The cryptocurrency industry is receiving a lot of attention worldwide, and the domestic market is no exception. However, Korea is currently experiencing somewhat slow growth due to unclear regulations and an unstable political environment. This unstable investment environment is a major cause of talent, capital, and companies in the industry flowing out overseas, ultimately weakening the competitiveness of the domestic web3 ecosystem. In this article, we will examine the trends of domestic cryptocurrency investors, analyze the ongoing status of corporate relocation and asset outflow, and forecast the future direction.

Trends of domestic cryptocurrency investors

There are approximately 15.6 million investors in Korea who own $73 billion in cryptocurrency assets, and new investors have recently shown interest in highly profitable altcoins and memecoins. In particular, the ranking of memecoins selected by 99Bitcoins with high investment value is attracting attention, and new memecoins that surpass Dogecoin (DOGE) and Shiba Inu (SHIB) are showing strength. As US President Trump began to lead the administration, spot exchange-traded funds (ETFs) based on Bitcoin and Ethereum were launched, and Ripple (XRP), Solana (SOL), and even memecoins issued by the president himself are causing a big stir in the market. Amid this trend, the average daily trading volume of Korean cryptocurrency exchanges has increased to a level that exceeds the combined trading volume of the KOSDAQ and KOSPI indices, proving the potential for rapid growth in the domestic market. Even amidst ongoing political uncertainty, interest in domestic cryptocurrency investment continues, and this phenomenon shows the tendency of Korean investors to take risks but show undiminished passion.

However, the cryptocurrency-related regulatory policies that have been continuously postponed are further increasing market uncertainty. In fact, some exchanges have suspended their services, and the high volatility of coins is weakening investor confidence. According to a survey by the Financial Services Commission (FSC) in the first half of 2024, fund transfers to foreign virtual asset service providers (VASPs) increased 2.3 times year-on-year, and it was pointed out that more investors are moving to stable overseas platforms. This capital outflow is not simply an investment flow, but is likely to weaken the competitiveness of Korea's Web3 industry in the long term and have a negative impact on the development of blockchain and cryptocurrency-related businesses. In addition, there are concerns that the increased use of overseas exchanges will create blind spots in domestic investor protection.

Acceleration of overseas corporate relocation and human capital outflow

Korean Web3, blockchain, and cryptocurrency companies are facing various difficulties in running their businesses. One of the biggest problems is that under the current law, companies cannot open accounts for cryptocurrency transactions, which limits their ability to utilize their assets. As a result, it may hinder the monetization of domestic cryptocurrency assets and limit the progress of innovative projects related to Defi or Web3 games.

In this situation, major companies are moving their residences overseas where clear and favorable regulatory environments are in place. In fact, in 2024, the blockchain division of game development company Nexon and Wemade's business office decided to move to Abu Dhabi and Dubai, respectively, which are called global virtual asset hubs. The UAE government is actively investing in cutting-edge technologies including blockchain and cryptocurrency, and is creating an environment where companies can start businesses more easily through a rich investor pool and convenient systems. In addition, due to the lack of domestic employment opportunities, talented people in the field are also seeking to advance overseas. In particular, Korea is considered one of the countries with a very high rate of overseas migration of talents with related master's and doctoral degrees. As such, Korean cryptocurrency-related companies and talents are gradually moving overseas, significantly weakening the competitiveness of the domestic industry.

What is the future direction of the Korean cryptocurrency industry?

The high volume and interest in cryptocurrency trading in Korea shows the potential for industry development, but if investor liquidity and uncertainty continue, it will be difficult to expect sustainable growth. Unfortunately, overseas, the Korean market is evaluated as being excluded from global Web3 development due to political situations and lack of innovation. Overall, Korea is currently in need of reorganization in the business, policy, and technology sectors to strengthen the Web3 ecosystem based on decentralized networks and blockchain technology.

The domestic cryptocurrency industry sees the moment when the new government takes office in 2025 as a major turning point. Current discussions include allowing businesses to open cryptocurrency accounts, establishing stablecoin regulations, and developing clear cryptocurrency-related policies. To achieve this progress, we must actively respond to global policy changes and develop a regulatory framework that is suitable for the domestic situation to prevent talented people and businesses from further flowing overseas. Since Korea has ample potential for growth, creating a stable investment environment to maintain competitiveness in the global cryptocurrency market should be a priority.