South Korea Crypto Assets Market Report: The New Digital Frontier Under Kimchi Premium

1. Introduction

As the global Crypto Assets market stabilizes, South Korea continues to showcase a unique prosperity characterized by active trading and heightened enthusiasm. By the end of 2024, the total market capitalization of the South Korean Crypto Assets market exceeded $74.8 billion, with the five major local exchanges managing a combined $73 billion in assets. The daily trading volume in December surged from $2.38 billion in October to $10.7 billion, surpassing the two major South Korean stock exchanges within just two months.

The South Korean crypto market is expected to grow from $264.3 million in 2024 to $635.4 million in 2030, with a compound annual growth rate of 16.1%. As of April 2025, approximately 25 million people have opened accounts on virtual asset exchanges, equivalent to half of South Korea's total population having invested in the crypto market.

More notably, there is the unique "Kimchi Premium" phenomenon in South Korea. In March 2024, this premium reached 8.5%, and in November, it once escalated to 10%, far exceeding the global average, reflecting the high enthusiasm of local investors and the arbitrage demand under capital controls.

The massive flow of funds, extensive user base, and unique market price differential effects together shape the high activity and extraordinary popularity of the Korean Crypto Assets market, resembling a "golden land" of the digital age in the global crypto landscape.

2. Analysis of the Reasons for the Hot Korean Crypto Market

2.1 Economic Reasons

Investment channels are restricted

Traditional investment channels in South Korea are relatively limited. When real estate and stocks face high prices, declining returns, poor liquidity, and high entry barriers, investors naturally tend to seek alternative assets with higher marginal utility.

In South Korea, traditional investment channels are facing structural difficulties:

• Real Estate: South Korea's economic growth rate in 2023 is only 1.4%, and although it is expected to rebound to 2% in 2024, consumer and investment confidence remains weak. Since 2010, housing prices in the capital area have increased by 47.1%, with the five major metropolitan cities seeing a rise of 76.5%. In 2024, the transaction volume in the capital area is expected to decrease by 7.5% year-on-year, with Seoul experiencing a decline for three consecutive months from August to October.

• Stock Market: The KOSPI fell by 8.03% in 2024, far below the Shanghai Composite Index's +12.68% and the Nikkei 225's +17.06% during the same period. The return gap compared to the S&P 500 Index reached 32.3%, the highest since 2000.

Against the backdrop of continued poor performance in traditional investments, some Korean investors are beginning to turn their attention to the more volatile and higher potential return realm of Crypto Assets.

Low interest rates and loose monetary environment

The long-term accommodative monetary policy and low interest rate environment have prompted South Korean investors to accelerate their shift towards high-yield assets. Since the pandemic, the Bank of Korea's benchmark interest rate has been maintained at 3.5% for an extended period, significantly lower than the Federal Reserve's rate of over 5%, leading to a decline in the attractiveness of savings and making real returns difficult to withstand inflationary pressures.

Against this backdrop, the demand for high-volatility, high-return assets has increased. Crypto Assets have become the preferred allocation direction for risk-tolerant investors, especially among the younger population, due to their strong return potential, low entry barriers, and high liquidity.

Expectation of Korean Won Depreciation

In recent years, the Korean won has continued to depreciate, with the exchange rate against the US dollar briefly falling to 1473.75 won in April 2025, the lowest level since 2009. The depreciation of the won, combined with high oil prices and rising supply chain costs, has increased domestic inflationary pressure. In March 2025, South Korea's CPI rose 2.1% year-on-year, harming residents' actual purchasing power and putting pressure on economic recovery.

Crypto Assets, priced in US dollars, globally circulated, and decentralized, have become a new path for investors to hedge against domestic currency depreciation and pursue asset preservation.

2.2 Social Psychological Reasons

According to the theory proposed by economist Samuelson, "Happiness = Utility / Desire", when desire rises rapidly while the acquisition of utility is limited, individual happiness will significantly decline.

• The long-term solidification of social classes, high competitive pressure, and economic fluctuations have intensified wealth anxiety among young people, making "money" the dominant life goal. According to data from the Bank of Korea in 2024, 72.4% of respondents believe that "economic conditions" are the main determining factor of happiness.
• The Statistics Korea report in early 2025 indicated that 69.1% of the population aged 20-39 listed "financial freedom" as their primary life goal.
• Under the traditional paths such as employment, savings, and stock market returns failing to meet wealth desires, Crypto Assets are seen by young people as an investment choice to pursue high utility and break through class limitations.

At the same time, the consumption concepts of the young population in South Korea are undergoing profound changes, further influencing their investment preferences:

• The "YOLO (You Only Live Once)" group emphasizes enjoying life in the moment and a high risk tolerance;
• The "YONO (You Only Need One)" group tends to consume rationally and values asset accumulation.

Despite differing consumption attitudes, both converge on the investment motivation for high-yield assets, and Crypto Assets perfectly meet their common psychology of pursuing returns and wealth growth.

2.3 Why is South Korea so prosperous, and not Japan?

2.3.1 Economic Perspective: The Korean Won is relatively weak, requiring alternative paths.

• Japanese Yen: Considered a safe-haven currency internationally due to its extremely low interest rates and massive foreign exchange reserves. Even when the exchange rate of the Yen fluctuates, its financing advantages remain unchanged.
• Korean Won: The market size is small, liquidity is weak, and it fluctuates in line with global risk sentiment. Additionally, its status as foreign exchange reserves is relatively weak, with some capital controls, making it difficult to assume the same position as the Japanese Yen.

