Operating profits at South Korean crypto exchanges collapsed 78% to 81.6 billion won in the first half of 2026, as trading volume, customer deposits and the value of crypto held domestically all contracted at the same time.
By Yasmin Al-Rashid | October 2, 2026
The Hook: A Market Gone Quiet
South Korea has long been one of the most crypto-hungry markets on earth — the “Kimchi premium” was literally named after it. But new data from the Korea Financial Intelligence Unit (KoFIU), published October 1, paints a picture of a market in retreat. Exchange operating profits fell from 374.8 billion won in the second half of 2025 to just 81.6 billion won in the first half of 2026.
The survey covered 26 registered virtual asset service providers — 17 exchanges and nine custody and wallet businesses — from January 1 through June 30. KoFIU notes the figures come from company submissions and are not official national statistics, but the direction is unmistakable.
On-Chain Evidence: The Numbers Behind the Decline
- Average daily trading volume fell 44% — to 3.1 trillion won from 5.4 trillion won nationwide
- Won deposits dropped 35% — to 5.2 trillion won from 8.1 trillion won
- Domestic crypto value shrank 33% — to 58.9 trillion won by end of June, from 87.2 trillion won at the end of 2025
- Exchange sales fell 41% — while external crypto transfers dropped 41% to 62.8 trillion won
- Custody losses widened — custody and wallet businesses went from a 9.3 billion won loss to an 18.6 billion won loss
Yet the number of tradable accounts actually edged up 0.4% to 11.175 million. More people are registered while trading, deposits and exchange income all fall — a sign of a market waiting on the sidelines rather than one that has emptied out. The most common user age group also shifted, from people in their 30s to those in their 40s.
The Core Conflict: Concentration and the Stock Market Pull
Two structural stories run beneath the headline numbers. First, concentration: won-based exchanges held 58.5 trillion won of the country’s 58.9 trillion won in domestic crypto value — leaving coin-only exchanges with roughly 0.6%. Won platforms generated about 3.1 trillion won in average daily volume; coin-only venues recorded just 380 million won. KoFIU also flagged liquidity risk in exclusive listings: of 234 tokens listed on only one Korean platform, 93 each had market values of 100 million won or less, leaving them exposed to sharp price moves.
Second, competition from stocks. Bank of Korea data cited in May showed South Korean crypto holdings had fallen by more than half, from 121.8 trillion won in January 2025 to 60.6 trillion won by February 2026, with part of the decline linked to stronger demand for domestic equities. A separate first-half review put combined volume on the five biggest Korean exchanges at 366.58 billion USD, down 54.6% year over year, while Upbit’s first-half net profit fell 74% and Bithumb swung to a net loss. Yonhap reported that in July, average daily crypto trading across the five largest platforms equaled just 1.59% of KOSPI turnover.
The weakness was not uninterrupted, though. During a Bitcoin rally in August, Upbit’s daily volume jumped 273% to 1.84 billion USD and Bithumb’s rose 132.9% to roughly 934.9 million USD — proof that Korean traders return fast when prices move.
Market Implications: What the Korea Slowdown Signals
Korean retail flows have historically been a momentum amplifier for crypto — pumping up altcoin rallies and drying up just as fast. A 44% volume decline in one of the world’s top retail markets removes a layer of speculative fuel from global order books, particularly for the mid-cap altcoins Koreans favor. When that capital rotates into local stocks instead, global crypto markets feel it as thinner liquidity and choppier moves.
There is also a regulatory clock ticking: South Korea plans to apply a 22% tax on annual crypto gains above 2.5 million won starting January 1, 2027, with tax authorities preparing implementation guidance for domestic exchanges. Some analysts argue the looming tax gives investors a reason to trade before it arrives; others expect it to further dampen retail participation once it does.
The Verdict: Dormant, Not Dead
The KoFIU data describes a market in hibernation, not in exodus. Accounts grew, staffing stayed stable at 2,021 people, and the August volume spike showed the reflexes are still there. Bitcoin trades around 86,700 USD in the latest CoinGecko snapshot, and if the current rally holds, Korean retail money has historically been quick to chase it back in.
For global investors, watch three indicators: Korean premium spreads on major exchanges, Upbit and Bithumb quarterly earnings, and any pre-tax surge in December ahead of the 2027 levy. When Korean volume reawakens, it tends to arrive suddenly — and it usually shows up first in the altcoins.
The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.
from 374.8 billion won to 81.6 billion in six months. the kimchi premium crowd went quiet real fast
Volume down 44% and the 2027 crypto tax hasn’t even started. When that kicks in deposits are heading lower and half these exchanges consolidate or die
half that volume drop is just the premium compressing. same wallets sitting there, tighter spreads, way less fee churn. the 58.9tn won deposits are the real tell
Only 17 of the 26 VASPs surveyed are actual exchanges. Combined profit of 81.6 billion won across all of them means most are barely breaking even
374.8bn won down to 81.6bn in six months and the 2027 transfer tax hasnt even started. this market is getting cleaned out before the levy lands
massacre for the exchanges sure, but 58.9tn won still sits in domestic wallets. koreans didnt exit, they just stopped churning
Volume down 44 percent and the kimchi premium gone. the arbitrage desks that kept upbit and bithumb fat just moved offshore
the 20 percent windfall tax on exchange revenue started this, now the transfer tax on top. they taxed the golden goose twice and act surprised at 78 percent
the windfall tax passed right at the cycle top, so the revenue base was guaranteed to shrink. whoever built that forecast should frame it as a cautionary tale lol
81.6 billion won is roughly 60 million usd spread across 17 exchanges. upbit printed more than that in fees during a single 2021 mania week
26 VASPs surveyed across 17 exchanges and 9 custody shops. half of those custody businesses were zombies before the volume even dried up