South Korean Cryptocurrency Exchanges and Kimchi Coins Facing Competition from Global Rivals – Report

South Koreans are progressively shifting towards foreign crypto exchanges, as trading activity on local platforms declines, according to a recent report.

The South Korean news outlets FN News and News1 indicated that the report was prepared by the nation’s leading financial authorities, the Financial Services Commission and the Financial Supervisory Service.

The regulators analyzed data from 17 crypto exchanges during the first half of 2025, along with eight crypto custody services and wallet providers.

They discovered that the total amount of money and cryptocurrency transferred to international platforms reached 78.9 trillion won ($56.2 billion), reflecting a 4% rise.

Trading volumes on the Bithumb crypto exchange over the past 12 months. (Source: CoinGecko)

South Korean Crypto Exchanges: Missing Out as Market Cools?

The report also indicated that the overall crypto market’s “upward trend” has started to decelerate after a robust conclusion to 2024.

However, not all the findings were negative for the South Korean crypto sector. The number of users increased, reaching 10.77 million.

This marks an 11% rise from the end of the previous year, with some corporate users opening accounts as Seoul eases restrictions. The majority of crypto traders are aged 30-39, comprising 3 million or 27.9% of the total.

Nonetheless, the regulators noted that the size of the crypto-to-fiat market declined by 12%, despite the crypto-to-crypto market surging by 286%.

The domestic crypto market capitalization fell by 14%, while overseas market cap figures only decreased by 7%.

South Korea’s largest crypto exchange Upbit will list FLUID with KRW, BTC, and USDT pairs. Fluid is a lending protocol and decentralized exchange (DEX). Upbit also announced the listing of Infinit (IN) and B3. IN will trade against BTC and USDT, while B3 will trade against USDT.…

— Wu Blockchain (@WuBlockchain) September 24, 2025

Deposits Down

While South Koreans continue to be relatively active on local crypto exchange platforms, they seem less inclined to invest additional fiat funds.

KRW deposits dropped by 42% to 6.2 trillion won ($4.4 billion), with media outlets describing the decline as “a sign of a significant decrease in standby trading funds.”

Traders also experienced reduced profits, with a 17% decline since the latter half of last year.

The top 10 coins per trading volume on the Upbit crypto exchange on September 30, 2025. (Source: CoinGecko)

Geopolitics Giving Traders Cold Feet, Say Regulators

Exchanges also seem to be listing more tokens than ever in an effort to boost trading volumes, with the total number of trading pairs soaring from 181 to 1,538.

The regulators observed that 121 (or 43%) of these coins have a market capitalization of less than KRW 100 million ($71,232).

They emphasized that this “highlights the need to be mindful of market risks such as rapid price fluctuations and a lack of liquidity.”

Customer withdrawals also increased by 5%, reaching the KRW 101.6 trillion ($72.4 billion) mark.

The total value of assets managed by domestic custody and wallet operators plummeted by 50% compared to the end of last year.

User numbers for these services also saw a significant decline of 41%. The financial regulators stated:

“Market growth has slowed and volatility has increased compared to the previous year due to global tariff-related disputes and heightened geopolitical tensions. Overseas corporate crypto buying has driven up Bitcoin prices. But weakening retail investor sentiment has led to mixed results for other tokens.”

South Korea’s internet giant Naver is closing in on a stock swap deal for Upbit operator Dunamu, a move that could shake up the country’s crypto market.#Naver #Upbit https://t.co/rBGGskyLFJ

— Cryptonews.com (@cryptonews) September 25, 2025

Kimchi Coins: South Korean Crypto Exchanges Turn Their Backs?

The report also revealed unfavorable news for so-called “kimchi coins,” low-cap South Korean projects that are generally traded only on domestic exchanges.

The number of kimchi coins available on local exchanges has decreased by 3% over the past six months, despite the recent emergence of a “listings war.”

The media outlets concluded that the decline of kimchi coins reflects recent listing trends. News1 reported:

“Lately, crypto exchanges, both domestic and international, are increasingly looking to list promising overseas coins around the time of token launches. [South Korean exchanges are] listing tokens that are already actively traded on overseas exchanges, rather than opting for relatively high-risk [kimchi coin] listings.”

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