As derivatives transactions increase, overseas virtual asset exchanges were found to have earned tens of trillions of won in fees in just the first quarter of this year. In contrast, the transaction value at domestic exchanges, which cannot roll out new products due to various regulations, is declining.
According to on-chain data analytics firm Coinglass, the virtual asset market transaction value in the first quarter of this year came to $20.57 trillion (about 3,885 trillion won). The first-quarter revenue of overseas exchanges, which take a certain percentage of transaction value as fees, is estimated at $25.8514 billion (about 38.12 trillion won). The ratios of transaction value for derivatives and spot were tallied at 90.5% ($18.63 trillion) and 9.4% ($1.94 trillion), respectively.
At overseas virtual asset exchanges such as Binance Holdings Ltd., OKX, and Bybit, investors can transact a variety of derivatives that track the Korea and Japan stock markets or West Texas Intermediate (WTI) prices 24 hours a day, 365 days a year. The number of derivatives listed on the world's No. 1 coin exchange, Binance Holdings Ltd., is 448.
Because people can transact a range of products at any time, investors around the world are flocking in. For example, if the United States and Iran agree to a cease-fire or an end to the war and the WTI futures price is expected to fall, an investor would hold a short (betting on a price decline) position in an oil futures product listed on Binance Holdings Ltd.. Previously, investors had to wait until the domestic stock market opened to buy WTI Inverse.
Domestic virtual asset exchanges do not offer these perpetual futures (futures contracts with no expiration date) and allow only spot transactions. The first-quarter transaction value at the five major domestic virtual asset exchanges (Upbit, Bithumb, Coinone, Korbit, and GOPAX) was found at about $212 billion, down 20% from the previous quarter ($265 billion). That is about 1% of the global transaction value.
The first-quarter transaction values of Upbit, No. 1 in the domestic market by share, and Bithumb, No. 2, were $135 billion and $56 billion, respectively, and the combined transaction value of the two exchanges does not even reach 4% of Binance Holdings Ltd..
Experts say derivatives transactions in the virtual asset market will increase further. Tiger Research, a Web3-focused research firm, said, "Overseas exchanges are offering a variety of investment options, including derivatives transactions. Investment opportunities that domestic exchanges cannot provide are open overseas."