South Korea’s cryptocurrency exchange market is seeing a significant decline, with the number of registered virtual asset service providers (VASPs) dropping by 26% in just one year. According to a Feb. 7 report from the Financial Intelligence Unit (FIU), only 31 exchanges remain operational, down from 42 in 2024.
Why Are Crypto Exchanges Shutting Down?
The FIU report highlights several key challenges that have made it difficult for smaller exchanges to survive:
Lack of fiat trading support – Many delisted platforms were token-only exchanges without access to real-name bank accounts, making it hard to attract users and process transactions in Korean won or U.S. dollars.
Regulatory uncertainty – Changing regulations and compliance challenges forced some exchanges to shut down, while others failed to renew their business registrations in time.
Financial struggles – The report states that over 90% of token-only exchanges were in a state of complete capital erosion last year, making it impossible to continue operations. Exchanges like Qubit and Coinbit eventually shut down due to financial instability.
Major Exchanges That Have Exited
Some well-known exchanges that have exited the South Korean market include:
GDAC
ProBit
Huobi Korea
Bitrade
These closures indicate a growing trend of smaller exchanges struggling to keep up with South Korea’s evolving regulatory environment.
More Exits Expected?
The FIU report warns that the number of crypto exchanges in South Korea could drop even further. Several platforms still in operation have announced plans to exit, while others are shifting their focus to overseas markets to escape the uncertain regulatory climate.
What’s Next for South Korea’s Crypto Industry?
With stricter regulations and banking challenges, only larger, well-regulated exchanges may survive in South Korea’s crypto space. While authorities work on new policies to stabilize the industry, many smaller players are left with no choice but to shut down or relocate.
Will South Korea’s strict regulations drive crypto businesses away, or will they bring more stability to the industry? The coming months will be crucial in shaping the future of crypto exchanges in the country.
