South Korea's Digital Asset Market: Growth in Users Amidst Declining Metrics

South Korea's digital asset market continues to evolve, reflecting a complex landscape of growth in user numbers alongside declining market activity and profitability. A recent survey undertaken by the Financial Intelligence Unit (FIU) and Financial Supervisory Service (FSS) for the first half of 2025 offers a comprehensive analysis of industry trends, highlighting shifts in user demographics, market structure, asset valuations, and cross-border activity.

User Base Surpasses 10 Million Despite Contraction in Market Metrics

As of June 2025, the digital asset user base in South Korea grew to 10.77 million, registering an 11% increase from 9.7 million at the end of 2024. This milestone underscores rising interest and participation in the sector. However, other critical metrics tell a more subdued story. Domestic market capitalization plummeted by 14%, dropping from ₩110.5 trillion at the close of 2024 to ₩95.1 trillion ($70 billion). Daily trading volumes mirrored this decline, averaging ₩6.4 trillion ($4.7 billion) in early 2025 compared to ₩7.3 trillion in late 2024—a reduction of 12%. Additionally, fiat deposits fell sharply by 43% to ₩6.2 trillion ($4.6 billion), signaling a noteworthy outflow of liquidity in the market.

Shifts in Market Structure and Rising Coin Markets

While the South Korean digital asset market remains heavily centered on won-denominated trading, notable shifts have occurred. Coin-to-coin markets, historically less dominant, showed remarkable growth. Average daily trading volumes in these markets surged by an impressive 286%, climbing to ₩610 million ($450,000) from ₩160 million in late 2024. Coin market capitalization also tripled, reaching ₩4.896 billion.

Despite these gains, coin markets experienced substantial operational challenges, with losses widening to ₩17.4 billion from ₩12.6 billion at the end of last year. This underscores the ongoing difficulties in achieving profitability, even within areas experiencing growth.

Cross-Border Transfers See Continued Expansion

The cross-border flow of digital assets increased during the first half of 2025, with total outflows reaching ₩101.6 trillion—a 5% rise from ₩96.9 trillion in late 2024. Transfers of amounts subjected to Travel Rule compliance (₩1 million or more) grew by 4%, hitting ₩20.2 trillion. Similarly, transactions directed to whitelisted foreign exchanges or personal wallets climbed by 4%, totaling ₩78.9 trillion.

Regulatory authorities attribute this uptick to arbitrage opportunities arising from price differences between domestic and international markets. This trend further highlights the increasingly global nature of South Korea’s digital asset ecosystem.

Decline in Custody and Wallet Services

Service providers operating in custody and wallet solutions experienced severe contractions during the surveyed period. Total assets under custody halved to ₩7 billion, accompanied by a 41% drop in users, reducing the figure to just 759 individuals. Revenues fell by over 50% to ₩4.5 billion, deepening operational losses to ₩11.8 billion. These statistics underline the challenges faced by wallet operators in maintaining profitability amidst shrinking market activity.

Retail Investors Continue to Dominate Market Share

South Korea's digital asset market remains overwhelmingly driven by retail investors, who account for 99.9% of the total user base. Meanwhile, corporate entities are relatively minor players, with only 220 participants. Among retail investors, those in their 30s represented the largest demographic, comprising 28% of users, followed closely by individuals in their 40s (27%), those aged 20 or younger (19%), and people in their 50s (19%). Investors aged 60 and above constituted 7%.

Demographic shifts also became evident with a 1% increase in participation among users in their 50s, while those in their 30s saw a similar decline. Such trends may hint at generational changes in financial approaches toward digital assets.

Smaller Portfolios Dominate as High-Net-Worth Segment Shrinks

Most retail investors maintain modest portfolios; 70% reported holdings valued under ₩500,000. High-net-worth individuals, owning over ₩10 million in digital assets, make up only 10% of the market, with just 1.7% holding portfolios exceeding ₩100 million. Compared to late 2024, investors with over ₩10 million in assets decreased by 2 percentage points, suggesting waning interest or caution among wealthier participants.

Fluctuations in Single-Listed Digital Assets

Digital assets exclusively listed on South Korean exchanges underwent a decline during the first half of 2025, falling by eight to a total of 279. Korea-origin tokens, specifically those issued by domestic entities or traded predominantly on local exchanges, dropped by 11 to an aggregate of 86. Their market capitalization was cut by half, totaling ₩1.3 trillion, constituting just 1% of the overall market.

Despite this contraction, Korea-origin tokens unexpectedly saw a sharp valuation increase, doubling to ₩780 billion. These single-listed assets remain highly concentrated in coin markets, accounting for 96% of the ₩4.9 billion coin market capitalization. Regulators continue to advise caution, pointing to heightened risks of liquidity issues and volatility in price movements.

Parallel Trends in Global Markets

South Korea’s digital asset sector reflects broader global patterns observed in 2025. International market capitalization saw a 7% decline, falling to ₩4,473 trillion ($3.3 trillion) from ₩4,815 trillion at the end of 2024. Despite this contraction, institutional adoption showed steady growth worldwide, driving Bitcoin (BTC) prices up by 16%, from $92,666 to $107,135 during the same timeframe.

South Korean financial regulators noted that global geopolitical tensions and shifts in international trade policies continue to exacerbate market volatility, further complicating the outlook for digital assets. These external factors echo the domestic challenges, shaping a nuanced and interconnected global narrative for the industry.

Conclusion: A Market in Transition

South Korea’s digital asset market demonstrates both resilience and vulnerabilities. The growing user base indicates sustained interest from retail investors, but the contraction in trading volumes, fiat deposits, and profitability signals underlying headwinds. Developments in coin-to-coin markets and cross-border transfers show promise, while concentrated risks in single-listed assets and custody services demand vigilance.

As this dynamic market navigates local and global pressures, regulators and stakeholders must prioritize stability while fostering innovation and expansion. The sector's trajectory in the coming years will hinge on its ability to balance robust participation with mitigating systemic risks.