South Korea Crypto Holdings Drop 50%: Investors Pivot to Stocks and Stablecoins

The Great Crypto Exodus: Holdings Plunge by 50%

According to recent data from the Bank of Korea (BoK), domestic South Korean digital asset holdings plummeted from KRW 121.8 trillion ($93.7 billion) in early 2025 to just KRW 60.6 trillion ($46.6 billion) by the end of February 2026. This data represents the combined assets of users across the nation’s “Big Five” exchanges:

• Upbit

• Bithumb

• Korbit

• Coinone

• Gopax

This cooling sentiment is further evidenced by a sharp decline in trading volume. Average daily turnover, which sat at KRW 17.1 trillion ($11.6 billion) in late 2024, has fallen to approximately KRW 4.5 trillion ($3.33 billion). Furthermore, won-denominated deposits on these exchanges—often viewed as a proxy for “dry powder” or future investment intent—dropped from KRW 10.7 trillion to KRW 7.8 trillion.

Market Volatility and Geopolitical Pressures

The downturn in South Korea mirrors a broader global slump in the digital asset market. Bitcoin (BTC), the industry’s primary bellwether, has corrected significantly from its October 2025 all-time high of over $125,000 to approximately $82,000 this week.

Several factors have contributed to this decline:

1. Equity Market Performance: A surge in both domestic and international stock markets at the start of 2025 has drawn retail capital away from high-risk crypto assets.

2. Exchange Rate Volatility: The South Korean won has weakened considerably, moving from 1,224 per dollar in early 2023 to 1,511 per dollar in March 2026. This has made dollar-denominated assets significantly more attractive.

3. Global Uncertainty: Ongoing conflicts in Ukraine and Iran have increased market volatility, with tensions in the Middle East specifically impacting global oil prices and investor appetite for risk.

The Rise of Stablecoins: A Ten-Fold Surge

Despite the retreat from speculative tokens, the demand for stability has reached record highs. Holdings of stablecoins in South Korea expanded nearly ten-fold from KRW 88.5 billion ($68 million) in mid-2024 to a peak of KRW 872.3 billion ($671 million) by the end of 2025.

Experts suggest this “flight to the dollar” is a strategic move by investors to hedge against the devaluing won while remaining within the digital asset ecosystem for quick re-entry into markets when conditions improve.

Proposed Regulation: The Digital Asset Basic Act

In response to this shifting landscape, the South Korean government is accelerating its regulatory efforts. In April 2026, details emerged regarding a draft of the “Digital Asset Basic Act,” spearheaded by the ruling Democratic Party’s Digital Asset Task Force.

Stablecoin Reclassification and Oversight

The proposed legislation seeks to integrate stablecoins and tokenized Real-World Assets (RWAs) into existing financial frameworks rather than creating a separate, bespoke regime. Key provisions include:

• Foreign Exchange Classification: Stablecoins used in cross-border transactions will be classified as means of payment under the Foreign Exchange Transactions Act.

• Regulatory Supervision: Businesses handling these assets will fall under the direct supervision of foreign exchange authorities.

• Issuer Obligations: Issuers may be required to obtain central bank authorization, maintain 100% reserve requirements in high-quality liquid assets, and provide a legal guarantee for redemption at par.

With South Koreans increasingly favoring stablecoins over volatile altcoins, the government’s move to impose stricter controls on non-won-denominated assets aims to bring much-needed stability and oversight to the evolving financial sector.