Around 70% to 80% of cryptocurrency secondary market transactions occur between crypto assets and stablecoins. The South Korean government’s welcoming stance, along with the huge popularity of crypto assets in the country, are among the reasons why the won is now the second most used fiat currency.
Decline in cryptocurrency volumes for stablecoin 2021/2
According to the latest analysis by the European Securities and Markets Authority (ESMA) on the structure of the cryptoasset market, approximately 70% to 80% of secondary market transactions occur between cryptoassets and stablecoins, without the participation or the use of fiat currencies.
While this is often the case, the ESMA report suggests that during periods of strong growth, transactions between cryptocurrencies and stablecoins often give way to crypto-crypto transactions. The report supports this theory by noting the increase in crypto-to-stablecoin volumes and a decrease in crypto-to-stablecoin volumes in 2020 and 2021. A similar trend was observed in the second half of 2023.
On the other hand, the ESMA report indicates that the growth of crypto transactions involving fiat currencies may suggest “a greater appetite or flight behavior towards security when withdrawing.” While the US dollar is, unsurprisingly, the most favored fiat currency, ESMA’s analysis also found that the use of the South Korean won has increased significantly.