South Korea’s cryptocurrency market has undergone a dramatic reversal of fortunes, with trading volumes on the country’s five licensed digital asset exchanges now accounting for just 8% of the benchmark KOSPI stock index’s trading activity — less than one-tenth of equity market levels — according to new data published by industry outlet Digital Asset.
The figures mark a stark contrast to the euphoric highs of late 2024. In December 2024, won-based crypto trading volume reached 323% of KOSPI volume, fuelled by a powerful digital asset rally linked to Donald Trump’s U.S. presidential election victory, when Trump declared his intention to make America the world’s capital of digital assets. Less than 18 months later, that dominance has all but evaporated.
The turning point came in the second half of 2025. Between August 2025 and May 2026, won-based crypto trading volume fell 71%, while KOSPI trading volume surged 243% over the same period, driven by a semiconductor boom and government-led efforts to support the domestic equity market. The KOSPI started 2025 at around 2,400 and broke through 6,300 in February 2026 — more than doubling in just over a year.
The scale of the crypto market’s contraction is significant. 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, while daily trading volumes shrank from approximately $11.6 billion in December 2024 to around $3 billion. Won deposits held at the five major exchanges — Upbit, Bithumb, Korbit, Coinone, and Gopax — also declined, falling from 10.7 trillion won at the end of 2024 to roughly 7.8 trillion won in early 2026.
The weakness is not only relative to domestic stocks but also to global crypto markets. The so-called “Kimchi Premium” — an indicator measuring the price difference between Bitcoin traded in South Korea versus overseas — has been consistently negative since March 2026, briefly turning positive in April before falling back below zero. A negative reading signals that domestic Bitcoin prices are lower than international levels, pointing to weak buying pressure among Korean investors.
The impact has been felt unevenly across the industry. Smaller platforms have suffered most, with Coinone and Korbit recording trading volume declines of approximately 78% and 92% respectively since February 2025, while larger platforms like Upbit and Bithumb, which benefit from deeper liquidity and a wider range of listed tokens, have proven more resilient.
Looking ahead, the outlook for South Korea’s crypto sector faces further headwinds. Financial authorities plan to introduce stricter anti-money laundering rules in August 2026, under which transactions exceeding 10 million won involving foreign exchanges or private wallets will automatically trigger suspicious transaction reports. The Finance Ministry has also confirmed plans to implement a 22% tax on crypto gains starting January 1, 2027, adding further uncertainty for investors.
The confluence of a booming stock market, tightening regulation, and subdued global crypto sentiment has fundamentally shifted South Korea’s retail investment landscape — at least for now.
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