South Korea's licensed cryptocurrency exchanges lost a third of their market value and 35% of their won-denominated deposits in the first half of 2026, according to a regulatory survey that points to an exodus of traders toward offshore platforms offering products unavailable at home.

The findings come from a review of 26 licensed virtual asset service providers conducted by the Korea Financial Intelligence Unit and the Financial Supervisory Service, covering January through June.

Those deposits matter beyond the headline: they are the pool of won traders use to buy tokens — and, as detailed below, to purchase Tether for transfer to offshore venues.

Steep declines across the board

The combined market capitalization of Korea's exchanges fell 33%, a drop of 28.3 trillion won, while won-denominated deposits sank 35%, or 2.9 trillion won. Average daily trading volume was down 44%.

By the end of June, market value had fallen to about 58.9 trillion won (roughly $42 billion), down from 87.2 trillion won six months earlier. Daily turnover dropped to 3.1 trillion won from 5.4 trillion, and customer deposits in won fell to 5.2 trillion from 8.1 trillion. Exchange operating income collapsed 78% to 81.6 billion won from 374.8 billion won a year earlier.

Regulators tied much of the decline to Bitcoin, which the FSS noted had fallen 33% to $58,559 by the end of June. The survey also found that 93 of the 234 tokens listed on a single exchange were valued at 100 million won or less by appraisal — a figure the regulator said should give users pause.

Offshore platforms draw traders with products banned at home

The deposit decline reflects overseas platforms luring Korean traders with products the domestic market does not permit. Licensed local exchanges list spot tokens only, so leveraged derivatives have no onshore equivalent. One example is a perpetual futures contract — a derivative with no expiry date — built on KORU, a U.S.-listed exchange-traded fund that returns three times the daily move of Korea's Kospi index.

Binance launched a KORU product with 20x leverage on June 22 and raised the cap to 50x four days later. Because the fund itself already tracks three times the index's daily price swings, traders could end up exposed to as much as 150 times that loss or gain.

Earlier in June, Binance had also offered 20x products tied to Samsung Electronics, SK hynix and Hyundai Motor, while Bybit, OKX and KuCoin launched their own KORU contracts. The hazards were illustrated on June 23, when the Kospi fell 9.99% and KORU dropped 35.7% in a single session to $700.01.

These platforms operate outside the reach of South Korea's investor protections. Traders typically access them buying Tether with won on a licensed local exchange and then transferring the stablecoin overseas.

700 trillion won traced out of the country

Tiger Research, working with blockchain analytics firm Chainalysis, tracked roughly 120,000 Korea-linked wallets and estimated that about 700 trillion won, or $530 billion, left domestic exchanges between 2021 and 2026. Outflows reached around $120 billion in 2025 and are projected near $52 billion this year, the firm said.

Wallets owned by South Koreans placed roughly $1.64 billion into three decentralized derivatives platforms — Hyperliquid, Lighter and Variational — between January 2024 and July 2026. In July alone, about 1,200 of those wallets traded $4.97 billion in notional volume on Hyperliquid, showing that offshore derivatives activity continued past the survey's June cutoff. Their most-traded instruments included contracts linked to SK Hynix, Samsung Electronics and crude oil, all of which can be traded with leverage and around the clock, even when regular markets are closed.

Shinhan Securities analyst Park Sung-jae said in July, when domestic trading had fallen to about 1.6% of Kospi turnover, that investors are leaving because of the diverse investment methods foreign crypto exchanges offer. Those exchanges provide futures and leverage, he noted, while spot trading is "the only de facto trading option" in South Korea.

Tax plan adds to offshore pressure

Separately, South Korea plans to apply a 22% levy on annual crypto gains above a 2.5 million won deduction starting January 1, 2027, with the first returns due in May 2028. Petitioners warned the rule would push even more traders offshore and gathered the 50,000 signatures needed to force a National Assembly review. Lawmakers from both the ruling and opposition parties have floated delays as far out as 2030.

Finance Minister Lee Hyoung-il has backed the tax, arguing that 85% of investors hold crypto worth less than 5 million won and therefore will not be greatly affected even after the deduction.

The National Assembly review sets up the next policy checkpoint, weighing petitioners' warnings of further offshore drift against the ministry's argument that most investors will be largely unaffected after the deduction.