Last year, South Koreans moved more than 160 trillion won ($110 billion) from local crypto exchanges to foreign platforms due to regulatory restrictions in the country, one of Asia’s most active digital asset markets, a joint report from Coingecko and Tiger Research showed on Friday.
The regulatory framework has taken time to evolve. In December, the highly anticipated Digital Asset Basic Act (DABA), a comprehensive framework intended to govern the trading and issuance of cryptocurrencies, was delayed due to disagreements among regulators over the issuance of stablecoins. The Virtual Asset User Protection Act, which took effect in 2024, does not address market structure issues such as leverage or derivatives trading.
The regulatory void has raised fears among market participants that Korea’s centralized crypto exchanges (CEXs) are increasingly unable to compete with offshore platforms offering more complex trading products.
“The number of South Korean investors holding significant sums in overseas cryptocurrency exchange accounts has more than doubled in a year, reflecting both the resurgence of the global market and growing frustration with South Korea’s restrictive business environment,” Korean news agency Aju Press reported in November.
The study found that cryptocurrency has become a major investment asset in South Korea, with the number of investors reaching 10 million and exchanges such as Upbit and Bithumb generating revenue worth billions of won.
However, growth is stagnating, even as Korean investors continue to actively trade cryptocurrencies and are increasingly turning to foreign platforms such as Binance and Bybit, according to the report.
The report states that the main reason Korean investors are moving their funds overseas is the lack of investment opportunities, as South Korea prohibits domestic exchanges from offering crypto derivatives to retail traders.
“Domestic CEXs are subject to strict regulations that limit them to spot trading, while foreign CEXs fill this gap with more complex products, including leveraged derivatives,” it says.
