South Korea has experienced a significant outflow of cryptocurrency assets, totaling $40.6 billion (56.8 trillion won) between January and March. Stablecoins came close to countering the outflow, accounting for close to 50% of the total. Shocking 26.87 trillion won flowed out of the country’s top five exchanges. South Korean users are reportedly moving their money over to offshore crypto exchanges in greater numbers. This shift into crypto illustrates a bigger trend in the increasing acceptance of digital assets.

The substantial outflows were tracked across South Korea's five major digital asset exchanges: Upbit, Bithumb, Coinone, Korbit, and Gopax. These figures speak to a dramatic change in the country’s growing cryptocurrency ecosystem as millions of users seek out increased access and savings across foreign markets. Though March witnessed a decrease in outflows from stablecoins, this was around the time that global crypto markets were entering a cooling off period.

Stablecoins Dominate Outflow Composition

Much of the crypto outflow from South Korea is due to stablecoins. The 26.87 trillion won in stablecoins that left the country accounts for nearly 74% of the total $40.6 billion outflow. It’s clear that users love stablecoins. This would suggest they are either seeking to hedge against volatility or seeking out opportunity to access DeFi platforms outside of South Korea.

Investors may be catching a rising tide of diversification as they exit stablecoins. They might be looking for better regulatory climates in other jurisdictions, too. We all know the digital asset landscape is fluid and ever-evolving. In this new complex and changing environment, stablecoins are critical to enabling transactions and to bringing stability to the crypto ecosystem.

Digital Asset Adoption on the Rise

Even with the increased outflows, overall South Koreans are witnessing greater acceptance and adoption of digital assets. As of March 2024, nearly one-third of all South Koreans—over 16.29 million—have opened accounts on digital asset exchanges. This represents nearly one-third (32%) of the whole US population. Local public servants are more directly engaging with these nascent blockchain-related assets, too. This rapid take-up isn’t even only happening in the private sector.

Specifically, 411 of the 2,047 South Korean public officers possessed cryptocurrency-related assets. This swell of interest by public officials is a reflection of the broader, growing mainstream adoption of these digital assets in our country. It’s important to note that the numbers in these are representative of user accounts on South Korea’s top exchanges.

Funds Shift to Offshore Exchanges

The large outflow of crypto assets away from South Korea reflects that many users are moving more of their funds to offshore crypto exchanges. Three key factors are fueling this increase. Stricter regulations, fewer places to invest, and an increasing interest in accessing a broader set of digital assets factor in. South Korean users are transferring money to offshore exchanges. They want more control and independence over their crypto holdings.

Among users in the increasingly global cryptocurrency market, offshore exchanges are becoming favored venues of trade. They call for platforms that offer lower fees, more creative products, and a broader range of digital assets. The regulatory environment is ever-evolving. One of the more compelling cases will be watching how South Korean exchanges respond to lose their active use and failing grow investors.