"South Korean Crypto: Q1 2025 Recap & Regulatory Outlook"

South Korean crypto emerges from failed coup into crackdown season

South Korea kicked off 2025 with political chaos, regulatory heat, and a crypto market finally brought to heel — or at least forced to grow up. The nation closed 2024 in disarray following then-President Yoon Suk Yeol’s botched martial law stunt in December.

In the aftermath, authorities spent the first quarter drawing lines in the sand as financial watchdogs slapped cryptocurrency exchanges with probes and lifted the ban on corporate trading accounts. Meanwhile, crypto adoption hit record highs as trading volume cooled.

Here’s a breakdown of the key developments that shaped South Korea’s crypto sector in Q1 of 2025.

South Korean crypto traders given yet another two-year tax exemption

Jan. 1 — Crypto tax postponed

A planned 20% capital gains tax on crypto did not take effect on Jan. 1 after lawmakers agreed to delay it until 2027. This was the third postponement: first from 2022 to 2023, then again to 2025.

The latest delay, reached through bipartisan consensus in late 2024, came amid mounting economic uncertainty and political turmoil. Lawmakers cited fears of investor flight to offshore exchanges, challenges in tracking wallet-based profits, and shifting national priorities in the wake of Yoon’s failed martial law stunt and subsequent impeachment.

Jan. 14 — Warning against North Korean crypto hackers

The US, Japan, and South Korea published a joint statement on North Korean crypto hacks. Crypto firms were warned to guard against malware and fake IT freelancers. Lazarus Group, the state-sponsored cyber threat group, was named as a prime suspect in some of the top hacks in 2024.

Jan. 15 — Companies wait on the sidelines for crypto greenlight

South Korea’s Virtual Asset Committee held its second meeting. The FSC was widely expected to approve corporate access to trading accounts on local exchanges. Instead, the FSC announced investor protections against price manipulation and stricter stablecoin oversight.

Jan. 16 — First enforcement of crypto market manipulation

South Korean authorities indicted a trader in the first pump-and-dump prosecution under the Virtual Asset User Protection Act, the new crypto law effective from July 2024. Meanwhile, Upbit received a suspension notice for allegedly violating Know Your Customer (KYC) requirements.

Jan. 23 — Upbit, Bithumb compensate users after service outages during martial law

Upbit and rival exchange Bithumb announced plans to compensate users following service disruptions triggered by the surprise declaration of nationwide martial law on Dec. 3, 2024.

South Korean crypto world finally opened to corporations

Feb. 13 — Charities and universities get first dibs on corporate crypto access

The FSC unveiled its plan to allow corporate entities to open crypto trading accounts in phases by late 2025. Charities and universities are first in line and will be allowed to sell their crypto donations starting in the first half of the year.

Feb. 21 — Alleged serial fraudster busted again

Police rearrested “Jon Bur Kim,” identified by the surname Park, for allegedly profiting in a crypto scam involving the token Artube (ATT).

Feb. 25 — Upbit operator Dunamu gets slapped

The nation’s Financial Intelligence Unit formally notified Dunamu, the operator of Upbit, of regulatory action. The sanctions were tied to KYC compliance failures and dealings with unregistered foreign exchanges.

Feb. 27 — Crypto crime force formalized

South Korean prosecutors formally launched the Virtual Asset Crime Joint Investigation Division, indicting 74 individuals and securing 25 arrests.

Bitcoin ETF next on checklist for South Korean crypto space

March 5 — Reconsidering Bitcoin ETF ban

The FSC started reviewing legal pathways to allow Bitcoin spot exchange-traded funds (ETFs), citing Japan’s evolving regulatory approach as a potential model.

March 21 — Crackdown on unregistered exchanges begins

The FIU compiled a list of illegal foreign exchanges and moved to block access via app stores and ISPs.

March 26 — 17 exchange apps blocked (including KuCoin and MEXC)

Google Play removed 17 unlicensed crypto exchange apps in South Korea at the request of regulators.

March 27 — Upbit scores three-month break

A South Korean court temporarily lifted the partial business suspension imposed on crypto exchange Upbit by the FIU.

South Korean crypto expected to go from crackdown in Q1 to campaign trail in Q2

By mid-April, the crackdown was still gaining steam. Apple followed Google’s lead in removing offshore exchange apps from its store, while prosecutors filed yet another round of market manipulation charges.

South Korea’s crypto industry is now contending with tighter rules, rising institutional expectations, and a government no longer content to watch from the sidelines. All this unfolds ahead of an early presidential election in June.