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 report by Coingecko and Tiger Research revealed on Friday.
The regulatory framework has been slow to evolve. In December, the long-awaited Digital Asset Basic Law (DABA), a broad framework intended to regulate the trading and issuance of cryptocurrencies, was delayed due to disagreements between regulators over the issuance of stablecoins. The Virtual Asset User Protection Law, which came into effect in 2024, does not address market structure issues such as leverage or derivatives trading.
The regulatory gap has 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 global market resurgence and growing frustration with South Korea’s restrictive trading environment,” Korean news agency Aju Press reported in November.
The research found that cryptocurrencies have become a major investment asset in South Korea, with the number of investors reaching 10 million and exchanges such as Upbit and Bithumb generating trillions of won in revenue.
However, growth is stalling, even as Korean investors continue to actively trade cryptocurrencies and increasingly turn to foreign platforms such as Binance and Bybit, according to the report.
The report says that the main reason Korean investors are moving funds abroad is the gap in investment opportunities, as South Korea prohibits 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,” he said.
