Q1 2025 South Korea Web3 Market Report: Is South Korea still a Liquidity Exporter?

Shift from an investment-driven environment to a mature industrial ecosystem.

Written by: Ryan Yoon, Elsa

Key Points Summary

• From liquidity export to industrial ecosystem: In the first quarter of 2025, the South Korean Web3 market will reach a turning point. This market, once regarded as a global project "liquidity export," is transforming into a structured self-sustaining industrial ecosystem.
• Impact of Relaxed Regulations on Corporate Accounts: As part of the Financial Services Commission's roadmap, institutional entities are gradually being allowed to conduct cryptocurrency transactions through corporate accounts.
• Global project-led ecological construction: Projects such as Avalanche, TON, Ripple, and Solana are actively establishing a long-term foundation in South Korea. Their activities have gone beyond marketing and are committed to building developer communities and hosting hackathons.

1. The South Korean Web3 Market in Q1 2025: Still Just a Liquidity Export?

Despite active participation from retail investors and ample liquidity, the institutional infrastructure development in the South Korean Web3 market has made limited progress. Regulatory efforts prioritize investor protection over ecosystem development, delaying broader industry growth.

The two main obstacles are: 1) the association restrictions between corporate accounts and cryptocurrency exchanges; 2) the high entry barriers to obtain a Virtual Asset Service Provider (VASP) license. Companies are unable to connect their corporate accounts to local exchanges, making it legally infeasible to convert the cryptocurrencies obtained through operations into fiat currency via South Korean financial institutions. Although some companies have turned to overseas entities as a stopgap measure, this approach carries regulatory risks and cannot provide a sustainable long-term solution.

The high entry barriers for VASP registration have also become a major constraint on market development. Although operating on a small scale without registration is technically feasible, large projects always face legal and regulatory uncertainties.

These institutional constraints, combined with investor activities far exceeding the maturity of the local ecosystem, have led some projects to primarily view South Korea as a customer acquisition channel. Against this backdrop, it becomes difficult to refute the external assertion that the South Korean market is simply defined as a "liquidity export."

The market development in the first quarter of 2025 indicates that South Korea has the potential to shift from a speculation-driven market to an industry revitalization-oriented market. Recent regulatory improvements (such as allowing corporate accounts to engage in cryptocurrency transactions) mark substantial progress in structural reforms. Beneath the surface, global projects are steadily building a local ecosystem with the support of an expanding community of builders and emerging new initiatives.

The South Korean Web3 market is at a critical turning point. As the ecosystem matures beyond an investor-driven development model, it is expected to generate greater long-term value with the dual support of institutional readiness and ongoing investment interest.

2. Systemic Progress: Allowing Corporate Accounts to Engage in Cryptocurrency Trading

In South Korea, restrictions on cryptocurrency trading by legal entities began with the "Park Sang-ki ban" in 2017. The policy, led by then-Justice Minister Park Sang-ki, essentially prohibits financial institutions and corporations from engaging in cryptocurrency trading. Although the guidelines have lapsed, the practice has continued to this day, creating a dual-track system in which individuals can transact within the regulatory framework and legal entities are restricted in their investment and financing activities.

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Source: Tiger Research

To address these limitations, the Financial Services Commission (FSC) officially released the "Roadmap for Corporate Participation in the Cryptocurrency Market" on February 13, 2025. The core highlight of this roadmap is the phased lifting of the corporate cryptocurrency trading restrictions that have been in place for seven years.

• Phase One (starting in Q2 2025): Accounts will be opened to law enforcement agencies, non-profit organizations, and cryptocurrency exchanges, limited to asset liquidation purposes.
• Phase Two (starting in the second half of 2025): Allow listed companies and registered investment companies and other professional investors to conduct trading.
• Stage Three (Medium to Long Term): Fully open the market to ordinary enterprises.

In the first phase, starting from November 2024, law enforcement agencies such as the prosecution, tax authorities, and local governments have begun to obtain account access to facilitate the liquidation of seized cryptocurrencies. Non-profit organizations and exchanges are expected to follow up in the second quarter of 2025. The second phase marks a more significant shift. From the second half of 2025, publicly traded companies and professional investment firms will be allowed to engage in cryptocurrency trading for investment and financial management purposes.

Most Web3 projects, however, are ordinary enterprises in the third stage. To qualify for the second stage, a company must maintain a financial investment product balance of at least 10 billion KRW (approximately 7 million USD) according to the Capital Markets Act, and 5 billion KRW (approximately 3.5 million USD) for external audit entities — a threshold that most Web3 companies cannot meet. Therefore, most Web3 projects cannot immediately benefit from the new regulations. However, the roadmap still indicates a gradual easing of regulatory constraints. As the third stage progresses, direct market access for Web3 native enterprises will become increasingly feasible.

