$110B in crypto leaves South Korea in 2025 as trading rules lag global markets

South Koreans moved more than 160 trillion won ($110 billion) from local crypto exchanges to foreign platforms last year due to regulatory restrictions in the country, according to a joint report by Coingecko and Tiger Research.

The regulatory framework in South Korea has been slow to evolve, causing frustration among market participants. The long-awaited Digital Asset Basic Act (DABA) was delayed in December due to disagreements among regulators over stablecoin issuance. Additionally, the Virtual Asset User Protection Act, which came into force in 2024, does not address market structure issues such as leverage or derivatives trading.

This regulatory gap has led to concerns that South Korea’s centralized crypto exchanges (CEXs) are struggling to compete with offshore platforms that offer more complex trading products. As a result, the number of South Korean investors holding large sums in overseas cryptocurrency exchange accounts has more than doubled in a year, reflecting both the global market’s resurgence and dissatisfaction with the restrictive trading environment in South Korea.

Cryptocurrency has become a primary investment asset in South Korea, with investor numbers reaching 10 million and exchanges like Upbit and Bithumb generating revenues in the trillions of won. However, despite the active trading activity among Korean investors, growth in the market is stagnating. Many investors are turning to foreign-based platforms such as Binance and Bybit due to the lack of investment opportunities in South Korea.

One of the main reasons Korean investors are moving funds offshore is the gap in investment opportunities caused by regulations that prohibit domestic exchanges from offering crypto derivatives to retail traders. Domestic CEXs are limited to spot trading, while foreign CEXs offer more complex products, including leveraged derivatives.

Overall, the report highlights the challenges faced by the cryptocurrency market in South Korea and the growing trend of investors moving their funds to foreign platforms. It underscores the need for regulatory reforms to ensure the competitiveness and growth of the crypto market in the country.