What happened?
South Korea’s crypto market lost about $24 billion in six months as domestic crypto holdings fell from KRW 121.8 trillion to KRW 89.2 trillion and daily trading volumes plunged. Investors actively withdrew funds from exchanges, with deposits dropping from KRW 10.7 trillion to KRW 6.2 trillion, even while Bitcoin and global crypto prices rose. Many retail traders shifted money into domestic stocks and stable assets, causing trading activity on local crypto platforms to collapse.
Who does this affect?
Retail investors and the country’s roughly 10.86 million active trading accounts are directly impacted, with many reducing crypto exposure and reallocating to equities. Crypto exchanges, related crypto firms and miners are seeing lower volumes and revenue, while banks and institutional players preparing to enter the market face both opportunity and transition costs. Local governments and tax authorities are also involved, seizing assets for unpaid taxes and changing enforcement, which affects holders and service providers.
Why does this matter?
The big outflows and collapsing volumes reduce local liquidity, raising the risk of larger price swings and making the Korean market more disconnected from global activity. At the same time, government moves to reclassify crypto firms as venture companies, approve spot ETFs and back won-stablecoins could lure institutional capital back and change market structure. In short, expect short-term pressure on prices and trading, but meaningful regulatory and bank adoption could trigger renewed inflows and reshape where liquidity and pricing power sit.