South Korean cryptocurrency exchanges saw operating profits collapse 78% in the first half of 2026 as trading activity, customer won deposits and the domestic value of crypto holdings all contracted sharply. According to the Korea Financial Intelligence Unit’s official H1 market survey, exchange operating profit fell from KRW374.8 billion in the second half of 2025 to KRW81.6 billion between January and June. The decline accompanied a 44% fall in average daily trading volume and a 41% contraction in exchange revenue.
The government survey covered 26 registered virtual asset service providers, including 17 exchanges and nine custody and wallet companies. Average daily exchange volume dropped from KRW5.4 trillion to KRW3.1 trillion, while won-denominated customer deposits fell 35% to KRW5.2 trillion. The value of crypto held through domestic exchanges declined 33% to KRW58.9 trillion. Trading accounts eligible to transact nevertheless increased 0.4% to 11.18 million, indicating that the revenue contraction reflected lower market activity rather than a broad disappearance of registered users.
Trading Slowdown Compresses Exchange Revenue
The figures illustrate how closely South Korea’s exchange economics remain linked to transaction activity. With turnover down KRW2.3 trillion per day compared with the preceding six months, operators had substantially less trading volume from which to generate fee revenue. Operating profit fell by KRW293.2 billion between the two half-year periods, a much steeper contraction than the 41% decline in revenue.
The downturn was concentrated inside a market that remains overwhelmingly won-denominated. KoFIU found that won-market exchanges held KRW58.5 trillion of the KRW58.9 trillion in domestic crypto value at the end of June, while coin-only markets accounted for just KRW330 billion. Monthly turnover ratios ranged from 100% to 201% for won markets compared with only 2% to 9% for coin markets. The data confirms a highly concentrated market structure by settlement currency, but the regulator does not disclose individual exchange responses because it treats company-level submissions as confidential.
That limitation means the government dataset cannot substantiate claims that particular smaller exchanges became loss-making or that Upbit and Bithumb captured a specific percentage of H1 trading. Enforcement pressure has nevertheless remained significant across individual operators, including the FIU’s KRW5.2 billion fine and partial suspension imposed on Coinone. Market contraction and regulatory enforcement are simultaneous operating pressures, but the available evidence does not establish that one caused the other.
Nor does the latest survey support a narrative of accelerating capital flight during H1. External crypto transfers from domestic exchanges fell 41% to KRW62.8 trillion, including a 39% decline in transactions covered by the Travel Rule and a 43% decline in whitelisted transfers to overseas services or personal wallets. Outbound transfer value decreased alongside domestic trading, making it difficult to characterize foreign transfers as the principal driver of the profit decline from this dataset alone.
Tax and Tokenization Rules Approach in 2027
A separate policy change will arrive on January 1, 2027, when South Korea begins taxing income from the transfer or lending of virtual assets. The National Tax Service’s current guidance sets the national tax rate at 20% after eligible costs and an annual KRW2.5 million deduction; the commonly cited 22% combined rate includes local income tax. The tax has a confirmed effective date, but the H1 exchange survey does not establish that anticipation of the levy caused trading volume to fall during the first six months of 2026.
Tokenized securities are moving on a different timetable. South Korea’s amended securities legislation takes effect on February 4, 2027, with the first phase covering selected institutional MMFs, bonds, trust-based unlisted shares and fractional-investment securities. The rollout follows the Financial Services Commission’s three-stage tokenized securities roadmap. February 2027 is therefore the start of a limited tokenization regime, not the launch date for a complete digital-asset or stablecoin framework.
Stablecoin policy remains under development within South Korea’s broader second-stage digital-asset legislation. Companies are preparing infrastructure ahead of those rules, including a Kakao Pay, KakaoBank and Fireblocks initiative exploring won-stablecoin infrastructure and a Visa-Dunamu partnership examining stablecoin payment models. Neither project represents a commercially launched won stablecoin or evidence that the final Korean issuance framework has been settled.
The H1 results therefore present a more specific problem than a generalized liquidity crisis. South Korean exchanges entered the second half of 2026 with substantially lower trading turnover, deposits, revenue and profitability, even as the number of eligible trading accounts remained broadly stable. The next regulatory phase will add tax and securities-tokenization changes in 2027, but the immediate earnings pressure documented by KoFIU is already visible in the existing exchange business model.
