S. Korea: $60B Crypto Outflow to Overseas Wallets in H2 2025

• South Korean cryptocurrency outflows reached approximately $60 billion (90 trillion won) in the second half of 2025, marking a 14% increase from the first half.
• Exchange profitability plummeted by 38% during the same period, despite a growing number of registered users and a surge in total deposits.
• Arbitrage opportunities are cited by regulators as the primary driver for investors transferring assets to overseas platforms and private wallets.

Surge in Overseas Capital Transfers

A recent report from South Korea's Financial Services Commission (FSC) reveals a significant migration of digital assets away from domestic exchanges. In the latter half of 2025, outflows climbed to 90 trillion won (around $60 billion), up from the 78.9 trillion won ($52.5 billion) recorded between January and June.

Regulators indicate that these transfers are largely motivated by arbitrage activities, where traders seek to exploit price differences between local and international markets. This trend highlights a growing preference among South Korean investors for global liquidity and decentralized storage solutions.

Contrasting Trends in User Engagement

While capital is leaving domestic platforms, the local infrastructure continues to see an influx of participants. By the end of 2025, the number of crypto exchange accounts in South Korea reached 11.1 million, a 3% rise from mid-year figures.

Financial commitments from these users also intensified:

• Total deposits on local exchanges rose to 8.1 trillion won ($5.4 billion), a 31% increase from June 2025.
• The number of active exchanges remained steady at 18 operating entities.

Financial Downturn for Local Exchanges

Despite the increase in user numbers and deposits, the financial health of South Korean exchanges took a hit. Operating profits for the 18 domestic exchanges dropped to 380.7 billion won ($253.4 million) in the second half, a sharp decline from the 617.8 billion won ($411.2 million) earned in the first half of the year.

The broader market metrics also showed signs of contraction:

• Total market capitalization fell 8% to 87.2 trillion won (approximately $58 billion) by year-end.
• Daily transaction volumes averaged 5.4 trillion won ($3.6 billion), representing a 15% decrease.

Market Pressures and Economic Outlook

The FSC attributed the decline in profitability and trading volume to the cooling of major cryptocurrency prices toward the end of the year. This correction follows a historic peak in October 2025, when Bitcoin reached an all-time high of approximately $126,080. The market currently faces headwinds from ongoing Middle East geopolitical tensions and a consistently hawkish stance from the U.S. Federal Reserve, leading to a period of relative stability but lower speculative fervor.