Policies That Inflate 'Foreign Coins' with Retail Investors' Money [Issue+]

Trump's 'Pro-Crypto' Policy Stance

U.S. Focuses on Growing 'Domestic Coin Companies'

South Korea Discriminates Against 'Domestic Coin Companies' Due to Regulatory Concerns

Some Domestic Exchanges Have '0 Listings' of Kimchi Coins

Korean Companies and Individuals Conduct Business Quietly Overseas

Regulatory Reform is Urgently Needed to Prevent Talent and Capital Outflow

In the Korean market, which boasts the world's highest cryptocurrency trading volume, a distorted trend continues where trading support is primarily provided for coins created by foreigners. The main reason is that domestic exchanges are avoiding listing so-called Kimchi Coins (coins associated with domestic companies or Koreans) due to regulatory concerns.

As a result, most domestic companies establish corporations overseas, pay taxes abroad, and continue their cryptocurrency business on foreign exchanges. Ironically, the negative stance of the authorities on the cryptocurrency market is accelerating the outflow of domestic capital and fattening the wallets of foreign coin entrepreneurs.

This is contrary to the U.S., where President Donald Trump is leading efforts to support domestic cryptocurrency companies, and there are concerns that if this policy stance continues, the domestic cryptocurrency industry may quickly lose its competitiveness.

U.S. "Making America the Crypto Capital" vs. South Korea "Can't Even Open Corporate Bank Accounts"

In the U.S., which is leading the cryptocurrency market, there is a trend of supporting U.S.-based cryptocurrency companies following President Trump's 'America First' policy since his inauguration.

For example, at President Trump's inauguration dinner, Ripple's CEO Brad Garlinghouse and CLO Stuart Alderoty were invited to speak directly with Vice President-elect James David Vance.

President Trump and Melania Trump launched their official meme coins, 'Official Trump' and 'Melania Coin,' on the U.S.-issued cryptocurrency 'Solana,' and major U.S. exchanges like Coinbase and Kraken listed them immediately upon release.

In addition, in the U.S., cryptocurrency-based ETFs launched by the world's largest asset manager, Black Rock, are actively traded, and corporate investments are allowed. Nasdaq-listed company Strategy and NYSE-listed company KULR Technology Group are using idle cash to purchase Bitcoin.

In contrast, in South Korea, companies dealing with cryptocurrencies are often treated like 'criminals' and frequently denied the opening of bank accounts. Corporate issuance or investment in cryptocurrencies is also impossible. As a result, industry insiders are conducting their cryptocurrency business overseas. Thanks to personal interest, the cryptocurrency trading volume of Korean individual investors is at the world's top level, but due to the authorities' policy stance, Kimchi Coins are being discriminated against, and most of the liquidity benefits are going to foreign coins.

Junhyun Kang, a member of the Democratic Party of Korea, explained, "President Trump is expressing his will to make the cryptocurrency industry a core growth engine of the national economy under the banner of making America the 'crypto capital.' He is actively pursuing pro-crypto policies, such as stockpiling Bitcoin as a strategic reserve asset and establishing a cryptocurrency advisory committee under the presidential office."

Kang pointed out, "In contrast, in South Korea, it has become difficult to engage in cryptocurrency-related businesses, leading companies to mainly establish corporations overseas and create employment and added value there. Also, financial companies and corporations cannot enter the cryptocurrency market, leading to growth centered on individual investors, among other criticisms."

Junseok Lee, a member of the Reform New Party, criticized, "At one time, South Korea was a key country in the cryptocurrency industry, but some media and politicians dismissed the potential of the cryptocurrency industry as speculation, causing South Korea to lose its status as a key country. The mainstream regulation focuses on suppressing risk factors rather than supporting innovative industries, which is a big problem."

He added, "Due to government regulations, reverse discrimination against domestic cryptocurrency companies has occurred, lowering the competitiveness of the industry itself. Furthermore, domestic projects (cryptocurrency-related companies and personnel) are being driven overseas, resulting in the outflow of talent and capital. As the global cryptocurrency industry has become part of national competitiveness, we can no longer leave the 'reverse discrimination' situation unattended."

Jaeseop Kim, a member of the People Power Party, emphasized, "South Korea also needs in-depth discussions to align policy speed with the U.S. and establish a systematic cryptocurrency system that meets global standards."

Korean Exchanges Become Liquidity Channels for Foreign Coins... 'Kimchi Coin' Discrimination Due to Regulatory Concerns

Andrei Grachev, founder of the overseas cryptocurrency market maker DWF Labs, sparked controversy among domestic investors last year by posting "Kimchi hehehe" on his X (formerly Twitter). This was a mockery implying that the Korean market absorbs all the dumping volumes of foreign investors.

Arthur Hayes, founder of BitMEX, also openly expressed this perception. When the price of Ethereum (ENA) he held stopped rising, he mentioned on his X, "The price of Ethereum is plummeting, but it's okay. The Koreans haven't entered the market yet. When will the Kimchi (Koreans) come?"

To foreign cryptocurrency company officials, the Korean market is perceived as an 'easy liquidity vending machine.' In contrast, to Korean cryptocurrency company officials, the Korean market is perceived as an 'insurmountable wall.' This is because domestic exchanges are particularly passive in dealing with Kimchi Coins (coins associated with domestic companies or Koreans) due to the authorities' stance.

For example, in the past three months, only 10% of the total listed cryptocurrencies on major domestic cryptocurrency exchange A were Kimchi Coins, and another major domestic cryptocurrency exchange B did not list any Kimchi Coins during the same period. This raises concerns that the domestic market is failing to perform its original function of capital raising for domestic companies and is instead becoming a 'liquidity channel' for coins created by foreigners.

Junseok Lee, a member of the Reform New Party, pointed out regarding this issue, "The defensive operation of companies that should be active across the industry, such as cryptocurrency exchanges, is due to the restrictive business environment caused by regulatory uncertainty."

In a situation where regulatory uncertainty is high for cryptocurrencies associated with Koreans or Korean companies, domestic exchanges have come to prefer listing coins of foreign entrepreneurs or foreign companies, where regulatory uncertainty is relatively low.

Lee pointed out, "President Trump is expected to prioritize national interests in all areas, including cryptocurrencies, based on America First. We should also support Korean projects to be listed on domestic exchanges first with predictable policies and build global competitiveness based on this."

Byungdeok Min, a member of the Democratic Party of Korea, said, "The biggest problem with domestic regulation is that it has not understood the rapidly changing industry trends and has not established a vision for long-term policy. Blockchain technology and digital assets have no borders. We need to develop the ability to discover excellent projects and create projects that work in the global market."

Youngmin Lee, Joonhyung Lee, Suhyun Lee, Bloomingbit reporters 20min@bloomingbit.io