What happened to South Korea’s cryptocurrency market in 2026?

South Korea’s crypto market shrank sharply as investors moved money into equities and reduced exposure to digital assets. Crypto holdings dropped from 121.8 trillion won ($83.3 billion) in January 2025 to 60.6 trillion won ($41.4 billion) by February 2026. Trading activity and exchange deposits also fell significantly, showing weaker retail participation.

Why are South Korean investors shifting from crypto to stocks?

The article suggests investors rotated into traditional equities because crypto prices weakened and stock market sentiment improved. Falling crypto valuations reduced confidence, while equities appeared more attractive for short-term returns. This shift also reduced liquidity across local crypto exchanges.

How much did crypto trading volumes fall on South Korean exchanges?

Daily trading volumes across major South Korean exchanges including Upbit, Bithumb, Korbit, Coinone and Gopax fell to around $3 billion in February 2026. That compares with roughly $11.6 billion in December 2024. The decline signals lower retail trading activity and weaker market momentum.

What do falling exchange deposits mean for South Korea’s crypto market?

Deposits held in Korean won on exchanges dropped from 10.7 trillion won to 7.8 trillion won. Lower deposits usually mean investors have less capital ready to buy crypto assets. For traders, this can reduce liquidity and increase volatility during market swings.

Why are South Korea’s new AML rules controversial for crypto exchanges?

South Korea plans to automatically flag crypto transactions above 10 million won involving overseas exchanges or private wallets as suspicious starting in August. Industry group DAXA argues the rules could overwhelm exchanges with compliance reports. Critics also warn stricter oversight may push users toward offshore platforms like Binance.

How could South Korea’s crypto tax affect investors from 2027?

South Korea confirmed a 22% tax on crypto investment gains will start on January 1, 2027. The tax could reduce speculative trading activity and encourage some investors to move capital into other assets. Long-term investors may also change trading strategies to manage tax exposure.

What are the main bull and bear cases for South Korea’s crypto industry now?

The bull case is that South Korea continues building blockchain infrastructure, tokenised asset platforms and legal frameworks that could support institutional adoption. The bear case is that stricter regulation, taxes and declining retail interest could weaken local exchanges and reduce trading volumes further. Both trends are happening at the same time.

What should crypto investors watch next in South Korea?

Investors should monitor the August rollout of the revised AML rules and any industry response from exchanges or regulators. The planned 22% crypto tax in 2027 is another major catalyst that could reshape trading behaviour. Traders should also watch whether tokenised asset projects led by institutions like the Korea Securities Depository gain traction over the next year.

South Korea crypto market shrinks as investors shift to stocks

Written by Brie CarterPublished May. 10 2026Last Updated May. 10 2026

South Korea’s cryptocurrency market experienced a sharp decline over the past year as investors redirected funds into the country’s stock market amid weaker digital asset sentiment.

Data submitted by the Bank of Korea revealed that crypto holdings among South Korean investors dropped from 121.8 trillion won, equivalent to roughly $83.3 billion, at the end of January 2025 to 60.6 trillion won, or around $41.4 billion, by the end of February 2026.

The figures highlighted one of the steepest annual declines recorded in the country’s digital asset sector in recent years.

Trading activity across South Korea’s five major cryptocurrency exchanges also weakened significantly during the same period.

Average daily trading volumes across exchanges including Upbit, Bithumb, Korbit, Coinone and Gopax fell to approximately $3 billion in February 2026.

The decline marked a major drop from the $11.6 billion daily trading volume recorded in December 2024.

Korean media outlet The Chosun Daily cited central bank data submitted to Rep. Cha Gyu-geun of the Rebuilding Korea Party.

Analysts linked the slowdown to falling crypto prices and a broader shift in investor appetite towards traditional equities.

Deposits held in Korean won on local exchanges also fell sharply, signalling reduced buying power among retail investors.

Exchange deposits dropped from 10.7 trillion won at the end of 2024 to around 7.8 trillion won in early 2026.

The reduction in available capital suggested many investors either exited the market or shifted their money into other investment sectors.

Despite the wider market downturn, stablecoins showed a more resilient performance compared to other digital assets.

Stablecoin holdings climbed from approximately $60 million in July 2024 to a peak of nearly $597 million in December of the same year.

Holdings later eased to around $41 million by February 2026, although the decline remained smaller than the broader cryptocurrency market contraction.

Financial regulators are now preparing stricter anti-money laundering measures aimed at increasing oversight of cryptocurrency transactions.

Revised AML rules expected to take effect in August would automatically classify crypto transactions above 10 million won involving overseas exchanges or private wallets as suspicious.

The Digital Asset Exchange Alliance, widely known as DAXA, criticised the proposal and warned it could create operational difficulties for domestic exchanges.

Industry representatives argued the stricter rules may encourage traders to migrate towards offshore platforms such as Binance.

DAXA estimated the proposed reporting framework could increase suspicious transaction reports by as much as 85 times.

The organisation projected annual reports could rise from roughly 63,000 cases last year to more than 5.4 million under the new system.

Concerns are also growing around South Korea’s planned cryptocurrency taxation framework scheduled to begin in 2027.

The country’s Finance Ministry recently confirmed that a 22% tax on crypto investment gains will officially take effect on January 1, 2027.

The confirmation intensified debate among investors and industry participants who remain divided over the timing of the measure.

Meanwhile, South Korea continues expanding its blockchain infrastructure despite the slowdown in crypto trading activity.

Samsung SDS recently secured a contract to develop and manage a blockchain-based securities platform for the Korea Securities Depository.

The blockchain securities platform is expected to be completed by February 2027 as part of South Korea’s broader digital asset strategy.

Authorities are also preparing a new legal framework aimed at supporting tokenised assets and blockchain-based financial products across the country.