South Korea’s regulated crypto industry posted a sharp earnings contraction in the first half of 2026, with operating profits dropping 78% as trading volumes, asset valuations, and customer deposits declined. The slowdown is laid out in new data from the country’s financial authorities, pointing to a market environment that has cooled materially since the start of the year.
According to a survey by the Korea Financial Intelligence Unit (KoFIU), average daily trading volume at domestic virtual asset exchanges fell 44% versus the prior six-month period. The same dataset shows market capitalization down 33% and won-denominated deposits decreasing 35%, alongside lower exchange revenue.
Key takeaways
- KoFIU reports a 78% fall in South Korean crypto exchanges’ operating profits in the first half of 2026, indicating profitability pressure across the sector.
- Trading activity weakened: average daily exchange volume fell 44% while market capitalization dropped 33% over the same span.
- Customer behavior shifted alongside market conditions, with won-denominated deposits down 35% according to KoFIU.
- Exchange sales declined 41%, even as the number of accounts eligible to trade rose slightly (+0.4%).
- The changes align with broader indications that retail attention may be drifting from crypto toward South Korea’s stock market.
Profit plunge tied to volume, valuations, and deposits
The KoFIU findings cover activity from Jan. 1 through June 30 and analyze reported performance across registered virtual asset service providers. The operating profit decline was substantial: a 78% reduction over the first half compared with the preceding six-month period.
KoFIU attributes the deterioration to weaker market throughput and contracting customer funds. Average daily trading volume fell 44%, suggesting fewer transactions or reduced participation among existing users. At the same time, market capitalization declined 33%, reflecting lower valuations for crypto assets tracked within the survey scope. Deposits also moved lower: won-denominated deposits at domestic exchanges fell 35%.
Revenue pressure followed those market shifts. KoFIU data shows exchange sales dropped 41% during the period. Notably, this decline occurred despite a modest increase in the number of trading-eligible accounts (+0.4%), implying that having more accounts on file did not translate into stronger activity or balance growth.
What KoFIU measured and who was included
KoFIU’s survey covers 26 registered virtual asset service providers. The group includes 17 exchange operators and nine custody and wallet providers, giving a view across core trading infrastructure as well as services that hold customer assets.
The dataset is based on reported metrics over the first half of 2026, allowing comparisons against the prior six-month period. That comparison framing is important: it indicates the contraction was not just a short-term fluctuation, but a sustained deterioration across multiple dimensions—activity, balances, and profitability.
Retail interest may be shifting toward stocks
While KoFIU’s report focuses on exchange performance, the broader backdrop suggests the decline may also reflect changing retail preferences in South Korea. The findings arrive amid indications that some retail investors have been reallocating capital from crypto toward domestic equities.
Earlier reporting highlighted a steep reduction in crypto holdings among South Korean investors. In May, the value of crypto held by South Korean investors fell 50.2% to 60.6 trillion won (about $41.4 billion) over roughly a year, according to coverage from ChosunBiz that linked the decline to funds moving toward stocks.
Additional analysis pointed to an even sharper divergence in trading momentum. Cointelegraph reported in July that combined average daily volume across major South Korean exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—had fallen about 89% year over year during comparable seven-day windows, while the KOSPI index had more than doubled over the 12 months to July 22.
Taken together, those observations help contextualize KoFIU’s first-half results. When retail capital reallocates to equities, exchanges can face reduced inflows (reflected here in falling deposits), lower turnover (captured in declining trading volume), and weaker valuations (reflected in lower market capitalization). The earnings impact then follows through on reduced sales and operating margins.
Accounts rose slightly, but activity didn’t
One of the more telling details in KoFIU’s update is the contrast between the near-flat growth in eligible trading accounts and the major declines in operational metrics. The number of accounts eligible to trade increased by 0.4%—a change that might suggest a stable user base on paper.
However, that stability did not show up in market activity. Trading volume still fell 44%, deposits dropped 35%, and exchange sales decreased 41%. For investors and market participants, this combination often signals a shift from broad participation toward more selective or less frequent trading—either because market enthusiasm has cooled, because capital has been redirected, or because users are holding assets for longer rather than circulating them through spot markets.
Cointelegraph reached out for comment to Bithumb and Upbit operator Dunamu regarding the figures, but no response is included in the provided material.
Investors watching South Korea’s crypto market next should focus on whether exchange deposits and trading volumes stabilize in the second half of 2026, and whether the apparent rotation toward stocks continues to drain liquidity. If profitability continues to track volume and deposit trends, further earnings pressure could remain a key theme for local operators.
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