• South Korea’s crypto holdings have soared to $73.4 billion, fueled partly by optimism surrounding Trump’s potential re-election and a general market upswing.
• Meanwhile, the Bank of Korea has voiced concerns that stablecoins could potentially interfere with monetary policy, advocating for a distinct regulatory approach for them.

While the United States is actively maneuvering to become a leader in the global crypto space, South Korea appears to be securing its own strong foothold with a significant and growing domestic crypto presence.

Bank of Korea Data Shows Record Crypto Holdings

According to recently published figures from the Bank of Korea (BOK), investors in South Korea collectively now hold over $73.4 billion worth of crypto assets spread across domestic exchanges. This impressive total first surpassed the 100 trillion won benchmark in December 2024.

This record-breaking sum marks the highest monthly figure ever reported since the Bank of Korea started tracking these statistics, underscoring the rapid growth in the market.

Digging into the latest payment settlement report, we see that the value of virtual assets held in domestic wallets surged to 104.1 trillion won ($73.4 billion) by December. That’s a remarkable 2.2-fold leap from October’s 58 trillion won total.

Much of this bullish sentiment was reportedly ignited by Donald Trump’s re-election, which seemed to boost investor confidence with expectations of more crypto-friendly policies.

During this same period, daily crypto trading volumes experienced a staggering fivefold increase, hitting 17.2 trillion won in December. Simultaneously, deposits into exchanges more than doubled, further demonstrating the robust momentum building in the market.

But Was Trump the Only Catalyst?

While Donald Trump’s re-election certainly played a role in fueling market optimism, it wasn’t the only factor at play. Domestic regulatory shifts also contributed significantly to the sector’s expansion.

The enforcement of the Virtual Asset User Protection Act in July 2024, for example, introduced crucial safeguards designed to prevent market manipulation and bolster investor confidence and protection.

However, efforts to further strengthen this legislative framework hit a snag amidst political turmoil, particularly following President Yoon Suk-yeol’s controversial martial law attempt in December.

Despite these disruptions, lawmakers and financial regulators have reaffirmed their commitment to revisiting and advancing crypto reforms once the upcoming June presidential elections have concluded.

What Else is Happening?

This surge in activity follows a recent period of stricter enforcement, where South Korea took action against 14 international crypto exchanges, including big names like KuCoin and MEXC, banning them for failing to properly register their operations with local authorities.

Meanwhile, the Bank of Korea has indicated that a comprehensive framework specifically for stablecoins is likely in the works and could be rolled out by the end of the year. This comes even as the central bank voiced caution regarding the potential risks associated with the increasing prevalence of these digital assets.

Simultaneously, industry voices continue to actively lobby for a loosening of restrictions on domestic token launches and corporate crypto holdings – areas where competitors like the U.S. and Japan seem to be making faster progress.

As might be expected, the BOK’s report didn’t shy away from expressing concerns, articulating its viewpoint most clearly when it stated: 

“Unlike general virtual assets, stablecoins have the inherent characteristics of a means of payment.”

The report didn’t stop there, adding:

“If they are widely issued and circulated and used as a means of payment to replace legal tender, they may have negative effects on the implementation of central bank policies such as monetary policy, financial stability, and payment and settlement.”