Korean Investors Flood Overseas Crypto Exchanges for High-Risk Stock Derivatives

South Korean investors are increasingly turning to overseas cryptocurrency exchanges for high-risk derivatives based on domestic stocks, including the KOSPI. The proliferation of such products has raised concerns about regulatory gaps and investor protection.

Binance recently launched a perpetual futures product called 'KORUUSDT' based on the 3x leveraged KOSPI ETF listed on the U.S. stock market. This product allows trading with up to 50x leverage, which could generate gains or losses of up to 150 times the KOSPI's rate of change.

The addition of 50x leverage has expanded the maximum multiple from 20x, making it possible for large profits to be made if the KOSPI rises slightly. Conversely, even a small decline can lead to an investment being liquidated instantly.

Other global exchanges have joined the trend, listing similar products based on Samsung Electronics and SK hynix. Trading volumes are growing rapidly, with KORUUSDT recording $754.4 million in trading from its launch through the 26th. The cumulative trading value of SKHYNIXUSDT approached 10 trillion won.

Domestic investors can access these products by buying Tether with won on domestic exchanges and transferring it to an overseas exchange wallet. However, this has raised concerns about the flow of funds to overseas platforms and the difficulty in protecting investor interests within the domestic regulatory framework.