Korean Crypto Market Loses $24B in Six Months as Trading Volume Collapses – What’s Going on?
South Korean crypto market has shed roughly $24 billion in six months, with home crypto holdings plummeting from KRW 121.8 trillion to KRW 89.2 trillion between January and June 2025, in line with the Bank of Korea’s newest Financial Stability Report.
The large outflow coincided with a dramatic collapse in buying and selling exercise, as each day volumes crashed from KRW 17.1 trillion in December 2024 to only KRW 3.2 trillion by June.
Active Withdrawal Despite Bitcoin Price Gains
The decline occurred regardless of Bitcoin’s price appreciation throughout the identical interval, indicating retail buyers have been actively withdrawing from crypto markets quite than experiencing passive losses.
Exchange deposits fell from KRW 10.7 trillion to KRW 6.2 trillion, confirming widespread fund outflows.
Korean retail buyers shifted focus from crypto to home equities, which outperformed abroad markets amid a strengthening received forex.
The pivot was significantly pronounced in U.S. tech shares, with month-to-month purchases dropping from $1.68 billion between January and April to only $260 million by July.
However, South Korean authorities are concurrently accelerating pro-crypto insurance policies, with President Lee Jae-myung designating digital asset ecosystem improvement as a “key nationwide activity.”
The Democratic Party additionally launched a crypto policy task force this month, promising laws earlier than the tip of the yr to foster trade development.
Mass Exodus From Crypto to Traditional Assets
The Bank of Korea attributed the decline in the crypto market partly to Korean buyers’ strategic pivot towards domestic equities throughout a interval of relative outperformance.
Local inventory markets supplied enticing alternate options as international uncertainty round U.S. tariff insurance policies created volatility in abroad investments.
Korean retail buyers demonstrated specific disillusionment with Tesla, selling a net $657 million in August alone as the electrical automobile maker misplaced its compelling narrative.
Instead, crypto-related shares, such as Bitmine Immersion Technologies, attracted $253 million in web inflows.
Daily buying and selling volumes on home crypto exchanges skilled an unprecedented decline of over 80% from their peak ranges.
The decline affected stablecoin buying and selling development, which had been increasing steadily earlier than slowing through the withdrawal interval.
Despite the home downturn, global crypto markets reached a complete capitalization of $4.2 trillion by September, representing 3.2% of the worldwide inventory market worth.
Institutional adoption and legislative progress, together with the passage of the U.S. GENIUS Act, supported the expansion of the worldwide crypto market.
Korean crypto buyers maintained important positions regardless of the outflows, with over 10,000 residents holding belongings exceeding 1 billion received ($750,000).
The nation’s 10.86 million lively buying and selling accounts signify roughly 20% of the whole inhabitants.
In reality, survey data revealed that 51% of South Koreans aged 20-59 have expertise with crypto buying and selling, with 27% at present holding digital belongings, averaging 13 million received ($9,547) per investor.
Early adopters sometimes started with Bitcoin earlier than diversifying into altcoins and stablecoins, with 60% beginning through the 2020 bull run.
Government Pushes Pro-Crypto Agenda Despite Market Decline
President Lee Jae-myung’s administration has launched comprehensive crypto-friendly reforms, reclassifying buying and selling companies as “enterprise firms” to grant them entry to tax incentives and state-backed financing that was beforehand denied since 2018.
The Ministry of SMEs and Startups proposed amendments to incorporate Virtual Asset Service Providers beneath the class of enterprise firms.
Financial regulators lifted restrictions on institutional crypto investments whereas getting ready approval frameworks for Korea’s first spot crypto ETFs.
South Korea is shifting to reclassify crypto companies as “enterprise firms,” which might grant entry to authorities subsidies.#SouthKorea #Cryptohttps://t.co/FucfcydMDq
— Cryptonews.com (@cryptonews) July 9, 2025
The Financial Services Commission additionally offered implementation measures scheduled for late 2025, alongside regulatory frameworks for won-based stablecoins.
Major banks established devoted crypto groups in anticipation of legislative approval.
Woori Bank launched a nine-member Digital Asset Team, whereas Kookmin Bank created a Digital Asset Response Council overlaying KB Financial Group associates.
Similarly, Shinhan Bank shaped a 20-employee crypto activity drive as establishments put together speedy market entry methods.
Local governments concurrently intensified crypto tax assortment efforts.
According to a current Cryptonews report, Cheongju City has seized tokens from 203 residents since 2021 for unpaid taxes and has opened its personal buying and selling account to straight liquidate confiscated belongings.
The metropolis collected 1.5 billion received ($1.1 million) from 161 tax evaders via crypto seizures.
The Democratic Party’s crypto coverage activity drive pledged to streamline laws away from operator restrictions towards trade fostering.
Task drive leaders plan consultations with regulators, the Bank of Korea, and personal sector consultants to develop complete digital asset laws.
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