Last year, South Koreans transferred over 160 trillion won (approximately $110 billion) from domestic cryptocurrency exchanges to international platforms due to regulatory challenges in the country, which is one of Asia’s leading markets for digital assets. This information was disclosed in a joint report by Coingecko and Tiger Research released on Friday.
The regulatory landscape has made slow progress. In December, the anticipated Digital Asset Basic Act (DABA)—designed to provide a comprehensive framework for crypto trading and issuance—was postponed due to disagreements among regulators concerning stablecoin issuance. Furthermore, the Virtual Asset User Protection Act, which became effective in 2024, does not tackle critical market structure issues like leverage or derivatives trading.
This regulatory void has sparked worries among market participants about the growing inability of Korea’s centralized exchanges (CEXs) to compete with offshore platforms that offer more sophisticated trading products.
According to the Korean news agency Aju Press, in November, the number of South Korean investors with substantial amounts in offshore cryptocurrency exchange accounts more than doubled over the past year, highlighting both a resurgence in the global market and increasing frustration with South Korea’s restrictive trading environment.
The research indicated that cryptocurrency has emerged as a primary investment asset within South Korea, with the number of investors climbing to 10 million, and platforms like Upbit and Bithumb generating revenues in the trillions of won.
However, growth is stalling, even as Korean investors remain active in crypto trading and increasingly turn to foreign platforms such as Binance and Bybit, as indicated in the report.
The primary driver behind the movement of funds offshore is the disparity in investment opportunities, as South Korea forbids local exchanges from offering crypto derivatives to retail investors.
“Domestic CEXs are restricted by stringent regulations that confine them to spot trading; in contrast, foreign CEXs address this gap with a wider array of products, including leveraged derivatives,” the report stated.
