The cryptocurrency exchange market in Korea has been shrinking significantly, with the number of registered crypto trading companies falling by more than 26% over the past year.
As of February 2025, only 31 registered crypto exchanges can be operated in Korea. This was a sharp decline from 42 exchanges in early 2024.
On February 7, 2025, local media reports said, “The number of domestic virtual asset service providers (VASPs) has decreased compared to last year.”
As highlighted in a recent report by the Financial Intelligence Unit (FIU), the decline identifies the challenges posed by strict regulatory requirements.
Furthermore, the lack of regulatory clarity has forced fewer exchanges out of the market.
Comparison of crypto taxes: US, India, Korea
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GDAC, Probit, Huobi Korea and Bitrade are closed
“Due to administrative difficulties last year, coin market exchanges are going out of business one after another,” the report said.
Notable closures include GDAC, Probit, Huobi Korea and Bitrade.
Most of these listed companies were “token-only” platforms that lacked the South Korean winner and Fiat currency trading options such as the US dollar. Without a realistic bank account, a regulatory requirement for FIAT trading, these platforms have struggled to attract users and keep them operational.
The FIU report revealed that over 90% of these token-only exchanges face “complete capital erosion” last year. This led to widespread closures. Exchanges like Qubit and Coinbit are one of those closed. This was due to financial bankruptcy and failure to renew the registration.
The regulatory framework for cryptocurrency has evolved rapidly over the past few years. Though it aims to protect investors and increase market integrity, these regulations create major barriers to entry for small players.
Recently, Upbit, Korea's largest cryptocurrency exchange, has been under intense regulations. After being accused of violating over 700,000 people, Upbit is facing a halt after knowing its customer (KYC) and anti-money laundering (AML) obligations.
Exploration: Korea launches a platform for seizing digital assets from tax evaders
Korea's new platform designed to seize digital assets from tax evaders
According to a report by local South Korean media dated February 3, 2025, Gwachon City announced its use of IT solutions, seized and liquidated crypto assets from Tax Evaders.
Regulators are using the platform to identify crypto wallets belonging to city escapees. Authorities have identified 361 high-income citizens who have not paid taxes on cryptocurrency benefits so far.
Authorities believe that identified netizens are hiding their wealth in crypto assets to avoid paying heavy taxes. The average amount is 18.8 billion wins, and the non-payment tax is calculated to exceed 3 million.
In Korea, there are still contracts to reach regarding crypto tax.
Exploration: KYC, South Korea's Upbit is facing scrutiny of regulations after AML violations
This week's Crypto Asia: Post in the Korean crypto exchange market has shrunk by 26%.
