South Korea's Crypto Exodus: The Outflow of Capital, Companies, and Talent
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South Korea's Crypto Exodus: The Outflow of Capital, Companies, and Talent
As the global Web3 industry is poised for rapid growth under the Trump administration, South Korea must reform its regulatory policies to ensure long-term sustainability of the sector.
Navigating Web3 tides with focused insightsAuthors: Jay Jo, Yoon Lee, Tiger Research
Translation: Luffy, Foresight News
Key Takeaways
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South Korea's cryptocurrency trading volume remains high, attracting global attention. However, unclear regulations and lack of guidelines are hindering industry development.
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The government prohibits businesses from opening real-name cryptocurrency trading accounts. This restriction, combined with ambiguous regulatory frameworks, has led to an outflow of talent, capital, and companies, weakening the competitiveness of the Web3 ecosystem.
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As the global Web3 industry is poised for rapid growth under a Trump administration, South Korea must reform its regulatory policies to ensure long-term sustainability in this sector.
1. Introduction
The inauguration of Donald Trump—often dubbed the "crypto-friendly president"—and the establishment of the U.S. Securities and Exchange Commission’s (SEC) Crypto Special Task Force (Crypto 2.0 TF), will accelerate structural changes in the global Web3 market. This marks a critical turning point. Talent, capital, and enterprises may migrate to countries with robust regulatory frameworks, while outflows from jurisdictions with regulatory uncertainty will intensify.
Private capital inflows and outflows by country in 2024. Source: Henry & Partners
South Korea is also caught in this trend. According to Henry & Partners’ *2024 Private Wealth Migration Report*, South Korea leads Asia in high-net-worth individual emigration. Economic, social, and cultural factors are driving this migration wave. While not directly linked to the Web3 industry, these individuals often act like canaries in a coal mine, signaling shifts in a nation’s business environment.
Against this backdrop, it is crucial to re-examine South Korea’s Web3 landscape. This report explores capital, corporate, and talent flows within South Korea’s Web3 market and the key challenges the industry must confront.
2. Capital Outflow: Offshore Exchanges and Accelerating On-Chain Transfers
South Korea’s cryptocurrency market has developed rapidly, with 15.6 million crypto investors holding $73 billion in assets. Daily trading volumes on crypto exchanges now rival the combined daily volumes of the Korea Composite Stock Price Index (KOSPI) and the Korean Securities Dealers Automated Quotations (KOSDAQ). This reflects strong investor enthusiasm for digital assets, driven by low stock market returns and political instability related to martial law declarations.
However, recent outflows of crypto assets have reached concerning levels. During periods of martial law, local major exchanges experienced service disruptions, undermining confidence in platform stability. Meanwhile, diversified investment opportunities offered by foreign exchanges and decentralized finance (DeFi) have further accelerated capital migration.
A 2024 mid-year survey by South Korea’s Financial Services Commission (FSC) of Virtual Asset Service Providers (VASPs) revealed that fund transfers to overseas VASP wallets surged 2.3 times year-on-year. On-chain data confirms this trend, showing sustained increases in asset migrations from domestic exchanges to foreign platforms.
In the long term, such capital outflows could harm South Korea’s Web3 industry. Trading fees and service revenues flow abroad, weakening the competitiveness of the domestic ecosystem and diminishing investor protection. It also raises concerns about declining demand for the Korean won and increased currency volatility.
3. Exodus Wave: Relocating Headquarters to Crypto-Friendly Jurisdictions
South Korean Web3 companies are accelerating their offshore relocation. In 2024, Nexon’s blockchain division Nexpace, along with the Kaia Foundation behind Klaytn and Line Finschia, moved to Abu Dhabi. WeMade’s Wemix relocated to Dubai. The Web3 industry is rapidly shifting toward countries with clearer and more favorable regulatory environments.
South Korea faces numerous obstacles in advancing Web3-related businesses. Companies cannot open corporate bank accounts for cryptocurrency trading, making the use of crypto assets extremely difficult. This creates complications in converting crypto into fiat, leading to accounting, tax, and operational challenges. For example, in a crypto payment business, Company A may receive crypto from consumers but need to settle payments in Korean won with suppliers. Without a corporate account, cashing out assets becomes nearly impossible.
Although South Korea has established a regulatory framework, the absence of specific guidelines for stablecoins, DeFi, and Web3 gaming limits industry growth. The country’s restrictive regulatory approach inhibits any business activity not explicitly permitted. In contrast, global markets benefit from regulatory sandboxes that support various pilot projects.
The Trump administration’s pro-crypto stance may highlight these disparities, as favorable overseas regulatory conditions accelerate the departure of Web3 firms from South Korea.
4. Brain Drain: Eroding Technical Competitiveness in the Web3 Sector
The relocation of South Korean Web3 companies abroad could negatively impact the domestic Web3 talent pool. As firms move to countries with clearer and more supportive regulations, domestic job opportunities may shrink, triggering a brain drain. This could hinder the development of the domestic Web3 ecosystem.
Talent outflows are not just a Web3-specific issue for South Korea. The country ranks among the highest in terms of skilled professionals migrating to the United States, particularly those holding master’s and doctoral degrees. This trend is especially pronounced in tech-dependent sectors like Web3 and could undermine the industry’s competitiveness.
In contrast, countries like the United States and the UAE are promoting Web3 industry growth through clear regulations and supportive policies. South Korea’s regulatory ambiguity accelerates talent loss, posing a long-term threat to its technological competitiveness and industrial ecosystem.
5. Challenges and Opportunities for South Korea’s Web3 Market in 2025: Regulatory Reform and Industry Growth
South Korea has drawn global attention due to its high cryptocurrency trading volume. Yet, this volume has not translated into meaningful industry development, positioning the country largely as a liquidity conduit for global traders. Such a structure is unsustainable. South Korea urgently needs progress in both business innovation and technology to strengthen its Web3 ecosystem.
Source: Arthur Hayes
Due to insufficient domestic innovation and regulatory uncertainty, South Korea remains on the periphery of global Web3 development. Overreliance on trading volume rather than ecosystem building has resulted in a “Korea discount” in international markets.
In 2025, with a new government expected to take office, significant shifts are anticipated in the global industry landscape. Amid these changes, South Korea stands at a critical crossroads. Positive steps include allowing crypto operators to open corporate accounts, establishing stablecoin regulations, and advancing crypto legislation. However, these measures only scratch the surface.
To make real progress, South Korea must embrace risk assessment, analyze global policy shifts, and develop a tailored regulatory framework suited to its domestic context. The country must shift focus away from trading volume alone and instead build a sustainable innovation hub defined by business excellence and technological leadership.
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