Foreign Liquidity Providers Prepare to Enter the Korean Virtual Asset Market

Foreign liquidity providers and market makers in the virtual asset sector are preparing to enter the Korean market. With the anticipated enactment of the Digital Asset Basic Act and the allowance for trading by listed companies and registered professional investors, they see the Korean market as a business opportunity. According to the virtual asset industry on August 4, overseas companies such as Flow Traders, Cumberland, and Wintermute are discussing collaboration plans with domestic virtual asset businesses. These companies supply liquidity or participate directly in trading to facilitate the matching of buy and sell orders, thereby assisting in price formation. While the domestic market has grown primarily around individual investors, there is a lack of systems and infrastructure to support institutional trading. The liquidity needed when corporate funds flow into the market is crucial, as significant price fluctuations can occur with large orders. Overseas companies are likely to trade through over-the-counter transactions, such as block deals or swaps. The lack of domestic companies to fulfill these roles creates favorable conditions for foreign firms. Professor Cho Jae-woo from Hansung University explained that the domestic over-the-counter trading business has not yet established itself within the regulatory framework. Flow Traders, Cumberland, and Jane Street already have entities or offices in Korea, and more companies plan to enter once regulatory directions are clarified. However, the requirements for trading licenses and the scope of business remain unclear, making the entry methods still fluid. The industry anticipates that liquidity demand will increase when corporate trading and the exchange-traded fund market open.