South Korea's Crypto Exodus: Capital, Businesses, and Talent Drain
Original Title: Korea Exodus: The Migration of Capital, Talent, and Companies
Original Authors: Jay Jo, Yoon Lee, Tiger Research
Original Translation: Luffy, Foresight News
Key Points
· South Korea's cryptocurrency trading volume remains high, attracting global attention, but unclear regulation and a lack of guidance hinder industry development.
· The government prohibits opening cryptocurrency exchange real-name accounts for businesses. This restriction, coupled with a vague regulatory framework, has led to the outflow of talent, capital, and companies, weakening the competitiveness of the Web3 ecosystem.
· With the global Web3 industry poised for rapid growth under the Trump administration, South Korea must reform its regulatory policies to ensure the long-term sustainability of the industry.
1. Introduction
The inauguration of the "crypto-friendly president" Trump and the establishment of the Crypto 2.0 Task Force by the U.S. Securities and Exchange Commission (SEC) will accelerate the structural transformation of the global Web3 market. This is a key turning point. Talent, capital, and companies may migrate to countries with sound regulatory frameworks, while the outflow from jurisdictions with regulatory uncertainty will intensify.
2024 Global Fund Flows, Source: Henry & Partners
South Korea is also part of this trend. The Henry & Partners' "2024 Private Wealth Migration Report" shows that South Korea leads in high-net-worth individual migration in Asia. Economic, social, and cultural factors are driving this migration wave. Although not directly related to the Web3 industry, these individuals often serve as canaries in the coal mine, signaling changes in a country's business environment.
Against this backdrop, it is crucial to reexamine South Korea's Web3 industry. This report explores the movement of capital, companies, and talent in the South Korean Web3 market, as well as the key challenges this industry must address.
2. Capital Flight: Offshore Exchanges and Accelerated On-Chain Transfers
The cryptocurrency market in Korea has been rapidly growing. With 15.6 million cryptocurrency investors holding assets worth $73 billion, the daily trading volume of cryptocurrency exchanges now rivals the combined trading volume of the Korea Composite Stock Price Index (KOSPI) and the Korea Securities Dealers Automated Quotations (KOSDAQ). This reflects Korean investors' enthusiasm for crypto assets, driven by low stock market returns and politically related unrest.
However, cryptocurrency outflows have reached concerning levels recently. During times of unrest, service disruptions at major local exchanges undermined people's trust in the stability of these platforms. Meanwhile, foreign exchanges and the diverse investment opportunities offered by decentralized finance (DeFi) have further fueled capital migration.
A survey by the Financial Services Commission of Korea in the first half of 2024 on Virtual Asset Service Providers (VASPs) revealed a 2.3-fold year-on-year increase in funds transferred to overseas VASP wallets. On-chain data confirms this trend, indicating a continuous rise in asset migration from local exchanges to foreign platforms.
In the long run, capital flight may harm Korea's Web3 industry. Transaction fees and service revenues flowing abroad erode the competitiveness of the local ecosystem and diminish investor protection. This has also raised concerns about declining demand for the Korean won and increased volatility in its value.
3. Migration Wave: Relocating Headquarters to Crypto-Friendly Countries
Korea's Web3 companies are accelerating their offshore migration. In 2024, Nexon's blockchain division Nexpace, as well as Klaytn and Line Finschia's Kaia Foundation, moved to Abu Dhabi. WeMade's Wemix relocated to Dubai. The Web3 industry is swiftly shifting to countries with clearer and more favorable regulations.
Korea faces numerous obstacles in promoting Web3-related businesses. Companies are unable to open corporate accounts for cryptocurrency transactions, making the use of crypto assets challenging. This complexity hinders the monetization of crypto assets and creates issues in accounting, taxation, and business operations. For example, in a cryptocurrency payment business, Company A may receive crypto assets from a consumer and need to settle payments with the seller in Korean won. Without a corporate account, cashing out assets becomes nearly impossible.
