On January 2nd, a report jointly released by Coingecko and Tiger Research on Friday revealed that due to local regulatory restrictions in South Korea, investors transferred over 160 trillion won (approximately US$110 billion) from domestic cryptocurrency exchanges to overseas platforms last year. South Korea, as one of Asia's most active digital asset markets, has a relatively underdeveloped regulatory framework.
Last December, the highly anticipated Digital Assets Basic Law (DABA) was delayed due to disagreements among regulators over stablecoin issuance. This framework law, designed to comprehensively regulate the trading and issuance of crypto assets, has yet to be implemented. Meanwhile, the Virtual Assets User Protection Act, set to take effect in 2024, does not address structural market issues such as leveraged trading or derivatives trading.
Regulatory gaps have raised concerns among market participants, who worry that South Korean centralized cryptocurrency exchanges are finding it increasingly difficult to compete with overseas platforms offering more sophisticated trading products. A report by the Korean news agency Aju Press in November noted, "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 growing investor dissatisfaction with South Korea's restrictive trading environment."
Research has found that cryptocurrencies have become a major investment asset in South Korea, with the number of investors reaching 10 million and trading platforms such as Upbit and Bithumb generating trillions of won in revenue. However, the report shows that while South Korean investors continue to actively trade cryptocurrencies and are increasingly turning to overseas platforms such as Binance and Bybit, the growth of domestic trading platforms has stagnated.
