How South Korean investors trade cryptocurrencies on international platforms: Regulatory challenges behind the $11 billion capital outflow

In 2025, over 11 billion USD (more than 160 trillion won) of cryptocurrency flowed out of South Korea to overseas platforms. This phenomenon is not merely capital movement but highlights the fundamental differences in domestic and international trading environments. The issue of how South Korean investors trade cryptocurrencies has now gone beyond domestic regulations and is forcing them to operate in the international market.

According to a joint survey conducted by CoinGecko and Tiger Research, despite South Korea being one of the most active digital asset markets in Asia, its investors are accelerating their departure from domestic platforms. While major exchanges like UPbit and Bithumb continue to generate substantial trading volumes, some of the country’s 10 million cryptocurrency investors are switching to overseas platforms such as Binance and Bybit.

Why Are South Korean Traders Turning to Overseas Platforms?

South Korea’s regulatory environment is hampering the growth of the cryptocurrency market. The “Virtual Asset User Protection Act” enacted in 2024 did not establish a solid foundation for spot trading, making it insufficient to support advanced investment strategies such as leverage trading and derivatives trading.

Subsequently, in December last year, the long-awaited “Digital Asset Basic Act (DABA)” was proposed, but due to conflicts among regulatory authorities over the issuance of stablecoins, a complete framework has yet to be established. This regulatory gap is a major factor compelling domestic investors to engage in trading activities abroad.

The Decisive Difference Between Spot Trading and Derivatives: Domestic vs. International Trading Methods

There is a significant difference in the financial products offered between domestic exchanges and international platforms. Domestic centralized exchanges (CEXs) are limited to spot trading due to strict regulations. In contrast, overseas CEXs offer more complex and advanced trading products, including leveraged derivatives.

“Due to strict regulations faced by domestic CEXs, they are limited to spot trading, whereas overseas CEXs fill this niche by offering more complex products, including leveraged derivatives,” according to reports.

This disparity in trading opportunities is the main reason pushing South Korean investors toward the international market.

Market Changes Caused by Regulatory Gaps

According to Aju Press, last November, the number of South Korean investors holding large amounts of funds in overseas cryptocurrency exchanges more than doubled within a year. This reflects the recovery of the global market and suggests growing dissatisfaction among investors with South Korea’s restrictive trading environment.

As the size of the cryptocurrency market expands and its position as an investment asset is established, deficiencies in domestic regulations directly lead to decreased competitiveness. Despite having a base of 10 million investors, many are seeking optimal trading environments abroad, posing a serious challenge for South Korean regulatory authorities.

While domestic CEXs remain profitable, the outflow of investors seeking more advanced trading strategies is expected to continue. Unless the regulatory environment rapidly adapts to the needs of an increasingly internationalized market, the trend of capital outflow will persist.