South Korean virtual asset exchanges recorded a steep decline in operating profits during the first six months of 2026, according to figures released by the Korea Financial Intelligence Unit. Operating profits fell 78 percent, dropping to 81.6 billion won, or approximately 55.9 million dollars, from 374.8 billion won, or about 256.7 million dollars, in the preceding half-year period.

The survey covered activity from January 1 through June 30 across 26 registered virtual asset service providers, consisting of 17 exchange operators and nine custody and wallet providers. The data were compiled from company submissions and are not treated as official national statistics.

Sharp Contraction in Trading and Asset Metrics

Average daily trading volume at domestic exchanges declined 44 percent to 3.1 trillion won, roughly 2.12 billion dollars, from 5.4 trillion won in the second half of 2025. Exchange sales fell 41 percent over the same comparison window. Market capitalization of crypto assets held through Korean platforms dropped 33 percent to 58.9 trillion won, about 40.3 billion dollars, from 87.2 trillion won at the end of 2025.

Won-denominated customer deposits decreased 35 percent to 5.2 trillion won, or approximately 3.56 billion dollars, from 8.1 trillion won. Despite these declines, the number of accounts eligible to trade rose slightly by 0.4 percent to 11.175 million at the end of June from 11.126 million six months earlier. Accounts holding less than 1 million won in virtual assets increased by 370,000 to 8.63 million. The most common user age group shifted from individuals in their 30s to those in their 40s.

Dominance of Won-Based Platforms and Liquidity Issues

Won-based exchanges continued to dominate the domestic market, holding 58.5 trillion won of the 58.9 trillion won total crypto value at the end of June. Coin-only exchanges accounted for just 330 billion won, or roughly 0.6 percent. Trading volume on won platforms averaged about 3.1 trillion won daily, while coin-only venues recorded only 380 million won. Volume fell 44 percent on won-based platforms and 55 percent on coin-only ones.

A new turnover measure showed monthly trading turnover ranging between 100 percent and 201 percent for won-based exchanges, compared with 2 percent to 9 percent for coin-only platforms. For context, the KOSPI recorded 25 percent monthly turnover and the KOSDAQ 43 percent during the first half. The number of unique crypto assets in circulation fell 5 percent to 673, while single-exchange listings declined to 234 from 296. Those exclusive listings represented only 600 billion won, or 1 percent of total domestic crypto value, with 93 of them, or 40 percent, each valued at 100 million won or less.

Retail Capital Movement Toward Equities

The first-half results align with broader signs that South Korean retail investors have redirected attention and capital from crypto toward the domestic stock market. The value of cryptocurrencies held by South Korean investors fell 50.2 percent to 60.6 trillion won, or 41.4 billion dollars, over roughly a year ending in early 2026. Combined average daily volume across major platforms including Upbit, Bithumb, Coinone, Korbit and Gopax had earlier shown an approximate 89 percent year-over-year decline during comparable periods, while the KOSPI more than doubled over the 12 months to late July.

In mid-July, average daily trading across those five exchanges stood at 597.8 billion won, equal to just 1.59 percent of the 37.6 trillion won average daily turnover on the KOSPI. A review of first-half trading on the five largest exchanges placed combined volume at 366.58 billion dollars, down 54.6 percent year over year. Upbit increased its share of activity even as overall volumes contracted. Temporary volume spikes occurred later during a Bitcoin price rally in August, with Upbit daily volume rising 273 percent to 1.84 billion dollars and Bithumb volume up 132.9 percent to roughly 934.9 million dollars. Upbit’s first-half net profit still fell 74 percent, while Bithumb shifted from profit to a net loss.

Declines in Transfers and Custody Operations

External transfers from Korean exchanges dropped 41 percent to 62.8 trillion won from 107.3 trillion won in the prior six months. Transfers covered by the travel rule totaled 9.5 trillion won, or 15 percent, while whitelisted transfers to approved overseas entities and personal wallets accounted for 51.7 trillion won, or 83 percent. Transfers under 1 million won made up only 1.6 trillion won, or 2 percent of total transferred value, but involved 63 percent of users making external transfers.

Custody and wallet providers also faced pressure. Customer accounts rose 2 percent to 792, yet assets held in custody fell 25 percent to 230.4 billion won. Operating results worsened from a 9.3 billion won loss in the second half of 2025 to an 18.6 billion won loss in the first half of 2026. Exchange staffing remained relatively stable at 2,021 employees at the end of June, down by 10 from six months earlier, while anti-money laundering staffing increased by one to 213.

South Korean traders face an upcoming regulatory change scheduled for January 1, 2027, with plans for a 22 percent tax on annual crypto gains above 2.5 million won. Tax authorities are preparing implementation guidance for domestic exchanges.