South Korean retail investors have recently shifted their focus when investing in overseas stocks, moving from US big tech stocks to crypto-related equities amid growing global interest in the sector.
South Korean Investors Turn To Crypto Stocks
Over the past few months, South Korean individuals investing in overseas stocks have shifted from US big tech equities to crypto-linked stocks, recent data showed, with a focus on stablecoin-related companies.
Citing data from the Korean Center for International Finance (KCIF), Yonhap News Agency reported that the percentage of crypto-linked equities in the top 50 net-bought stocks by local retail investors increased from 8.5% in January to 36.5% in June before dropping to 31.4% last month.
Meanwhile, net purchases of the top seven US big tech stocks declined nearly 74% from a monthly average of $1.68 billion between January and April to $440 million in May, further dropping to $260 million in July.
According to the report, South Korean investors became net sellers of overseas stocks in May and June but returned to net buying in July with $499 million in purchases. Nonetheless, the new momentum was considerably weaker compared to the $3.8 billion monthly average buying between January and April.
“Since June, the domestic stock market has outperformed overseas markets, while the local currency has strengthened, prompting individual investors to withdraw their investments from foreign markets,” Yonhap News Agency noted, citing the KCIF report.
On Monday, Bloomberg also highlighted that South Korean retail investors have flocked to BitMine Immersion Technologies over the past month, as investors “continue to be drawn to the kind of high-risk, high-reward opportunities on offer in crypto.”
The news media outlet reported that local retail investors have poured $259 million into Bitmine stocks since the start of July. According to Korea Securities Depository data, this made the company the most purchased foreign security stock during that period.
Notably, BitMine is a Bitcoin and Ethereum Network Company “with a focus on the accumulation of Crypto for long-term investment.” It recently became the largest ETH treasury in the world and the third-largest crypto treasury globally, with its holdings surpassing 1.15 million ETH, valued at $4.96 billion at current prices.
Retail Shift Fueled By Stablecoin Momentum
According to the KCIF report, the surge in crypto-related equities, and particularly stocks related to stablecoins, follows the passage of landmark crypto legislation in the US. President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act into law last month, setting a framework for much-needed stablecoin regulation and innovation in the country.
Amid the US push, stablecoins have also seen growing momentum in several jurisdictions, including South Korea. In June, a member of the Democratic Party of Korea (DPK) proposed a comprehensive legislation to establish a more structured regulatory framework for crypto assets in the country, which included a licensing system for stablecoin issuers.
In July, South Korea’s ruling and opposition parties also proposed rival bills to establish a regulatory framework for digital assets pegged to the Korean Won (KRW) to advance the ongoing efforts to institutionalize the sector.
As reported by Bitcoinist, the banking sector is preparing for the upcoming legislation, studying two legalization scenarios, as it remains unclear whether non-bank entities will be allowed to be stablecoin issuers.
The financial institutions are also considering a business model in which banks establish a joint venture to collectively issue stablecoins, and have reportedly contacted various non-bank companies to prepare for the legalization and issuance of KRW-pegged digital assets.
