What happened?
South Koreans are moving more crypto activity to overseas exchanges, with 78.9 trillion won sent abroad and a 4% increase in cross-border transfers. Domestic trading volumes and KRW deposits fell sharply while user numbers still grew to 10.77 million. Regulators found the domestic market cap dropped 14%, crypto-to-fiat trading fell 12% and exchanges massively increased listed trading pairs from 181 to 1,538.
Who does this affect?
Retail traders in South Korea, especially people in their 30s who make up the biggest share of users, face reduced fiat liquidity and fewer local token options. Domestic exchanges and custody providers are hit hard — custody assets under management fell about 50% and user counts for those services dropped around 41%. Smaller local projects (so-called “kimchi coins”) are losing listings as exchanges favor tokens already active overseas.
Why does this matter?
The shift of funds overseas and the drop in fiat deposits weakens liquidity and price support for local tokens, which can raise volatility and widen spreads. Bigger corporate and international flows can move benchmark prices like Bitcoin while domestic market depth and exchange revenues shrink, making the local market more sensitive to shocks. That means investors may face higher trading risks and regulators and exchanges will likely need stronger risk controls and listing standards to stabilize the market.