South Koreans moved more than 160 trillion won ($110 billion) from local crypto exchanges to foreign platforms last year due to regulatory restrictions in the country, one of Asia’s most active digital asset markets, a joint Coingecko and Tiger Research report revealed on Friday.
The legislative framework has been slow to develop. In December, the long-awaited Digital Asset Basic Act (DABA), a comprehensive framework intended to govern crypto trading and issuance, was delayed due to disagreements among regulators over stablecoin issuance. 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 gap raised concerns among market participants that Korea’s centralized crypto exchanges (CEXs) are increasingly unable to compete with offshore platforms that offer more complex trading products.
“The number of South Korean investors holding large 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 trading environment,” Korean news agency Aju Press reported in November.
The survey found that cryptocurrency has become a primary investment asset in South Korea, with the number of investors rising to 10 million and exchanges such as Upbit and Bithumb generating revenues in the trillions of won.
Growth is stagnating, however, even as Korean investors continue to trade crypto actively, increasingly turning to foreign-based platforms such as Binance and Bybit, according to the report.
The report said the main reason Korean investors are moving funds offshore is the gap in investment opportunities, as South Korea bans domestic exchanges from offering crypto derivatives to retail traders.
“Domestic CEXs face strict regulations that limit them to spot trading, while foreign CEXs fill this gap with more complex products, including leveraged derivatives,” it said.
