South Korea has cemented its position as one of the world’s most dynamic cryptocurrency markets, with new data revealing domestic crypto holdings have surged past $73.4 billion. According to the Bank of Korea (BOK), the value of cryptocurrencies held by South Korean investors surpassed 104.1 trillion won in December 2024, marking the first time the threshold has been crossed and setting a historic national record.

This represents a 2.2x increase from October 2024, when holdings were estimated at 58 trillion won. The BOK’s recent Payment and Settlement Report attributes this rapid growth to a mix of favorable global political developments, domestic regulatory advancements, and rising investor confidence.

Trump’s Re-election fuels Market Optimism

One of the key global drivers behind the recent surge in South Korea’s crypto activity is Donald Trump’s re-election as U.S. President in late 2024. The former and now returning president is widely seen as more crypto-friendly than his predecessors, which prompted a renewed wave of optimism across global markets—including in South Korea.

During this period of political momentum, daily trading volumes on South Korean exchanges multiplied fivefold, hitting 17.2 trillion won. In tandem, investor deposits more than doubled, reflecting widespread confidence in the market’s direction.

Regulatory Changes Strengthen Investor Protection

While global politics played a crucial role, the domestic landscape also fueled this crypto boom. In July 2024, South Korea enacted the Virtual Asset User Protection Act, a major step forward in regulating its growing digital asset sector.

The law introduced enhanced safeguards against fraud, market manipulation, and improved protection mechanisms for individual investors—factors that have helped draw more retail and institutional participants into the market.

However, ongoing political unrest in the country has temporarily slowed down further regulatory reform. In December, President Yoon Suk-yeol’s controversial martial law attempt shook the political establishment, placing additional crypto legislation on hold. Despite the disruption, lawmakers remain committed to resuming regulatory advancements after the June 2025 presidential election.

BOK Warns Against Stablecoin Risks

While welcoming the sector’s growth, the Bank of Korea also expressed concerns, particularly regarding the emergence of stablecoins. In its latest report, the BOK noted that stablecoins—cryptocurrencies pegged to fiat currencies—could pose significant risks to monetary policy, financial stability, and payment systems.

“Unlike general virtual assets, stablecoins have the inherent characteristics of a means of payment,” the report said. “If they are widely issued and circulated and used as a means of payment to replace legal tender, they may have negative effects on the implementation of central bank policies.”

The BOK is now actively reviewing a dedicated regulatory framework for stablecoins, which it plans to roll out by the end of 2025.

Crypto Exchange Crackdown and Market Resilience

South Korea’s regulators have also taken action to clean up the exchange ecosystem. In late 2024, 14 cryptocurrency exchanges, including KuCoin and MEXC, were banned for failing to comply with registration requirements under the Financial Services Commission (FSC).

Despite this enforcement, market activity has remained strong, and investor sentiment appears largely undeterred. South Korea’s growing influence in the global crypto economy is evident in its increased participation in global trading and continued development of Web3 infrastructure.

Outlook for 2025: Bullish with a Watchful Eye

As 2025 progresses, South Korea’s crypto market is poised to remain a vital player in the global digital asset space. While political uncertainty and regulatory bottlenecks may present short-term hurdles, the country’s commitment to investor protection, coupled with rising global demand, suggests a bullish long-term outlook.

However, the Bank of Korea’s warnings on stablecoins serve as a critical reminder: unchecked growth must be balanced with stability, oversight, and policy alignment to ensure the country’s crypto future remains secure and sustainable.