South Korea’s registered crypto exchanges shed a third of their market value and 35% of their won deposits in the first half of 2026.Korean markets are experiencing an exodus of traders and substantial outflows due to the lack of diversity in their investment offerings.How much did Korean exchanges lose from January to June?A survey of 26 licensed virtual asset service providers run by the Korea Financial Intelligence Unit and the Financial Supervisory Service, covering January through June has revealed that the combined market capitalization of Korea’s exchanges fell by 33%, a drop of 28.3 trillion won, while won-denominated deposits sank by 35%, or 2.9 trillion won. Average daily trading volume was also down 44%.The market value had fallen to about 58.9 trillion won (roughly $42 billion) by the end of June, compared to its value of 87.2 trillion won six months earlier. Daily turnover fell to 3.1 trillion won from 5.4 trillion, and customer deposits in won dropped to 5.2 trillion from 8.1 trillion. Exchange operating income collapsed by 78% to 81.6 billion won compared to 374.8 billion a year earlier.Regulators tied much of the loss to Bitcoin, which the FSS noted fell 33% to $58,559 by the end of June. The survey also found that 93 of the 234 tokens listed on just one exchange were valued at 100 million won or less by appraisal. The regulator said this figure should make users think twice.The decline in deposits is due to overseas platforms baiting Korean traders with products the country’s market does not allow. For example, there is a perpetual futures contract built on KORU, a U.S.-listed exchange-traded fund that returns three times the daily move of Korea’s Kospi index.Binance launched a KORU product with 20x leverage on June 22, then raised the limit to 50x four days later. Because the fund itself already tracks three times the index’s daily price swings, traders could end up exposed to as much as 150 times that loss or gain.Earlier in June, Binance had also offered 20x products on Samsung Electronics, SK hynix and Hyundai Motor, and Bybit, OKX and KuCoin launched their own KORU contracts. On June 23, the Kospi fell 9.99%, and KORU fell by 35.7% in one session to $700.01.These platforms operate outside the reach of South Korea’s investor protections. Traders get to them by purchasing Tether with won on a licensed local exchange and then transferring the stablecoin overseas.700 trillion won traced out of the countryTiger Research, working with blockchain analytics firm Chainalysis, tracked roughly 120,000 Korea-linked wallets and estimated that about 700 trillion won, or $530 billion, left domestic exchanges between 2021 and 2026. Outflows reached around $120 billion in 2025 and were projected near $52 billion this year, the firm said.Wallets owned by South Koreans put roughly $1.64 billion into three decentralized derivatives platforms: Hyperliquid, Lighter and Variational, between January 2024 and July 2026. In July alone, about 1,200 of those wallets traded $4.97 billion in notional volume on Hyperliquid. Their most-traded instruments included contracts linked to SK Hynix, Samsung Electronics and crude oil, which can be traded with leverage and around the clock, even when regular markets are closed.Shinhan Securities analyst Park Sung-jae said in July, when domestic trading had fallen to about 1.6% of Kospi turnover, that investors are leaving due to the diverse investment methods foreign crypto exchanges offer. He mentioned that those exchanges offer futures and leverage, while spot trading is “the only de facto trading option” in South Korea.Meanwhile, Cryptopolitan previously reported that South Korea plans to apply a 22% levy on annual crypto gains above a 2.5 million won deduction starting January 1, 2027, with the first returns due in May 2028.Petitioners warned that the rule would push even more traders offshore and gathered the 50,000 signatures needed to force a National Assembly review. Lawmakers from both ruling and opposition parties have floated delays as far out as 2030.Cryptopolitan recently reported that Finance Minister Lee Hyoung-il supports the tax. His argument is that 85% of investors hold crypto that is worth less than 5 million won, and so they won’t be greatly affected even after the tax deduction. Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.