Alvin Lang
May 10, 2026 10:53
South Korea’s crypto holdings plunged 50% in a year, with trading volumes collapsing as investors pivot to stocks and regulators tighten oversight.
South Korea’s cryptocurrency market has witnessed a dramatic contraction, with the value of holdings falling by over 50% in just 13 months. According to data reported by The Chosun Daily and sourced from the Bank of Korea, South Korean crypto assets dropped from 121.8 trillion won ($83.3 billion) at the end of January 2025 to just 60.6 trillion won ($41.4 billion) by February 2026. Daily trading volumes mirrored this plunge, shrinking from $11.6 billion in December 2024 to $3 billion by February 2026.
The shift is attributed to two key factors: a significant capital reallocation into the booming stock market and falling cryptocurrency prices. Won deposits held on the country’s five major exchanges—Upbit, Bithumb, Korbit, Coinone, and Gopax—decreased from 10.7 trillion won in late 2024 to 7.8 trillion won by early 2026, signaling reduced investor interest.
Interestingly, stablecoins resisted the broader market trend. Stablecoin holdings surged from $60 million in July 2024 to a peak of $597 million in December 2024 before settling at $41 million by February 2026, a relatively modest decline compared to other crypto assets.
Regulatory Pressures Amplify Market Stress
The collapse coincides with looming regulatory measures. Financial authorities in South Korea plan to introduce stricter anti-money laundering (AML) rules in August 2026. Under the revised framework, transactions exceeding 10 million won involving foreign exchanges or private wallets will automatically trigger suspicion reports. The industry body DAXA has sharply criticized the proposal, warning it could overwhelm exchanges with compliance requirements and drive users toward offshore platforms like Binance. Reports suggest that such rules could increase suspicious transaction filings by 85 times, from 63,000 cases last year to over 5.4 million annually.
Adding to the uncertainty, South Korea’s Finance Ministry recently confirmed plans to implement a 22% tax on crypto gains starting January 1, 2027. This has fueled further debate among investors and industry stakeholders, with many voicing concerns over how the tax could stifle market recovery.
Tokenized Assets Gain Ground
Despite the challenges, South Korea is making strides in blockchain development. Samsung SDS has been contracted to build a blockchain-based securities platform for the Korea Securities Depository (KSD). This platform, set for completion by February 2027, aims to lay the groundwork for tokenized asset trading as South Korea gears up for a new legal framework focused on digital securities.
The country’s pivot to tokenized markets reflects a strategic shift toward regulated, blockchain-driven financial infrastructure, offering a potential silver lining amid the ongoing crypto market downturn.
With tighter AML rules on the horizon and the crypto tax looming in 2027, the South Korean market faces a rocky road ahead. Investors will likely keep a close eye on regulatory developments and stock market trends to guide their next moves.
Image source: Shutterstock
