Market News

Regulator Stalemate: South Korea's Crypto Landscape Faces New Challenges

In a striking report, over $110 billion in cryptocurrency was shifted from South Korea to foreign exchanges in 2025 due to stringent regulatory policies.

This exodus underscores a significant regulatory gap, as South Korea struggles to establish a comprehensive framework for digital assets amidst ongoing debates over stablecoin governance.

The delayed implementation of the Digital Asset Basic Act (DABA) is particularly concerning, leaving investors with limited options in the domestic market.

While South Korean exchanges like Upbit and Bithumb report substantial trading activity, they are unable to compete with foreign platforms that offer advanced trading products, including crypto derivatives.

Efforts to introduce crypto exchange-traded funds (ETFs) are also hindered by regulatory indecision, despite calls for a more progressive approach from industry leaders.

The Korea Exchange’s chairman recently expressed readiness to launch crypto ETFs, but political disagreements continue to stall formal legislation.

Additionally, enforcement actions against local exchanges have intensified, with heavy fines imposed for anti-money laundering violations, pointing to a stricter regulatory climate.

As market participants voice concerns over these restrictions, a shift towards offshore platforms is becoming increasingly apparent.

This trend reflects both the frustration with the current regulatory environment and the search for better investment opportunities outside South Korea.

Overall, the ongoing regulatory stalemate raises questions about the country's competitive edge in the evolving cryptocurrency landscape.