Crypto Exodus Alert: South Korea’s $60 Billion Flight to Overseas Exchanges

South Korea's Financial Services Commission (FSC) has issued a stark warning over massive capital flight, revealing approximately $60 billion in crypto assets have moved to overseas exchanges amid tightening domestic regulations. The unprecedented outflow signals a major shift in Asian crypto markets as investors seek less restrictive jurisdictions, potentially triggering volatility across major digital assets.

Inside The South Korean Crypto Report

Around $60 billion (₩90 trillion) worth of crypto assets were moved out to foreign exchanges and private wallets during the second half of 2025, a Wednesday report from the country’s top financial regulator revealed. This represents a 14% increase compared to the first quarter of the year, which saw a $52.2 billion (₩78.9 trillion) outflow.

However, the amount subjected to the Travel Rule (outgoing transactions of ₩1 million or more per transaction by a registered business operator) decreased in a 23%, going from ₩20.2 trillion in the first half of the year to ₩15.6 trillion in the second half.

At the same time, wallet and custody platforms saw a modest uptick in user numbers (779, 20 more than those at the end of June 2025), but the value of assets they hold dropped sharply, partly because benchmark prices for several custodied tokens have fallen.

The number of accounts on South Korean crypto exchanges hit 11.1 million, a 3% increase from June 2025, while customer deposits jumped much faster, surging 31% to about $5.4 billion (₩8.1 trillion). But even with such an expansion, exchanges didn’t end up making more money. The 18 platforms still in operation booked roughly $253.4 million (₩380.7 billion) in operating profit for the second half, a 38% drop from the around $411.2 million (₩617.8 billion) they earned in the first six months.

This crypto exodus doesn’t necessarily come as a surprise in the light of the latest moves from South Korean regulators, which clearly paint them in crackdown colors. As covered by Bitcoinist earlier this month, the National Tax Service (NTS) announced they are moving ahead with an AI-driven system to track crypto investment gains as they prepare to start taxing virtual asset profits from January 2027. Authorities have also toughen oversight on major crypto exchanges, with Korean giants such as Korbit, Upbit and most recently Bithumb facing penalties and suspensions due to AML and KYC violations.

But that’s not all: last February, authorities signed a new cooperation agreement between the Financial Intelligence Unit (FIU) and nine major credit card companies, working alongside the customs service, to track and block card-based payments tied to illegal overseas crypto foreign-exchange schemes and cross-border fund outflows. Under the deal, officials will combine card-usage records with immigration data to flag suspicious patterns and cut off channels commonly used to move money into unregistered offshore exchanges. This sits on top of the FIU’s broader 2026 AML agenda, which includes expanding the Travel Rule to smaller transactions and tightening oversight of virtual asset service providers.

All points to Seoul wanting to stem capital flight and money laundering without killing Korea’s position as a major crypto hub, especially as they also move to normalize institutional and corporate participation. Tighter AML and cross‑border controls could reduce some offshore liquidity and arbitrage, but may also push sophisticated capital into more opaque channels or DeFi rails.

Cover image from Perplexity, BTCUSD chart from Tradingview