$110B in Crypto Flees South Korea in 2025 as Strict Trading Rules Push Investors Offshore

South Korea saw a massive outflow of crypto in 2025, with more than $110 billion worth of assets moving from local exchanges to overseas platforms. This move was triggered largely by strict domestic trading rules that limit what local exchanges can offer investors. Though crypto adoption in the country remains high, delays in updating regulations and disagreements over stablecoins have pushed many traders to seek crypto investment options abroad.

South Korean Crypto Regulation Slows Down

South Korean investors transferred more than 160 trillion won (about $110 billion) from local crypto exchanges to overseas platforms last year, mainly because of strict rules, according to a joint report by CoinGecko and Tiger Research released on Friday.

Crypto regulations in South Korea have been slow to catch up with the market. In December, the long-awaited Digital Asset Basic Act was postponed after regulators disagreed on how stablecoins should be handled. Meanwhile, the Virtual Asset User Protection Act, which took effect in 2024, does not cover key areas like leverage and derivatives trading.

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The report said, “Domestic CEXs face strict regulations that limit them to spot trading, while foreign CEXs fill this gap with more complex products, including leveraged derivatives.”

The lack of clear rules has raised worries that South Korea’s local crypto exchanges are struggling to compete with overseas platforms that offer a wider range of trading options. The research shows that crypto has become a major investment in South Korea, with around 10 million people investing and local exchanges like Upbit and Bithumb earning revenues worth trillions of won.

Despite this, growth is slowing. Many Korean investors are still trading but are increasingly using foreign platforms such as Binance and Bybit. According to the report, the main reason money is moving overseas is that local exchanges are not allowed to offer products like crypto derivatives to retail traders.

Bithumb Faces Heavy Fine

The South Korean authority is also imposing heavy fines on its local exchanges amid vague regulations. Recently, Bithumb, South Korea’s second-largest cryptocurrency exchange by trading volume, was inspected by the Financial Intelligence Unit (FIU) in March 2025 and has since been hit with a heavy fine for breaking anti-money laundering (AML) rules.

The FIU found several compliance problems during its review, including failures to properly follow AML requirements, weak know-your-customer (KYC) checks, and disparity in reporting suspicious transactions.

Bithumb is expected to face a major penalty, with estimates suggesting it could match or even exceed Upbit’s $25 million fine, given Bithumb’s large market share and an additional review of its order book.

In recent months, South Korea’s Financial Intelligence Unit has stepped up oversight of major exchanges to tighten enforcement of AML and KYC rules. These penalties are part of a round of inspections involving the country’s “Big Five” exchanges: Upbit, Bithumb, Coinone, Korbit, and GOPAX.