South Korean investors shifted more than 160 trillion won ($110 billion) from local crypto exchanges to foreign platforms last year, driven by restrictive domestic regulations. A joint report from Coingecko and Tiger Research highlighted this outflow, attributing it to delays in broader crypto frameworks. Officials acknowledged the need for updated rules, but disagreements over stablecoins stalled progress.
In 2025, South Korea, one of Asia's most vibrant digital asset markets, saw significant capital flight from its cryptocurrency sector. According to a joint report by Coingecko and Tiger Research released on Friday, investors transferred over 160 trillion won—equivalent to $110 billion—to overseas exchanges. This movement stemmed from stringent local regulations that confined domestic platforms to spot trading, while foreign venues offered advanced products like leveraged derivatives.
The regulatory landscape evolved slowly. The Virtual Asset User Protection Act took effect in 2024, focusing on user safeguards but leaving gaps in market structure, such as prohibitions on derivatives for retail traders. In December, the anticipated Digital Asset Basic Act (DABA), intended to oversee crypto trading and issuance comprehensively, faced delays due to regulatory disputes over stablecoin oversight.
Market participants expressed concerns about the competitiveness of South Korea's centralized exchanges (CEXs). As reported by Korean news agency Aju Press in November, "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 growing frustration with South Korea’s restrictive trading environment."
Despite stagnation in domestic growth, cryptocurrency remains a key investment in the country, with around 10 million investors. Platforms like Upbit and Bithumb reported revenues in the trillions of won, yet users increasingly favored international options such as Binance and Bybit to access diverse opportunities. The report noted: "Domestic CEXs face strict regulations that limit them to spot trading, while foreign CEXs fill this gap with more complex products, including leveraged derivatives."
This trend underscores the urgency for South Korean authorities to bridge the regulatory divide, as officials have signaled intentions to expand crypto rules amid the sector's rising prominence.
