South Korea’s crypto market has shrunk dramatically compared with its booming stock market, with local trading now at barely one-tenth the scale of KOSPI activity.
Digital Asset’s latest data, covering the five major domestic exchanges—Upbit, Bithumb, Coinone, Korbit and Gopax—shows that through May 26, crypto trading volume was only 8% of KOSPI trading volume for May. That represents a sharp reversal from late 2024, when won-based crypto trading peaked at 323% of KOSPI in December amid a crypto rally tied to Donald Trump’s U.S. election win and heightened risk appetite.
Key numbers
- Crypto trading volume across the five exchanges dropped roughly 71% between August 2025 and May 2026.
- Over the same period, KOSPI trading volume surged about 243%, driven by a semiconductors-led rally and government measures to support equities.
- South Korean crypto holdings fell from $83.3 billion at end-January 2025 to $41.4 billion by end-February 2026.
- Daily trading volume on the five exchanges fell from about $11.6 billion in December 2024 to roughly $3 billion in February 2026.
- Won deposits at crypto exchanges slipped from 10.7 trillion won at the end of 2024 to 7.8 trillion won.
The divergence widened after a pronounced crypto downturn in October 2025, while local equities pushed toward record levels. As stocks gained traction, crypto lost relative market share and cash inflows.
Kimchi premium turns negative — a demand signal
Digital Asset also cites CryptoQuant data showing the Bitcoin Korea Premium (the “Kimchi Premium”) has been negative in multiple recent sessions. The premium, which measures whether Bitcoin trades at a premium or discount in Korea versus overseas venues, turned negative in March, was briefly positive in April, and returned to negative territory. A negative premium signals weaker domestic buying pressure, suggesting the slump reflects not just lower volumes but diminished demand among Korean traders.
Regulatory backdrop likely weighing on activity
The slowdown arrives as South Korea tightens rules for investors and exchanges. From Jan. 1, 2027, the government plans to tax virtual-asset gains above 2.5 million won under a combined 22% rate. The National Tax Service is preparing guidance with the five major exchanges, and the first full filing period is expected in May 2028 for income earned in 2027. Authorities are also moving toward stricter checks on overseas transfers, which could increase reporting requirements for transfers involving foreign exchanges and private wallets — moves that industry groups warn may raise user costs and processing times.
What this means
For now, Korean crypto markets look subdued relative to the domestic equity boom. Lower deposits, shrinking holdings, falling trading volumes and a negative Kimchi Premium together point to a market where local demand has cooled significantly. Combined with looming tax and transfer-reporting rules, these trends suggest South Korea’s crypto ecosystem may face an extended period of consolidation unless new catalysts revive local appetite.
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