South Koreans moved more than 160 trillion won ($110 billion) from domestic crypto exchanges to overseas platforms last year due to regulatory restrictions in one of Asia’s most active digital asset markets, a joint report by Coingecko and Tiger Research revealed on Friday.
Regulatory frameworks are slow to evolve. In December, the long-awaited Digital Asset Basic Act (DABA), a comprehensive framework aimed at governing the trading and issuance of cryptocurrencies, was postponed 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 and derivative trading.
Regulatory gaps have raised concerns among market participants that South Korea’s centralized cryptocurrency exchanges (CEXs) are increasingly unable to compete with offshore platforms offering more complex trading products.
South Korean news agency Anju News reported in November that “the number of South Korean investors holding large sums of money in overseas cryptocurrency exchange accounts has more than doubled in one year, reflecting the resurgence of global markets and growing dissatisfaction with South Korea’s restrictive trading environment.”
According to the study, cryptocurrencies have become a major investment asset in South Korea, with 10 million investors and exchanges such as Upbit and Bithumb generating trillions of won in revenue.
However, the report says growth has stagnated, even as South Korean investors continue to actively trade cryptocurrencies and increasingly focus on overseas-based platforms such as Binance and Bybit.
The report said the main reason Korean investors are moving their funds overseas is due to a gap in investment opportunities as South Korea prohibits domestic exchanges from offering crypto derivatives to retail traders.
“While domestic CEXs face strict regulations that limit them to spot trading, foreign CEXs are filling this gap with more complex products, including leveraged derivatives,” the paper said.
