Chainfeeds Summary:
From collapse to leap forward: The restart and next growth cycle of the South Korean crypto market.
Article source:
https://www.techflowpost.com/article/detail_29573.html
Article Author:
JE Labs
Opinion:
JE Labs: The South Korean digital asset market is undergoing one of the most significant structural reconfigurations in its history. Upbit's daily trading volume plummeted from $9 billion in December 2024 to $1.78 billion in November 2025, a drop of nearly 80%. This dramatic shift did not occur against the backdrop of a contraction in market supply; on the contrary, the number of new tokens listed on South Korean exchanges increased by 141% year-on-year in 2025. Simultaneously, retail investor funds clearly shifted towards the stock market, with the KOSPI index rising by approximately 70% this year, driven by AI chip giants such as Samsung Electronics and SK Hynix. The kimchi premium, once considered a hallmark of the South Korean crypto market, has also compressed from a historical level of around 10% to less than 2%. This change does not signify a complete withdrawal of funds, but rather a systemic squeeze out of speculative premiums, with the market returning to a state closer to the global pricing system. The core question thus arises: Has South Korea's crypto era ended, or is it undergoing a necessary reconfiguration for the next round of structural growth? The cooling of the South Korean crypto market is not a short-term fluctuation, but a structural adjustment driven by regulatory delays, capital controls, and investor fatigue. Stablecoin legislation was stalled for months due to controversy over whether banks or non-bank institutions should lead the issuance, and the regulatory vacuum significantly hampered the progress of institutions and Web2 companies in tokenization and settlement layer innovation. Simultaneously, strict foreign exchange controls limited the entry of overseas market makers and institutional funds, resulting in a long-term one-way contraction in liquidity. The Foreign Exchange Trading Act and related guidelines from the Financial Supervisory Service made it difficult for non-resident institutions to establish Korean won positions and provide truly bilateral market-making services. Although the market is under short-term pressure, this cooling is more of a constructive correction than a systemic collapse. The South Korean market is shifting from a phase driven by sentiment and speculation to a more mature cycle focused on infrastructure, compliance, custody, and real-world application value. It is noteworthy that while domestic retail investor activity is declining, global crypto giants are counter-cyclically increasing their investment in South Korea. In October 2025, Binance returned to the South Korean market through the acquisition of Gopax, signaling a gradually opening regulatory environment. Meanwhile, South Korea retains unique advantages in terms of technology adoption speed, stablecoin integration potential, and institutional demand. Banks, fintech companies, and internet giants are exploring stablecoins and on-chain settlements, exchanges are continuously expanding institutional custody services, and the potential approval of a Bitcoin ETF is seen as a key catalyst for the next phase. Overall, South Korea has not withdrawn from the crypto arena, but rather is shifting from a retail speculative market to a digital asset system centered on institutions, infrastructure, and institutional participation. This resetting phase, in fact, provides an important strategic entry window for builders with genuine product capabilities and long-term vision.
Content source 
