Bottom Line Up Front: South Korea is experiencing explosive growth in stablecoin adoption, with $19.5 billion in stablecoin outflows in Q1 2025 alone and new legislation paving the way for domestic Korean won-backed stablecoins.
The market is dominated by major exchanges like Upbit and Bithumb, while fintech giants like KakaoPay are positioning themselves as future stablecoin issuers under President Lee Jae-myung’s pro-crypto administration.
South Korea has emerged as one of Asia’s most dynamic cryptocurrency markets, with stablecoins playing an increasingly central role in digital finance.
As of 2025, over 18 million South Koreans, more than a third of the population, reportedly engage in digital assets, making it one of the world’s most crypto-active nations per capita.
The country’s stablecoin ecosystem has reached unprecedented scale, with stablecoins making up 26.87 trillion won or 47.3% of South Korea’s total cryptocurrency outflows in Q1 2025.
This massive adoption reflects both the practical utility of stablecoins for accessing global crypto markets and the evolving regulatory landscape under the new Lee Jae-myung administration.
Current Stablecoin Landscape in South Korea
Market Scale and Trading Volumes
The South Korean stablecoin market has reached extraordinary proportions. South Korea’s top crypto exchanges transferred around 56.8 trillion won worth of cryptocurrencies overseas during the first quarter of 2025, with stablecoins pegged to the U.S. dollar, such as USDT and USDC, making up 26.87 trillion won or 47.3% of this total.
This represents approximately $19.5 billion in stablecoin outflows during just the first quarter, highlighting the massive scale of adoption. Stablecoin activity has reached KRW 57 trillion (US$42 billion) in the first quarter, consisting of trading volumes for USDT, USDC, and USDS across five major local exchanges.
Dominant Stablecoins and Market Share
The South Korean market is primarily dominated by USD-pegged stablecoins:
Tether (USDT): Tether continues to dominate, accounting for approximately 65% of the global stablecoin market, with a circulation surpassing $90 billion
USD Coin (USDC): Circle’s USDC faced a market share contraction to 23% in 2024, despite a user base expansion into 30 new countries
Other stablecoins: Including BUSD and emerging alternatives
Major Cryptocurrency Exchanges
South Korea’s stablecoin trading is concentrated on several major platforms:
Upbit
Upbit, operated by Dunamu, completely dominates the South Korean market. Upbit holds about 80% of all transactions made in the country, with user deposits totaling 5.3 trillion won ($4.6 billion). The exchange offers:
Low trading fees: 0.05% in Korean Won (KRW) trading pairs, 0.25% for BTC and USDT-based trading pairs
Regulatory compliance: UPbit was the first and the only one to have filed for registration to the Financial Services Commission (FSC) under the toughened conditions
Security certifications: In December 2018, Upbit became the first cryptocurrency exchange in the world to receive certifications from the Korea Internet and Security Agency for Information Security Management System (ISMS)
Bithumb
Bithumb is South Korea’s second-largest exchange, experiencing a resurgence in market share. Bithumb now consistently accounts for about a quarter of the country’s massive crypto trading volumes, up from a single-digit market share in 2023. The exchange is planning to go public during the second half of 2025.
Other Major Exchanges
Coinone: Coinone with 247.6 billion won ($213 million) in user deposits
Korbit: Korbit with 68.5 billion ($58.9 million) in deposits
Gopax: Gopax serving as an additional trading platform
The Financial Supervisory Service (FSS) identified Upbit, Bithumb, Coinone, Korbit, and Gopax as the leading platforms handling these transfers between January and March 2025.
Regulatory Environment and Compliance
Virtual Asset User Protection Act
South Korea’s regulatory framework reached a milestone with the implementation of the Virtual Asset User Protection Act. The Virtual Asset User Protection Act officially took effect on July 19 after spending a year baking in the legislative oven to refine its details.
Key Provisions include:
Digital asset firms must now monitor and report suspicious transactions
Service providers in South Korea are legally obligated to safe keep at least 80% of user digital asset deposits in cold storage, separate from their own funds
Exchanges must delegate the custody of users’ cash deposits to a licensed local bank and maintain digital asset reserves equal in amount and type to customer deposits
Digital asset firms in South Korea need to be insured against liabilities resulting from hacking and other types of “network malfunctioning accidents,” or set aside a reserve fund to cover accidents
Financial Services Commission Guidelines
The Financial Services Commission (FSC) serves as the primary regulator, with authority to supervise VASPs’ acts and inspect their business affairs and financial status. The FSC has established a 24-hour surveillance network with local exchanges that will screen for any suspicious activity in the digital asset market.
