South Korea Crypto Exposure Halves as Investors Pivot to Stocks

South Korea’s crypto market faced a pronounced slowdown over the past year, with a steep decline in investor holdings and a sharp drop in daily liquidity on the nation’s leading exchanges. New data summarized from the Bank of Korea and reported by local media shows that the total value of crypto assets held by Korean investors fell by more than half—from 121.8 trillion won at the end of January 2025 to 60.6 trillion won by the end of February 2026. Trading activity across the five largest exchanges also contracted dramatically, as daily volumes slid to about $3 billion in February, down from roughly $11.6 billion in December 2024. At the same time, the amount of won deposited on exchanges—a proxy for dry powder—dropped from 10.7 trillion won at the end of 2024 to 7.8 trillion won. The pace of decline has been linked to falling crypto prices and capital that shifted into the stock market, according to the report cited by The Chosun Daily, which referenced Bank of Korea data submitted to Rep. Cha Gyu-geun of the Rebuilding Korea Party.

Amid the broad market pullback, stablecoins stood out as a relative outlier. Korean investors increased their stablecoin holdings earlier in the period, with stablecoin exposure rising from about $60 million in July 2024 to a peak near $597 million in December, before easing to around $41 million by February 2026. The trajectory suggests a flight to liquidity that outpaced the broader crypto downturn, a pattern seen in several markets where issuers and users lean on stablecoins to manage volatility and on-ramp liquidity to exchanges during tougher conditions.

Key takeaways

• Investor exposure to crypto in South Korea more than halved over the year, dropping from 121.8 trillion won at end-January 2025 to 60.6 trillion won by end-February 2026.
• Trading liquidity on the five largest exchanges—Upbit, Bithumb, Korbit, Coinone and Gopax—collapsed to about $3 billion in February 2026, down from $11.6 billion in December 2024.
• On-exchange won deposits shrank from 10.7 trillion won to 7.8 trillion won, signaling thinner dry powder among investors amid price pressures and asset reallocation to equities.
• Stablecoins showed resilience, rising to a peak around $597 million in December 2024 before retreating to roughly $41 million by February 2026.
• Regulators plan to tighten AML rules in August to flag crypto transactions above 10 million won involving overseas exchanges or private wallets as suspicious, a move opposed by the local industry.

Market dynamics under tighter regulation

Policy developments are shaping the near-term trajectory of Korea’s crypto market. Regulators have set a course for more stringent anti-money laundering (AML) scrutiny, with August slated as the effective date for the revised regime. Under the proposed framework, crypto transactions exceeding 10 million won that involve overseas venues or private wallets would automatically trigger flags for further review. The tightening aims to curb illicit flows but has sparked concern within the domestic ecosystem about potential operational bottlenecks and the risk of pushing users toward offshore exchanges.

Industry group Digital Asset Exchange Association (DAXA) has publicly questioned the approach, arguing that the proposed rule is disproportionate and could drive activity to offshore platforms like Binance. DAXA warned that the plan could elevate the number of suspicious transaction reports from South Korea’s five largest exchanges by as much as 85-fold—rising from roughly 63,000 cases in the previous year to more than 5.4 million—creating practical compliance challenges for firms. The debate underscores a broader tension between ambitious regulatory oversight and the desire to maintain a functional, domestic market for digital assets. For background, Cointelegraph has covered the pushback from industry groups on the 10 million won reporting rule.

Beyond AML, South Korea is also navigating the political calculus around crypto taxation. The government has confirmed that a 22% tax on crypto gains will take effect on January 1, 2027, as scheduled. The tax plan remains a divisive topic in policy circles, with supporters citing revenue opportunities and critics warning it could dampen participation and innovation in the sector. The Finance Ministry’s confirmation adds a sense of inevitability to the tax policy, even as market participants weigh how the regime will be implemented and enforced across exchanges and wallets.

Infrastructure moves ahead of a new framework

In a separate but related strand, the government’s broader effort to modernize market infrastructure for tokenized assets appears to be moving forward. Samsung SDS has secured a contract to build and operate a blockchain-based securities platform for South Korea’s Korea Securities Depository (KSD). The project is designed to support tokenized securities on a national scale and is slated for completion by February 2027, aligning with the wider legal and regulatory shifts anticipated in early 2027. The development signals a push to establish robust, on-chain settlement and custody capabilities as the market transitions toward tokenized assets within a regulated framework. This milestone sits within a broader push to upgrade financial market infrastructure before new rules come fully into force.

Naturally, these regulatory and infrastructural moves intersect with the risk and reward calculus facing investors, traders and builders in Korea. They could incentivize greater compliance and transparency in the near term, while also presenting compliance burdens that may influence where and how trading occurs. Market participants will be watching closely how AML enforcement evolves in August, how the 22% tax is operationalized, and how the Samsung-led platform influences custody and settlement workflows for tokenized assets.

For ongoing context, readers can find related coverage noting Korea’s regulatory and market developments, including coverage of recent crypto-asset enforcement actions and tax policy discussions. The evolving landscape is also reflected in industry data on exchange volumes and holdings, as cited by local outlets aggregating central-bank and regulatory data. CoinGecko’s data on exchange rankings across Korea has historically illustrated how liquidity concentrates among a handful of platforms, a dynamic that could shift as regulation and routing rules change.

As the summer progresses, market observers will look for signs of how domestic users respond to the tightening AML regime, whether capital migrates to compliant, domestic venues or spills into offshore platforms, and how institutional-grade on-chain infrastructure evolves to support a tokenized asset regime. The coming months will also reveal how the tax policy is implemented in practice and what that implies for retail and institutional participation in South Korea’s crypto markets.

What remains uncertain is the pace at which regulators will balance enforcement with market vitality, and how quickly industry participants can adapt to a more transparent, compliant environment while maintaining access to liquidity and innovative financial products. Investors and builders alike should monitor August’s AML updates, the 2027 tax regime’s rollout, and the Samsung-led platform’s implementation milestones as key markers for the next phase of Korea’s crypto story.

References and related coverage include reporting on regulatory pushes and industry responses, such as the 10 million won reporting rule discussion and the 22% crypto gains tax plan, as well as ongoing updates on Samsung SDS’s blockchain securities initiative and Korea’s broader tokenized-asset agenda.