stocks most favored by Korean investors, the triple-leveraged NASDAQ ETF also ranks high. This tendency towards high-risk investments has become a common phenomenon.

On major trading platforms, the trading volume of Bitcoin often falls short compared to some altcoins. Currently, a large trading platform has a 24-hour trading volume of about $2 billion, all from spot trading. If Margin Trading were to be opened, this number could easily triple.

The possibility of opening up Margin Trading is relatively high this time, mainly because the new government has a more open attitude towards encryption. The ruling party supports taxing digital assets, but they recognize the need to establish a sound regulatory mechanism first. Therefore, they plan to promote the legislation of the Korean won stablecoin and relax restrictions on Margin Trading to pave the way for future taxation efforts.

It is worth noting that even if Margin Trading is approved, it may not be adopted in the form of perpetual contracts. The draft mentions a spot margin system based on a lending model, which does not involve derivatives or futures. The allowed leverage multiples are expected to be between 3 to 10 times.

Despite some loosening in the cryptocurrency sector, regulation for Play-to-Earn and Web3 games remains strict. The South Korean government has long cracked down on "speculative" activities in gaming, primarily to prevent gambling. Until a comprehensive cryptocurrency tax system is established, P2E projects may continue to face regulatory hurdles.

The South Korean gaming industry has been steadily declining in recent years, and players' trust in gaming companies has decreased. Major game developers are turning their attention to overseas markets, showing little interest in trying the P2E model domestically.

International projects have regarded major trading platforms in South Korea as important listing targets. Teams frequently visit South Korea to hold offline events to win the support of local users. If Margin Trading is opened on major platforms, the competition for the South Korean market will become even more intense.

Once Margin Trading expands to various cryptocurrencies, the Korean crypto market may迎来 a new period of prosperity.