While Korea has established a regulatory framework, the lack of specific guidance on stablecoins, DeFi, and Web3 gaming restricts industry growth. The country's proactive regulatory approach limits unlicensed activities. In contrast, the global market benefits from regulatory sandboxes supporting various pilot projects.
The Trump administration's stance on cryptocurrency may highlight this difference, and a favorable regulatory environment overseas is accelerating the migration of Web3 companies from Korea.
4. Brain Drain: Weakening the Technical Competitiveness of the Web3 Industry
The migration of Korean Web3 companies abroad may have a negative impact on the domestic Web3 talent pool. As companies move to countries with clearer and more favorable regulations, domestic employment opportunities may decrease, leading to a brain drain. This could hinder the development of the domestic Web3 ecosystem.
Talent migration is not just a problem for the Web3 industry in Korea. Korea is one of the countries with the highest proportion of key talent migrating to the United States, especially those with master's and doctoral degrees. This trend is particularly pronounced in the technology-dependent Web3 industry and could undermine the industry's competitiveness.
In contrast, countries like the United States and the UAE are promoting their Web3 industry development through clear regulations and supportive policies. Korea's unclear regulatory environment is accelerating talent outflow, posing a long-term threat to Korea's technological competitiveness and industry ecosystem.
5. Challenges and Opportunities for the Korean Web3 Market in 2025: Regulatory Reform and Industry Growth
Korea has received global attention due to its cryptocurrency trading volume. However, this trading volume has not promoted industry development, making the country a liquidity conduit for global traders. This structure is not conducive to sustainable growth. Korea urgently needs to make progress in business and technology to strengthen the Web3 ecosystem.
Source: Arthur Hayes
Due to a lack of local innovation and regulatory uncertainty, Korea is on the edge of the global Web3 development. This overreliance on trading volume rather than ecosystem development has led to a "Korea discount" in the international market.
By 2025, with a new government in place, significant changes are expected in the global industry. In these changes, Korea stands at a critical crossroads. Positive steps include allowing cryptocurrency operators to open corporate accounts, establishing stablecoin regulatory guidelines, and advancing cryptocurrency legislation. However, these efforts only scratch the surface.
To make progress, Korea must address risks, analyze global policy shifts, and develop a regulatory framework tailored to domestic conditions. Korea must shift from a focus solely on trading volume to establishing a sustainable innovation hub characterized by outstanding business and technical leadership.
You may also like
Galaxy Deep Research Report: How Hyperliquid's HIP-4 Upgrade Changes the Landscape of Prediction Markets?
ZachXBT: Humanity private key leak and abnormal surge in H token should be viewed separately
On June 9, according to related disclosures, on-chain investigator ZachXBT posted an update on Humanity’s roughly $31 million security incident, saying that after further analyzing fund flows, he currently tends to believe the project team was not involved in an “inside job” or a self-staged attack. According to him, the official explanation about the private key leak was broadly accurate, but before the token unlock, the price of H had been artificially pushed higher, and the hacker later took advantage of that market environment; therefore, the private key leak and the earlier abnormal price pumping should be regarded as two separate and independent events. This reframing has shifted the market’s understanding of the nature of the incident. Earlier discussion around Humanity had focused on whether the team directly participated in the attack or used the security incident to cover up internal operations. ZachXBT’s latest remarks shift the focus from “whether it was self-theft” to “whether there were pre-unlock market structure issues.” He also questioned whether the team may have.
Morning Report | OpenAI has submitted an S-1 registration statement draft to the U.S. SEC; Morpho completes $175 million financing
Morning Report | BitMine increased its holdings by 126,971 ETH last week; trader Eugene announced his exit from the crypto market
Wang Chuan: How can one not feel anxious after the neighbor Old Wang made thirty times profit by investing in storage stocks? (Seven) - A quarter-century cycle
Cryptocurrency CEXs are flocking to sell US stocks, and traditional brokerages are facing an "uninvited guest."
$75 billion in foreign capital has fled, and South Korean retail investors have absorbed it all using leverage
Japan’s Three Megabanks Plan Joint Stablecoin Issuance in Fiscal 2026
MUFG, SMBC, and Mizuho reportedly plan to jointly issue fiat-pegged stablecoins in fiscal 2026, signaling Japan’s growing push into bank-led digital payment infrastructure.