Therefore, compared to Japanese investors, South Korean investors lack long-term trust and security in domestic currency assets, tending to seek non-local currency-denominated assets that can circulate globally, and crypto assets are highly aligned with investor needs.

2.3.2 Economic Perspective: Traditional investment returns are lower, seeking higher returns.

• Real Estate: South Korea's real estate investment accounts for over 50%, significantly higher than Japan's 37%, but the overall actual return rate is lower, and there are more restrictions on real estate investment.
• Stock Market: In recent years, the South Korean stock market has been relatively weak compared to Japan. This is especially evident in 2024.

2.3.3 Policy Perspective: South Korea has an open attitude, while Japan is conservative and restrictive.

South Korea has a relatively open attitude towards Crypto Assets, while Japan adopts a more conservative and restrictive policy.

2.3.4 Cultural Perspective: South Korea pursues quick wealth, while Japan focuses on steady accumulation.

• Japan: Places greater emphasis on "small contributions lead to more", and "prudent financial management". Emphasizes values of restraint, accumulation, and patience.
• South Korea: Emphasizing "quick success" and "following trends", people are more inclined to pursue short-term high returns, eager to achieve rapid wealth through stock trading, coin trading, real estate, and other means.

2.4 Insights from the Korean Model for the Global Crypto Market

As the landscape of the Asian crypto market changes, the "middle way" demonstrated by South Korea is highlighting its strategic value. Compared to Singapore's recent tightening of regulations on local projects providing services overseas, as well as the slow pace of approvals and taxation in Hong Kong and Japan, South Korea's institutional flexibility, cultural fit, and capital environment are creating new comparative advantages.

For the global market, the key insight from the Korean model is that regulation can be encouraging guidance rather than comprehensive relaxation; user education and cultural adaptation are the underlying logic of all growth; infrastructure sovereignty and international collaboration are not in conflict, but rather a dual driving force for future development.

In the new policy game in Asia, South Korea has not only become an active consumer market but also has the potential to become a regional hub for technology and asset management. If the global Crypto Assets industry wants to localize and take root in the future, South Korea provides a practical model worth referencing.

3. Analysis of Korean Market Users

3.1 User Profile of the Korean Market

Market and Account Types: Overall Rapid Growth

• Growth in the number of investors: As of January 2025, the number of registered individual investors in South Korea's top five exchanges has reached approximately 25.25 million, an increase of about 37.6% compared to the same period three years ago.
• Actual number of users growth: As of February 2025, the total number of accounts in South Korean Crypto Assets exchanges has exceeded 25 million, of which approximately 17.09 million accounts are actual active investors.

Age and Gender: Significant growth in young users, increase in female participation

• The Korean Crypto Assets market is primarily composed of users aged 30 to over 40, accounting for more than 50% in total.
• The proportion of young users under 20 years old reaches 18.6%.
• As age increases, the gap between women and men in the crypto market gradually narrows, especially with the rising participation of middle-aged and older women.

Age and Capital Scale: Intergenerational Stratification is Obvious

• The Korean Crypto Assets market is dominated by small investors, with most users holding less than 500,000 won, particularly concentrated among the younger demographic.
• Users holding assets of over 10 million won account for 10%, a slight decrease of 0.2 percentage points compared to the end of 2023.
• Although investors over 60 years old account for a small proportion, the total amount of virtual assets they hold reaches 13.3795 trillion won.
• The South Korean Crypto Assets market exhibits a "dual structure" characteristic—young people are the main contributors to user numbers and activity levels, while the middle-aged and elderly groups hold more assets and trading volume.

3.2 User Habits Phenomenon

3.2.1 User Asset Preferences

• The market value of virtual assets in South Korea has reached $21.2 billion, an increase of 46% compared to last year.
• Bitcoin remains the dominant asset in the South Korean market, accounting for as much as 37.2% of the total trading volume.
• XRP has a market capitalization of $588 million in the South Korean market, ranking second, indicating its high popularity among Korean users.
• The top ten virtual assets in the Korean market are basically consistent with the top ten globally, reflecting the Korean market's preference for mainstream assets.

3.2.2 Overall User Behavior Characteristics

In the South Korean Crypto Assets market, user behavior shows a highly centralized characteristic:

• Preference for trading platforms is concentrated: UPbit occupies about 70% to 80% of the domestic market share.
• Trading configuration preferences are concentrated: Users are more enthusiastic about trading platforms' exclusive listings of "Kimchi Premium coin," while the trading activity for mainstream assets is relatively low.

3.2.3 On-chain Usage

The Korean market's dependence on centralized exchanges (CEX) is still significantly higher than the global average. Approximately 68.9% of the trading volume is still concentrated on centralized platforms, while the usage rates of decentralized exchanges (DEX) and DeFi protocols are relatively low.

However, South Korea's on-chain ecosystem is rapidly awakening. The proportion of DEX trading rose from 8.57% to nearly 17% in 2024, and by early 2025, DEX trading accounted for 16.7%.

4. Overview of the South Korean Crypto Market Exchanges

The South Korean Crypto Assets trading market shows a highly concentrated pattern, mainly dominated by five major spot exchanges: UPbit, Bithumb, Coinone, Korbit, and Gopax.

4.1 UPbit

Operated by Dunamu and supported by Kakao. It is one of the first platforms in South Korea to obtain a Virtual Asset Service Provider (VASP) license. Since its establishment in 2017, it has rapidly developed into a leader in the South Korean market, supporting