Upcoming Digital Asset Basic Act
Under President Lee Jae-myung’s administration, South Korea is fast-tracking stablecoin-friendly legislation. Lee’s ruling Democratic Party proposed the Digital Asset Basic Act on Tuesday, aimed at improving transparency and encouraging crypto sector competition.
Key features include:
Local companies can issue stablecoins with a minimum equity capital of 500 million won ($368,000)
They must also guarantee refunds through reserves and get regulatory approval from the Financial Services Commission
The Virtual Asset Committee will review global trends and regulatory frameworks to impose stricter obligations on stablecoin issuers. This would ensure asset reserves and redemption rights
Compliance Costs and Fees
The new regulatory framework introduces supervisory fees for major exchanges. Upbit, Bithumb, Coinone, and others must pay these fees, totaling approximately 300 million won (around $220,000):
Upbit: Expected to pay around 272 million won ($199,592)
Bithumb: Fee estimated at 21.14 million won ($155,157)
Coinone: Expected to pay approximately 6.03 million won ($4,422)
GOPAX: 830,000 won ($608)
Use Cases and Applications
Cross-Border Payments and Remittances
Stablecoins have become the preferred method for South Koreans accessing international crypto markets. Traders prefer stablecoins because they offer price stability and make it easier for South Korean traders to access foreign crypto markets like Binance and Bybit, where most trading pairs are listed in dollar-based stablecoins rather than Korean won (KRW).
Globally, over 43% of B2B cross-border payments in Southeast Asia now utilize stablecoins, and $18.6 billion in stablecoin remittances were sent to Southeast Asia in Q1 and Q2.
E-commerce and Digital Payments
South Korea’s advanced digital payment infrastructure makes it well-positioned for stablecoin integration. Retail usage jumped 35% as consumers leveraged stablecoins for e-commerce, bypassing traditional banking delays.
DeFi and Investment Applications
Decentralized Finance (DeFi) applications anchored by stablecoins grew their total value locked (TVL) to $120 billion, with stablecoins contributing 40% of this value. South Korean investors are increasingly participating in global DeFi protocols using stablecoins as their primary medium of exchange.
Technology Infrastructure and Adoption
Blockchain Networks
South Korean stablecoin activity primarily occurs on major blockchain networks:
Ethereum: The primary network for USDC and many other stablecoins
Tron: Tron held 26.5% of the stablecoin market share
Layer 2 solutions: Layer-2 solutions like Arbitrum and Optimism reduced stablecoin transaction fees by 35% and increased transaction speed by 50%
Mobile and Digital Wallet Integration
South Korea’s sophisticated mobile payment ecosystem provides ideal infrastructure for stablecoin adoption. Leading fintech companies are positioning themselves as future stablecoin issuers and service providers.
Market Analysis and Key Players
KakaoPay’s Stablecoin Preparations
KakaoPay, a subsidiary of tech giant Kakao, has emerged as the leading candidate for Korean won-backed stablecoin issuance. KakaoPay’s stock rose 208% to 94,700 Korean won ($68.6) from 30,800 won ($22.25) on May 23 following stablecoin-related developments.
Strategic advantages:
The payment platform currently has around $429 million in advance payment balances from users, which is a dominant amount compared to its competitors
As of the first quarter of this year, KakaoPay is known to hold a prepaid electronic payment balance of approximately 591.9 billion won. This figure is more than three times higher than that of competitors such as Naver Pay (157.6 billion won) or Toss (137.5 billion won)
KakaoPay filed applications for six kinds of stablecoin patents — PKRW, KKRW, KRWP, KPKRW, KRWKP, KRWK
Banking Sector Initiatives
Eight top South Korean banks plan to launch a won-pegged stablecoin by 2026 to reduce dollar reliance and expand the country’s digital finance footprint. This initiative represents the first big move from traditional banks to enter the digital asset space.
Circle’s Popularity Among Korean Investors
International stablecoin issuers are also seeing significant Korean investment. Circle Internet Group has become the most heavily bought overseas stock in South Korea, with retail traders investing nearly $450 million. Since its June 5 debut, Circle’s stock has surged over 500%, briefly reaching a market cap of $77 billion.
