South Korea Tightens Regulations as Over $110 Billion in Cryptocurrency Assets Flee Overseas, Local Trading Platforms Stagnate

According to a report jointly released by Coingecko and Tiger Research on Friday, South Korean investors transferred over 160 trillion Korean won (approximately $110 billion) from local cryptocurrency exchanges to overseas platforms last year due to local regulatory restrictions. South Korea, as one of the most active digital asset markets in Asia, has relatively lagging regulatory framework development. The highly anticipated Digital Asset Basic Act (DABA) was postponed in December last year due to regulatory disagreements on stablecoin issuance. The comprehensive law aimed at regulating cryptocurrency trading and issuance has yet to be implemented. The Virtual Asset User Protection Act, which will take effect in 2024, does not address market structural issues such as leverage trading or derivative trading. Regulatory gaps have raised concerns among market participants, who fear that South Korea's centralized cryptocurrency exchanges are increasingly struggling to compete with overseas platforms offering more complex trading products. Aju Press reported in November that the number of South Korean investors holding large accounts on overseas cryptocurrency exchanges has more than doubled in a year, reflecting both the global market recovery and investors' growing dissatisfaction with the restrictive trading environment in South Korea. Cryptocurrency has become a major investment asset in South Korea, with the number of investors reaching 10 million and the revenue scale of exchanges like Upbit and Bithumb reaching trillions of Korean won. However, the report shows that despite active trading of cryptocurrency by South Korean investors and an increasing shift to overseas platforms like Binance and Bybit, growth of local trading platforms has stagnated.

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