New data shows increasing deposits made by teens in virtual currency despite new rules that may close down many platforms in less than a month.
The strict regulatory efforts to control crypto investments in South Korea did not stop some from investing in high-risk, high-return virtual assets.
New data released by People Power Party lawmaker Yoon Du-hyeon show approximately 2.43 million people joined the four major exchanges in Korea — Upbit, Bithumb, CoinOne and Korbit — in the second quarter of 2021. The total amount deposited within the four exchanges exceeded US$6 billion as of July 31.
Notably, the amount deposited by those under age 20 in the four major exchanges marked up around US$3.4 million at the end of the second quarter, a remarkable growth from US$824,000 at the end of first quarter this year — a 412% increase in amount.
One expert cited the soaring prices of real estate in Korea as a reason for the rising popularity of crypto investing. Kim Dae-jong, professor of business at Sejong University, told Forkast.News in an interview, “In Korea, there’s more regulations on real estate than ever. The comprehensive real estate tax and property tax costs have increased greatly. The teenagers, seeing this, want to earn big money in a short time. So despite the higher risk, they invest in crypto for high return.”
Meanwhile, the amount of deposits by Korean citizens over age 60 grew as well, by approximately US$6.3 million compared to the end of March. This post-Korean War generation, deemed more conservative in asset investment planning, deposited a total of US$355 million into the four cryptocurrency exchanges.
Sixty-five-year-old Jeon Sook-ja told Forkast.News crypto investment is no longer a dangerous or puzzling new asset to the older generation. “[Cryptocurrency] has become a conversation topic among us adults for a long time now; we often talk about what coins are okay to buy, and what are not. Bitcoin and Ethereum, I think many of us have it already,” Jeon said.
There is a stark contrast between the investment strategies of young adults and that of the older citizens, according to Oh Mun-sung, professor of tax accounting at Hanyang Women’s University. Oh told Forkast.News, “Teenage investors are willing to take the risk in earning high returns — a lot of them trade altcoins, even ones we have not heard of,” said Oh. “People over the age of 70, even with more capital, [only] invest in Bitcoin and Ethereum. They still seem afraid of the smaller altcoins.”
The crypto fever in South Korea even follows not only the government’s numerous warnings against virtual asset investment, but the countdown to the strictest crypto exchange regulations yet. Any exchange that fails to meet the requirements of the enforced act until Sept. 24 will be at risk of closure.
Oh adds that despite the tumultuous situation exchanges are in, Korean people are confident in crypto investment as ever. “A couple years ago, all were unsure whether this new asset would survive the market. But now we see that at least a couple cryptos, such as Bitcoin, Ethereum, are likely to survive in the future. As they have that belief, crypto investment is becoming more normalized in Korea.”