Humanity Discloses H Token Dual-Chain Attack Details, With Losses on Ethereum and BSC Exceeding $36 Million
Humanity said the H token attack across Ethereum and BSC caused more than $36 million in losses after leaked ProxyAdmin keys enabled malicious contract upgrades and token minting.
White House Discusses CLARITY Act With Law Enforcement Ahead of Senate Vote
The White House discussed the CLARITY Act with law enforcement ahead of a Senate vote, focusing on illicit finance risks and developer protections.
Bitcoin Trading Guide 2026: Strategies for Experienced Traders
What Is XAUT and PAXG? Why Tokenized Gold Is Booming in 2026
Will the SpaceX IPO Hurt Bitcoin? Here's What Traders Are Watching
Foreign selling in the South Korean stock market accelerates, with cumulative net sales reportedly reaching $75 billion this year
On June 9, The Kobeissi Letter, citing Goldman Sachs data, reported that global investors are selling South Korean stocks at an unusually rapid pace. In the latest trading session, foreign investors sold about $801 million worth of Kospi constituent stocks again; total foreign outflows last week reached about $10 billion, and the market has been in net foreign selling on nearly every trading day over the past month. According to the data cited in the report, foreign investors have sold about $75 billion worth of South Korean stocks so far this year. Meanwhile, South Korean retail and institutional investors together recorded roughly $69 billion in net buying over the same period, suggesting that the market’s main buying support has come from domestic capital rather than returning overseas funds. The information currently disclosed still mainly comes from The Kobeissi Letter’s retelling and Goldman Sachs data summaries, while public details on the statistical period and the specific definition of “selling” remain relatively limited.
Fortune Warns of Strategy’s Financing Structure Risks as Bitcoin Premium Narrows
Fortune warned that Strategy’s Bitcoin treasury model faces growing financing risks as MSTR’s net asset premium narrows and preferred stock dividend pressure increases.
Ferrari Challenge Le Mans: Carl Moon to Dominate in WEEX Livery
Sahara AI Responds to SAHARA’s Sharp Drop: No Contract or Product Security Issues Found, Internal Investigation Underway
Sahara AI responded to SAHARA’s 60% price drop, saying no token contract or product security issues have been found and an internal investigation is underway.
WEEX Deposit/Withdrawal Dynamic Island: Your Asset Status, Always in Sight
Galaxy Deep Research Report: How Hyperliquid's HIP-4 Upgrade Changes the Landscape of Prediction Markets?
ZachXBT: Humanity private key leak and abnormal surge in H token should be viewed separately
On June 9, according to related disclosures, on-chain investigator ZachXBT posted an update on Humanity’s roughly $31 million security incident, saying that after further analyzing fund flows, he currently tends to believe the project team was not involved in an “inside job” or a self-staged attack. According to him, the official explanation about the private key leak was broadly accurate, but before the token unlock, the price of H had been artificially pushed higher, and the hacker later took advantage of that market environment; therefore, the private key leak and the earlier abnormal price pumping should be regarded as two separate and independent events. This reframing has shifted the market’s understanding of the nature of the incident. Earlier discussion around Humanity had focused on whether the team directly participated in the attack or used the security incident to cover up internal operations. ZachXBT’s latest remarks shift the focus from “whether it was self-theft” to “whether there were pre-unlock market structure issues.” He also questioned whether the team may have.
Morning Report | OpenAI has submitted an S-1 registration statement draft to the U.S. SEC; Morpho completes $175 million financing
Morning Report | BitMine increased its holdings by 126,971 ETH last week; trader Eugene announced his exit from the crypto market
Wang Chuan: How can one not feel anxious after the neighbor Old Wang made thirty times profit by investing in storage stocks? (Seven) - A quarter-century cycle
Cryptocurrency CEXs are flocking to sell US stocks, and traditional brokerages are facing an "uninvited guest."
