South Korea’s Crypto Market Sheds $24B as BoK Flags Risks
South Korea’s cryptocurrency market has lost nearly ₩32.6 trillion (US$24 billion) in value over the past six months, according to a report released by the Bank of Korea (BoK). The decline has raised concerns over weakening investor appetite and potential risks to financial stability.
The BoK said domestic crypto holdings fell from ₩121.8 trillion in January to ₩89.2 trillion in June, a 27% drop despite a partial rebound in Bitcoin prices during the same period.
Deposits at local exchanges 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 decline in market size, deposits, and trading volume reflects subdued investor sentiment and growing caution among households,” the BoK noted in its Financial Stability Situation report.
The central bank added that some capital has shifted into equities, supported by a strong domestic stock market. At the same time, stablecoin demand in Korea has stagnated since March, diverging from global trends where stablecoin usage has continued to rise.
Officials warned that Korea’s reliance on dollar-pegged stablecoins could trigger capital outflows and weigh on the won if redemption pressure grows. The report also highlighted gaps in reserve management and disclosure by crypto service providers.
While the BoK does not expect the downturn to spark systemic risks in the near term, it called for closer monitoring of exchanges and stricter safeguards for investors.
Lawmakers are currently debating legislation that would impose tougher reserve requirements and improve transparency in the sector.
South Korea remains one of the busiest retail crypto markets in the world. But the BoK’s warning shows how quickly sentiment can shift, with more than $24 billion in value erased in just half a year.
South Korean Market Continues to Mature
A South Korean government agency has tightened oversight of the country’s crypto sector, contributing to the recent market dip.
As part of this effort, the Financial Intelligence Unit (FIU) flagged 36,684 suspicious crypto activities between January and August 2025—higher than in both 2024 and 2023.
Most of these flagged activities involved stablecoins such as USDT, with one scheme drawing attention for $42 million worth of transactions.
This announcement comes shortly after South Korea approved a won-backed stablecoin, KRW1, launched under the strict supervision of Woori Bank.
Earlier in the year, the country underscored its openness to crypto by passing the Digital Assets Basic Act, which provides a framework for stablecoin issuance and usage, similar to the GENIUS Act in the United States.