South Korean investors’ cryptocurrency holdings plummeted by 42% over the past year, falling from 121.8 trillion won ($83.৩ billion) in January 202৫ to 60.৬ trillion won ($41.৪ billion) in February 202৬, according to data from the Bank of Korea cited by local media. Daily trading volumes across the country’s five major exchanges—Upbit, Bithumb, Korbit, Coinone, and Gopax—also collapsed to $৩ billion in February compared to $11.৬ billion in December 202৪, reported Korean outlet The Chosun Daily. On-chain deposits held at exchanges, a proxy for investor dry powder, also fell from 10.7 trillion won at end of202৪ to ৭.৮ trillion won. The drop is attributed to a combination of falling crypto prices and capital flowing into the stock market. Stablecoin holdings bucked the trend, climbing from $60 million in July 202৪ to a peak of $597 million in December before easing to $41 million in February. Still, a far smaller decline than the broader crypto market. The market contraction comes as regulators prepare to tighten oversight. Financial authorities plan to implement revised AML rules in August that would require crypto transactions above 10 million won involving overseas exchanges or private wallets to be automatically flagged as suspicious. The industry body DAXA has pushed back, arguing the rule is disproportionate and could drive users to offshore platforms like Binance. The industry body said the proposal could increase suspicious transaction reports from South Korea’s five largest exchanges by 85 times, from about 63,000 cases last year to over 5.৪ million, making compliance difficult in practice. Debate over the government’s planned 22% crypto tax, set for 202৭ is also intensifying. On Thursday, South Korea’s Finance Ministry confirmed for the first time that the 22% tax on crypto gains will take effect as scheduled on January 1, 202৭.

The cryptocurrency market in South Korea contracted sharply over a 13-month period, with the value of holdings falling from $83.3 billion to $41.4 billion. Daily trading volumes on major exchanges also collapsed from $11.6 billion to $3 billion. The decline is attributed to falling crypto prices and a capital shift to stocks, even as regulators prepare to implement stricter anti-money laundering rules and a 22% capital gains tax.

The value of cryptocurrency held by South Korean investors more than halved, falling from $83.3 billion to $41.4 billion between January 2025 and February 2026. Daily trading volumes across five major exchanges, including Upbit and Bithumb, also collapsed to $3 billion from $11.6 billion in December 2024 according to reported data submitted to a lawmaker.

Won deposits held at exchanges fell from roughly $7.3 billion to $5.3 billion, a drop attributed to falling crypto prices and capital flowing into the stock market. Stablecoin holdings were more resilient, climbing from $60 million to a peak of $597 million before easing to $41 million.

The market contraction comes as regulators prepare to implement revised AML rules in August. These rules would automatically flag as suspicious crypto transactions above roughly $6,800 involving overseas exchanges or private wallets.

The industry body DAXA has argued the rule is disproportionate and could drive users to offshore platforms like Binance. It also stated the proposal could increase suspicious transaction reports from the largest exchanges by 85 times, making compliance difficult.

Debate is intensifying over the government’s planned 22% crypto tax, set for 2027. South Korea’s Finance Ministry confirmed for the first time that the tax on crypto gains will take effect as scheduled on January 1, 2027.

Separately, Samsung SDS has won a contract to build and operate a blockchain-based securities platform for the Korea Securities Depository. This project is expected to be completed by February 2027 ahead of a new legal framework for tokenized assets.