According to a Bank of Korea (BoK) report, South Korea's cryptocurrency market lost nearly ₩32.6 trillion (US$24 billion) in value over the past six months, raising concerns about weakening investor appetite and financial stability risks. Domestic crypto holdings plummeted from ₩121.8 trillion in January to ₩89.2 trillion in June, a 27% drop, despite Bitcoin's price appreciation during the same period.
Exchange deposits plunged 42%, falling from ₩10.7 trillion to ₩6.2 trillion, while average daily trading volume collapsed nearly 80%, dropping from ₩17.1 trillion in December 2024 to ₩3.2 trillion in June 2025. The BoK attributed this to subdued investor sentiment and a shift of capital into domestic equities, which outperformed amid a strengthening won.
Stablecoin demand in Korea stagnated since March, diverging from global growth trends, with officials warning that reliance on dollar-pegged stablecoins like USDT could trigger capital outflows. The report highlighted gaps in reserve management by crypto service providers, prompting calls for closer monitoring and stricter safeguards.
Concurrently, South Korea is advancing pro-crypto policies, such as the Digital Assets Basic Act and the launch of a won-backed stablecoin, KRW1, under Woori Bank's supervision. President Lee Jae-myung's administration has reclassified crypto firms as venture companies to grant tax incentives, and the Democratic Party formed a crypto policy task force to foster industry growth by year-end.
Despite the downturn, South Korea remains a key retail market, with 10.86 million active trading accounts (about 20% of the population) and 51% of adults aged 20-59 having crypto experience. Regulatory efforts include intensified tax collection, with Cheongju City seizing tokens from 203 residents for unpaid taxes since 2021.