Challenges and Limitations
Regulatory Uncertainties
Despite progress, challenges remain. Bank of Korea Governor Rhee Chang-yong expressed concerns that creating the stablecoin could make it easier for holders to exchange the currency for the dollar, potentially weakening monetary policy effectiveness.
Market Volatility and Risk Management
The extreme volatility in stablecoin-related stocks demonstrates market uncertainty. Shares of South Korea’s Kakaopay Corp. dropped as much as 17% as trading resumed after a one-day halt, with the exchange suspended the stock twice due to its extreme price volatility, ultimately designating Kakaopay as an “investment risk”.
Capital Outflows
$19.5 billion worth of stablecoins left South Korea in Q1 2025, prompting calls for a won-backed alternative. This massive outflow represents a significant drain on domestic capital and highlights the need for local stablecoin alternatives.
Technical and Infrastructure Challenges
Despite advanced digital infrastructure, challenges include:
Scalability: Managing high transaction volumes during peak trading periods
Interoperability: Ensuring seamless integration across different blockchain networks
Security: Protecting against hacking and fraud in an evolving regulatory environment
Future Outlook and Trends
Government Support and Political Environment
President Lee Jae-myung’s administration provides strong support for stablecoin development. Lee has also promised to launch a stablecoin and legalize crypto funds in the country, while also advocating for South Korea’s national pension fund to invest in Bitcoin and crypto, in addition to pledges to permit the launch of Bitcoin exchange-traded funds (ETFs) in the country.
Projected Market Growth
South Korea is set to unveil the second phase of its cryptocurrency regulatory framework in the latter half of 2025, which will likely accelerate stablecoin adoption and provide clearer guidelines for market participants.
International Alignment
Vice Chairman Kim So-young noted that South Korea must align with global regulatory trends. He cited the European Union’s Virtual Asset Market Act (MiCA) and similar initiatives in Hong Kong and Singapore. This alignment will facilitate international integration and cross-border stablecoin operations.
Central Bank Digital Currency (CBDC) Integration
The Bank of Korea is also part of the Agora Project, a cross-border settlement system with central banks from seven countries, and is considering linking its deposit tokens to a public blockchain, a move that would position its state-backed digital currency alongside private-sector stablecoins operating on open networks.
Tax Implications and Investment Considerations
Crypto Taxation Framework
South Korea will enforce crypto gains tax at 20% starting January 1, 2027. This tax applies only to annual earnings over 50 million won (about $36,000), a major increase from the previous 2.5 million won threshold. This policy provides clarity for long-term stablecoin users and investors.
Investment Demographics
Korean cryptocurrency users span diverse demographics, with almost 60% of respondents said they plan to expand their crypto holdings under Lee’s tenure according to a Korea Chamber of Commerce and Industry survey.
Conclusion
South Korea’s stablecoin ecosystem in 2025 represents one of the world’s most dynamic and rapidly evolving digital asset markets. With $19.5 billion in quarterly stablecoin flows, comprehensive regulatory frameworks, and strong government support, the country is positioned to become a global leader in stablecoin adoption and innovation.
Key takeaways include:
Massive scale: 47.3% of all crypto outflows are stablecoins, representing unprecedented adoption
Regulatory clarity: The Virtual Asset User Protection Act and upcoming Digital Asset Basic Act provide comprehensive frameworks
Market leadership: Companies like KakaoPay and major banks are positioned to launch Korean won-backed stablecoins
Government support: President Lee Jae-myung’s pro-crypto administration is accelerating development
International integration: Alignment with global standards like MiCA ensures cross-border compatibility
The convergence of regulatory clarity, technological infrastructure, and market demand positions South Korea as a critical hub for global stablecoin adoption. As domestic won-backed stablecoins launch in 2025-2026, the market will likely see reduced reliance on USD-pegged alternatives and increased integration with traditional financial services.
For investors, businesses, and policymakers, South Korea’s stablecoin evolution offers valuable insights into how advanced economies can successfully integrate digital assets while maintaining financial stability and regulatory oversight. The country’s approach of balancing innovation with consumer protection sets a precedent for other nations developing their own stablecoin frameworks.
Sources: Financial Services Commission, Bank of Korea, Upbit, Bithumb, KakaoPay, Circle, CoinTelegraph, Bloomberg, and various Korean financial publications.
Last Updated: July 2025