South Korea's cryptocurrency market has emerged from the aftermath of a failed coup into a season of regulatory crackdown. The surprise move in December brought financial regulators back to life, and 2025 kicked off with political chaos, heat from authorities, and a crypto market that had finally been brought to heel — or at least forced to grow up.
The nation closed 2024 in disarray following then-President Yoon Suk Yeol's botched martial law stunt in December. In the aftermath, authorities spent the first quarter drawing lines in the sand as financial regulators began to take a harder stance on cryptocurrency trading.
Regulatory Crackdown
The South Korean government has taken steps to crack down on unregistered exchanges and those operating without licenses. The Financial Intelligence Unit (FIU) compiled a list of illegal foreign exchanges and moved to block access via app stores and ISPs. Google Play removed 17 unlicensed crypto exchange apps in South Korea at the request of regulators.
Additionally, Apple is working with regulators to block unauthorized crypto platforms, while a court temporarily lifted the partial business suspension imposed on crypto exchange Upbit by the FIU. The decision allows Upbit to resume serving new users while the case is under review.
Crypto Crime Force Formalized
South Korean prosecutors formally launched the Virtual Asset Crime Joint Investigation Division, following a year and seven months as a temporary operation. As a non-permanent unit from July 2023, the task force indicted 74 individuals, secured 25 arrests, and recovered over 700 billion won (around $490 million) in illicit gains.
The 30-person task force includes prosecutors, regulatory staff, and specialists. The establishment of this division marks a significant step towards tackling the growing problem of cryptocurrency-related crime in South Korea.
Bitcoin ETF Next on Checklist for South Korean Crypto Space
The Financial Services Commission (FSC) started reviewing legal pathways to allow Bitcoin spot exchange-traded funds (ETFs), citing Japan's evolving regulatory approach as a potential model. This marks a notable shift from South Korea's previous opposition to crypto-based ETFs.
While the review remains in its early stages, regulators are no longer dismissing the possibility outright. The approval of spot Bitcoin ETFs in the US has increased investor demand for similar products in South Korea.
Institutional Expectations Rise
The surge in adoption of cryptocurrency in South Korea has come as trading activity cools. Over 16 million investors, roughly a third of the population, hold crypto accounts, surpassing the 14.1 million domestic stock traders.
However, the crackdown is still gaining steam. Apple followed Google's lead in removing offshore exchange apps from its store, while prosecutors filed yet another round of market manipulation charges. The industry is now contending with tighter rules and rising institutional expectations.
Crypto Campaign Trail Ahead
Crypto played a visible role in Yoon's successful 2022 presidential election campaign and is expected to remain a key issue with voters ahead of an early presidential election in June, following Yoon's impeachment.
One candidate in the upcoming election, former prosecutor Hong Joon-pyo of the People Power Party, recently pledged to overhaul crypto regulations in line with the pro-industry stance of the Trump administration. Despite the pledge, Hong's understanding of the technology came into question as he admitted to not knowing what a central bank digital currency is.
Despite these challenges, South Korea's crypto industry will likely continue to navigate the complex regulatory landscape ahead. With a growing population of investors and increasing institutional expectations, the future of cryptocurrency in South Korea remains uncertain but promising.