The golden era of Upbit might just be beginning.

Original Title: Korea's Leverage Wave is Coming

Original Author: @impalementd

Translation and Compilation: GPT, BlockBeats

Editor’s Note: South Korea is currently pushing for the legalization of Korean Won-backed stablecoins and leveraged trading, with digital asset taxation expected to take effect soon. Despite strict regulations, the strong demand for leveraged trading is likely to lead to a significant surge in trading volumes. Government officials are backing the crypto industry, fostering the growth of spot leverage systems, although derivatives remain restricted. Play-to-Earn and Web3 gaming regulations remain stringent, and industry trust has been eroded, prompting major companies to shift their focus overseas. Upbit and Bithumb have become key targets for international projects, and the introduction of leverage could spark a new wave of market competition.

Below is the original content (it has been slightly reorganized for better readability):

South Korea's leverage wave is imminent, as the country finds itself at a crucial stage of leadership transition. In terms of cryptocurrency, the new administration is experimenting with several rather bold and experimental ideas.

Two topics currently standing out as the most likely to be implemented are:

Stablecoins backed by the Korean Won

Legalization of leveraged trading

On June 10th, ruling party lawmaker Min proposed a draft of the "Basic Digital Asset Act," which includes provisions for both stablecoins and leveraged trading.

Once these policies take effect, South Korea will move forward comprehensively with cryptocurrency taxation. Upbit and Bithumb have already been promoting themselves to international projects as top-tier exchanges. If leveraged trading is legalized, this move may trigger a second wave of trading volume growth in the South Korean market.

Koreans and Leverage: Practically Synonymous

Although this has become somewhat of a stereotype, many locals actually take pride in calling themselves a "nation of leverage." Data supports this claim—six out of the ten most-traded stocks in South Korea are leveraged ETFs.

Looking at the holding data again — on the list of overseas stocks most loved by South Koreans, TQQQ (a 3x leveraged Nasdaq ETF) ranks sixth. This preference for aggressive bets is not just an internet meme; it has almost become a part of the national character.

It’s precisely for this reason that, even on Upbit, Bitcoin trading pairs rarely make it into the top five. Similarly, on Bithumb, they have long stayed in fourth or fifth place.

Currently, Upbit's 24-hour trading volume stands at $2 billion, and this is purely spot trading. If leveraged trading were approved, the trading volume could easily triple. After all, the transaction volume difference between spot and derivative markets typically falls in the 3x to 4x range.

Why is the likelihood of lifting leverage restrictions higher this time?

In the past, there have been numerous bills attempting to relax regulations or delay crypto tax collection, but the difference lies in the fact that this time, after the elections, the related actions are finally becoming "visible."

The ruling Democratic Party has consistently supported taxing digital assets. However, the prerequisite for taxation is a sound regulatory framework. Thus, their strategy is to first push for legislation on "Korean won-denominated stablecoins" and relax restrictions on leveraged trading, laying the groundwork for subsequent taxation.

Current Presidential Chief Policy Secretary Kim Yong Bum, who previously managed the think tank Hashed Open Research under blockchain venture firm Hashed, has been actively promoting stablecoin legislation and has publicly supported relaxing regulatory policies in the crypto industry.

It probably won’t be perpetual contracts, but the "leverage nation" will awaken.

No one can guarantee whether this bill will ultimately pass. However, even if it does, leverage trading in South Korea likely won’t resemble the perpetual contract systems you see on platforms like Binance.

The draft proposal outlines a spot leverage system based on a "borrowing model" without mentioning any derivatives or futures options — these elements are completely absent from the draft. In other words, only collateral-backed leverage trading can be anticipated.

Although a spot leverage system is cumbersome to operate and comes with numerous restrictions, leverage-based products still dominate trading volumes in the South Korean stock market. This "taste" is likely to carry over to the crypto market. The expected leverage ratios supported may range from 3x to 10x.

Once a token is added to the list of assets eligible for leverage trading, its trading volume will skyrocket, and getting listed on Upbit is merely the first step.

Combining the leverage system with a Korean Won stablecoin will further amplify this effect.

P2E Remains Stuck in Regulatory Grey Areas

Despite these eye-catching reforms and a group of crypto-supporting officials joining the government, do not expect regulatory restrictions on Play-to-Earn (P2E) or broader Web3 gaming to ease anytime soon.

Whether under progressive or conservative administrations, the government has cracked down on "speculative" mechanisms in the gaming industry for years. The core issue lies in its resemblance to gambling. Until crypto taxation is fully implemented, Play-to-Earn projects will continue to be shelved.

South Korea's gaming industry has been on a decline for three consecutive years. The backlash against loot box mechanics has significantly eroded player trust, pushing major gaming companies to pivot towards overseas markets. They have little incentive to experiment with P2E domestically. For example, MSU (@MaplestoryU), despite its evident success internationally, has never held a single Korean-language AMA session.

Overseas projects are already eyeing Upbit and Bithumb as their ultimate listing goals. Various teams are flocking to Korea, hosting offline gatherings incessantly. It's well understood that to successfully navigate the listing process and gain support, winning over Korean users is a must.

Project teams continue to roll out various perks and initiatives to attract Korean token holders. If leverage trading were to open on Upbit and Bithumb, competition for the Korean market would heat up even more.

If leverage trading is no longer limited to Bitcoin but expands into the altcoin space, we could be entering the golden era of the "Upbit Age."

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