South Koreans Move KRW 160T in Crypto to Overseas Exchanges

South Korean investors transferred KRW 160 trillion about $110 billion in cryptocurrency from domestic exchanges to foreign platforms in 2025. This outflow was driven by strict local regulations that restrict domestic exchanges to spot trading. The capital outflow reflects a growing trend as investors seek more flexible options available overseas according to economic reports.

The movement of funds occurred as regulatory uncertainty delayed the implementation of the Digital Asset Basic Act.

This framework, intended to govern crypto trading and issuance, was postponed due to disagreements among regulators over stablecoin policies as reported. Meanwhile, local rules under the Virtual Asset User Protection Act did not address leverage or derivatives trading according to industry analysis.

South Korean investors have historically favored altcoins and early-stage tokens, but domestic platforms often lagged in listing opportunities according to market data. By the time tokens became available on local exchanges, the best opportunities for profit had already passed. This regulatory lag has encouraged many traders to use offshore platforms like Binance and Bybit as noted.

Why Did This Happen?

South Korea's regulatory environment has created a significant gap in investment opportunities. Domestic exchanges are limited to spot trading, while foreign platforms offer leveraged derivatives and pre-market access according to market analysis. This imbalance has led to a migration of capital and users to global exchanges as reported.

The shift to offshore trading platforms has had a financial impact on both Korean investors and foreign exchanges. According to a joint report by CoinGecko and Tiger Research, international platforms generated about KRW 4.77 trillion approximately $3.36 billion in fees from South Korean users.

How Did Markets Respond?

Foreign exchanges have benefited significantly from the South Korean outflow. Binance, for instance, captured about 57.7% of the outflow, totaling roughly KRW 92.3 trillion in principal. Other platforms, including Bybit, OKX, Bitget, and Huobi, also saw a substantial increase in trading activity as reported.

Local exchanges, on the other hand, struggled to maintain their share of the market. The combined operating revenue of South Korea's top five domestic exchanges, including Upbit and Bithumb, was KRW 1.78 trillion in 2025. This is significantly less than the fees generated by foreign platforms from Korean users.

What Are Analysts Watching Next?

Analysts are closely monitoring the impact of South Korea's regulatory delays on the domestic crypto market. With the Digital Asset Basic Act postponed, the regulatory gap is expected to widen. If current trends continue, capital outflows could increase as more investors seek offshore platforms with better trading features.

There are also concerns that tighter regulations or outright blocking of foreign platforms could push more capital into decentralized exchanges and personal wallets. In the first half of 2025 alone, about KRW 2.7 trillion moved to non-custodial platforms.

Experts suggest that a flexible regulatory framework could help retain local investors. A balanced approach that protects retail investors while allowing access to complex financial products could improve competitiveness for domestic exchanges.