South Korea is no longer “embracing” cryptocurrency. It is actively reallocating capital into it. By early 2025, more than 16 million South Koreans, roughly 32% of the population, held accounts on domestic crypto exchanges per a report. That figure exceeded the number of stock investors, which stood at 14.1 million by late 2024.
This shift is not speculative hype. It reflects behavior. Daily crypto trading volumes across Korean exchanges averaged ₩14.9 trillion (≈$10.2 billion) by late 2024. However, since then traffic has collapsed with trading volumes now up to 80%, with averages dropping to ₩3-6T daily amid ₩160T in outflows to overseas platforms. All this while the Korean won has become one of the most actively used fiat currencies in global crypto trading.
One-Third of Citizens Held Crypto: Now Capital Flight Changes Everything
Retail adoption in South Korea is broad, deep, and persistent. A 2025 Hana Bank survey found 27% of adults aged 20–50 owned digital assets. Ownership peaked among those in their 30s (31%) and 40s (28%), but even 25% of people in their 50s reported holding crypto.
Bitcoin remains the dominant asset, held by roughly 60% of crypto investors, but portfolios are increasingly diversified. Importantly, behavior is maturing.
Regular, long-term investing rose from 10% to 34%, while high-frequency speculative trading declined. About 66% of investors still hold under ₩500,000 (≈$400), confirming crypto’s mass-retail character rather than elite concentration in South Korea.
Economic pressure explains much of this. Youth unemployment remains elevated at 5.5%, more than double the national average. Housing affordability has deteriorated. Crypto has become a perceived financial escape hatch, not just a trade.
Even the state participates. In 2023, 20% of public officials subject to asset disclosure reported holding cryptocurrency, a move from counter-culture to civic reality.
Banks Forced into Crypto: Political Promises vs. 2026 Delays
Institutional adoption followed retail, not the other way around. South Korea’s major banks, Shinhan Bank, KB Kookmin, Woori Bank, NH Bank, K Bank, and Busan Bank, have all formed internal digital-asset task forces since 2024.
Shinhan launched crypto services inside its mobile app and invested in custody infrastructure. Several banks filed trademarks for KRW-pegged stablecoins, preparing for issuance once regulations permit. Custody consortia such as Korea Digital Asset Custody (KDAC) emerged to serve institutional demand.
The catalyst was political. President Lee Jae-myung (in office since June 2025) is openly pro-crypto and campaigned on promises to deregulate aspects of the industry. Jae-myung’s administration is actively working on a roadmap to approve spot Bitcoin ETFs and further deregulate the industry following the U.S. moves in that direction though delays have pushed potential launches into 2026. By March 2025, the Financial Services Commission (FSC) confirmed it would release institutional crypto investment guidelines by Q3 2025, explicitly reversing years of informal discouragement.
Korean banks now expect crypto to become a regulated financial product, not a tolerated anomaly. They are positioning ahead of expected regulatory approval to issue stablecoins, offer custody, and participate in tokenized asset markets.
Upbit’s Dominance: Systemically Important in a Shrinking Market
South Korea’s crypto market is structurally concentrated. Upbit, operated by Dunamu, controls roughly 80% of domestic trading volume. Bithumb follows as the second-largest exchange, with Coinone, Korbit, and Gopax completing the licensed group.
These exchanges are no longer mere marketplaces. They function as custodians, liquidity providers, and de facto financial utilities. All are members of DAXA (Digital Asset eXchange Alliance), a self-regulatory body coordinating listings, delistings, and compliance.
Global players remain constrained. Binance exited Korea in 2021 due to licensing rules and re-entered only indirectly through Gopax in 2023. The message is clear: access requires compliance.
In all, crypto adoption in South Korea began with retail investors, but the market is now structured around licensed domestic exchanges, real name banking requirements, and direct regulatory oversight by the FSC. Foreign platforms participate only on Korean terms.
Terra’s Legacy: How Collapse Sparked Strict Regulation
Regulation in South Korea accelerated after failure. The 2022 collapse of TerraUSD/LUNA, founded by Korean entrepreneur Do Kwon, exposed regulatory gaps and triggered public backlash.
The response was decisive. The Virtual Asset User Protection Act (VAUPA) took effect in July 2024, mandating cold-wallet custody of at least 80% of customer assets, segregation of funds, and harsh penalties for market manipulation and fraud, including life imprisonment in severe cases.
Algorithmic stablecoins were effectively banned. Exchange oversight tightened. Disclosure requirements expanded to executives and public officials.
VAUPA did not suppress crypto usage or trading volumes. It forced exchanges to operate like financial institutions, separating customer assets, tightening custody rules, and criminalizing market abuse at scale.
Crypto Tax Delay to 2027: The Window Closing on Untaxed Gains
South Korea’s crypto tax remains unresolved. A 20% capital-gains tax on crypto profits above ₩2.5 million (~$2,000) annually was legislated in 2020. Implementation has been postponed repeatedly, first to 2023, then 2025, and now 2027.
Officials admit the infrastructure is not ready. Definitions around staking rewards, airdrops, and reporting remain incomplete. As of writing time, crypto gains are effectively untaxed.
This delay has unintentionally fuelled adoption, especially compared with the U.S. and Japan, where crypto profits are already taxed. But the window is closing. The government has made clear that taxation will eventually align with traditional assets.
Digital Won vs. Private Stablecoins: Korea’s Dual-Track Future
South Korea’s government does not want foreign stablecoins dominating domestic payments. The Bank of Korea launched a CBDC pilot, involving 100,000 citizens, which ran through June before pausing amid shifts toward private stablecoins, with revival plans emerging in early 2026.
In parallel, lawmakers are drafting the Digital Asset Basic Act (DABA) orGeneral Act on Digital Assets, introduced in June 2025, but not fully implemented as yet. The bill proposes a two-track system distinguishing securities-like tokens from utility assets, legalizes KRW-denominated stablecoins, and opens the door to products like spot crypto ETFs.
Essentially, South Korea is pursuing a dual-track strategy. That is, a state-issued digital won for regulated payments, together with tightly supervised private crypto markets for investment and innovation. Policymakers are treating the two as complementary tools, not competing ideologies.
Did South Korea Outpace the World only to See Retail Flee Overseas?
Compared with peers, South Korea stands apart. Retail adoption exceeds Japan and the U.S. by population share. Institutional integration is advancing faster than in countries like the United Kingdom. Meanwhile, regulatory clarity may be arriving sooner than in the United States.
As adoption moves along, the question is no longer whether crypto belongs in South Korea’s financial system. The remaining question is whether traditional financial institutions can adapt quickly enough to a market structure that retail investors have already normalized.
Author: Ayanfe Fakunle
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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Korean Won Overtakes US Dollar As Largest Fiat Trading Pair Against Bitcoin | Disruption Banking
