Why are there so few currencies listed on Korean cryptocurrency exchanges?

Many investors outside the Korean cryptocurrency trading market may be curious as to why Korean cryptocurrency exchanges like Bithumb and Korbit only list a small number of currencies at a time?

Low supply

Bithumb, South Korea’s largest cryptocurrency exchange, earned over $300 million in transaction fees alone in 2017, but only has 12 cryptocurrencies on its platform. Korbit, South Korea’s third largest cryptocurrency exchange, has even fewer cryptocurrencies on its platform.

Korean cryptocurrency exchanges are very cautious when listing new coins, as they have to carefully analyze the market demand for these new coins. The Korean market has a high premium and a considerable demand for cryptocurrencies, but the market supply is relatively small.

Therefore, due to the insufficient supply of cryptocurrencies in South Korea, investors are often able to buy from the South Korean market at a high price higher than the global average price. Let’s put it this way, before listing Qtum and Zcash (ZEC) on the Korean exchange, Bithumb is said to have spent several months conducting risk assessment and analysis to ensure the long-term development of these two currencies.

Korean investors are not interested in all cryptocurrencies on the market. For example, on Bithumb, EOS’s daily trading volume is larger than the daily trading volume of Bitcoin, Bitcoin Cash, Litecoin, Dash, Monero, and Zcash combined. Therefore, it is more profitable for Bithumb to list a coin that is more popular than the seven major cryptocurrencies than to list seven new coins.

In addition, there are some additional trading restrictions in the Korean market - foreign investors are prohibited from trading in fiat currencies. Before South Korea officially banned foreigners from trading in fiat currencies on January 20, foreign investors were subject to quantity restrictions when trading in fiat currencies. Therefore, if the demand for a certain cryptocurrency in South Korea is low but the supply is large, it will be difficult for exchanges to continue to support this type of cryptocurrency.

In other regions, miners provide a large amount of cryptocurrency to exchanges, increasing the liquidity of most cryptocurrencies. In the Korean market, the supply of each cryptocurrency is small because there are no large mining pools in Korea. Since foreign investors and overseas miners cannot introduce cryptocurrencies into the Korean market, Korean cryptocurrencies must come from their local market.

In December last year, several Chinese miners were arrested for selling Bitcoin and other cryptocurrencies in South Korea. If a South Korean cryptocurrency exchange lists cryptocurrencies with low supply but high demand too early, it will not be able to fill the market demand for such cryptocurrencies and may cause serious problems for itself and local investors.

UpBit

Due to the small number of cryptocurrencies listed on Korean exchanges, UpBit was welcomed by local investors on its debut, and in just a few months, it has become the second largest cryptocurrency exchange in South Korea after Bithumb. UpBit is operated by Dunamu, a subsidiary of Kakao, the operator of KakaoTalk and KakaoPay. UpBit has established a strategic partnership with Bittrex, allowing the platform to list all cryptocurrencies listed on Bittrex. So far, UpBit is still the only exchange in South Korea that supports more than 100 cryptocurrencies.