South Korea's Crypto Exchange Landscape Shrinks by 26% This Week
A stark decline in the number of operational crypto exchanges in South Korea highlights the impact of strict regulatory policies on the market.
South Korea’s cryptocurrency exchange market is experiencing a notable contraction, with the number of registered crypto trading firms declining by over 26% in the past year.
As of February 2025, only 31 registered crypto exchanges are operational in South Korea, a significant drop from 42 in early 2024. According to local media reports from February 7, 2025, the number of domestic virtual asset service providers (VASPs) has decreased from last year.
This decline, outlined in a recent report by the Financial Intelligence Unit (FIU), highlights the challenges imposed by stringent regulatory requirements. Additionally, the lack of regulatory clarity has led to the exit of smaller exchanges.
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Notable Exchange Closures
The report states that “Coin Market exchanges have been going out of business one after another due to management difficulties since last year,” yet they remained on the list of operational businesses as their licenses were maintained temporarily.
Significant closures include GDAC, ProBit, Huobi Korea, and Bitrade. Many of these delisted exchanges operated as “token-only” platforms and did not have fiat currency trading options, such as the Korean won or US dollar. Without real-name bank accounts—a regulatory requirement for fiat transactions—these platforms struggled to draw users and sustain operations.
The FIU report indicates that over 90% of these token-only exchanges faced “complete capital erosion” last year, leading to widespread closures. Exchanges like Qubit and Coinbit also shut down due to financial insolvency and failure to renew their registrations.
South Korea’s regulatory framework for cryptocurrencies has rapidly evolved in recent years. While aimed at enhancing investor protection and market integrity, these regulations have inadvertently created substantial entry barriers for smaller players.
Recently, South Korea’s largest cryptocurrency exchange, Upbit, has come under intense regulatory scrutiny, facing accusations of violating over 700,000 Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations.
New Measures Against Tax Evasion
According to local media reports dated February 3, 2025, Gwacheon city announced plans to employ IT solutions to seize and liquidate crypto assets from tax evaders. Regulators aim to identify crypto wallets belonging to tax evaders, having already identified 361 high-income citizens who have failed to pay taxes on their crypto gains. Authorities suspect that these individuals are hiding wealth in crypto assets to evade heavy taxes, with the non-paid taxes exceeding 3 million won.