2.1. The Positive Significance of Allowing Corporate Trading Accounts

1. Establishing a legal foundation for Korean companies to develop Web3 business.
2. Enhance market stability through institutional investors with structured risk management and long-term strategies.
3. Promote the diversification of financial services, including cryptocurrency funds and custody services.

Web3 projects often use native tokens to exchange services and resources. However, in South Korea, companies previously had almost no legal means to liquidate acquired crypto assets. The new policy establishes a critical entry point for companies to operate in compliance, promoting the formalization of crypto-related business activities.

This progress is expected to further expand in the second half of the year, when trading permissions will extend to publicly listed companies and registered institutional investors. Unlike retail investors, corporate investors tend to adopt structured risk management frameworks and long-term investment strategies. Their entry into the market is expected to reduce volatility and support the sustainable development of the Korean Web3 ecosystem. Moreover, broader corporate participation may improve the persistent inefficiencies in the local market—most notably the "kimchi premium."

The increase in institutional participants is also expected to broaden the scope of crypto-related financial services. Asset management companies may launch cryptocurrency funds or acquire custody service providers to offer comprehensive solutions. Fintech companies may develop corporate treasury tools that support crypto account management. These developments will strengthen the supporting service infrastructure and attract more traditional financial institutions, aiding the expansion of the Web3 industry in South Korea.

2.2. Potential risks of allowing corporate encrypted accounts

1. Gradual relaxation of regulations may lead to supply and demand imbalances, putting downward pressure on prices.
2. With the entry of listed companies and institutional investors into the market, government efforts to ensure tax revenue are expected to strengthen.
3. Conservative risk management by institutional investors may lead to concentrated holdings of Bitcoin, raising concerns about the decline in the activity of the altcoin market.

The introduction of corporate accounts may have a substantial impact on retail participants. From a market dynamics perspective, a phased relaxation of regulations could lead to an imbalance in buying and selling pressures. According to the FSC's corporate roadmap, regulators believe that the risks associated with corporate selling activities are relatively low. Therefore, by the end of 2025, there may only be selling liquidity entering the market, leading to downward price pressure. While the expected volume of sell-offs may remain moderate relative to the overall market, low liquidity tokens may face greater volatility.

At the regulatory level, when listed companies and institutional investors fully enter the market, the government's efforts to ensure tax revenue are expected to strengthen. Although the taxation of cryptocurrencies has been postponed until January 1, 2027, the presidential election on June 3, 2025, may change the policy direction, which is worth close attention.

In terms of investment behavior, corporate capital may be concentrated in Bitcoin. As shown by U.S. Strategy (formerly MicroStrategy) and Japan's Metaplanet, institutional investors tend to allocate large-market stable assets due to conservative risk management. This could lead to a large inflow of funds into Bitcoin, or a shock to the altcoin market, where South Korean retail investors have historically been highly active. As a result, the altcoin market is likely to face weaker interest and reduced liquidity in the short to medium term.

3. Industrial Transformation: Strategic Layout of Global Web3 Projects

After the U.S. and China, South Korea has become a core strategic market for Web3 projects around the world. In response, a number of international teams are actively recruiting Korean talent and establishing substantive collaborations, demonstrating a strategic shift from superficial marketing to building a sustainable, builder-led local ecosystem. This long-term layout not only supports the growth of individual projects, but also enhances the overall competitiveness of the Korean Web3 industry.

3.1. Project Support: Guiding industry direction through supporting mature teams.

Source: Avalanche Korea X

Avalanche and the TON Foundation are global project exemplars that directly support local teams in building ecosystems in South Korea. After a successful collaboration with "MapleStory", Avalanche has expanded its cooperation with small and medium-sized projects in Korea. The team holds demonstration days every quarter to showcase available products and actively attract users, forming a feedback loop that provides substantial value to projects and participants.

The TON Foundation is taking a more structured approach by launching the "TON Society Korea Builder" program. This program includes a formal project database, a systematic support structure, and expanded network access to strengthen the local TON ecosystem in a scalable manner.

These ecological support strategies have produced tangible results that go beyond short-term exposure or participation metrics. Verified local developers have a more stable growth foundation, and their success stories provide clear guidance for newcomers. At the same time, these initiatives lay the groundwork for the international expansion of Korean projects.

3.2. Hackathon: Cultivating Korean Builders and Strengthening Market Potential

The hackathon hosted by XRPL Korea (Ripple) and Superteam Korea (Solana) has transcended a single event and become a key turning point for the Web3 ecosystem in Korea. In March, Ripple held a two-day "DE-BUTHON 2025," attracting 24 teams and 203 participants. Superteam Korea collaborated with 22 global partners to host the "SEOULANA HACKATHON," with participation exceeding 300 people.

The scale and success of these events help to change the perception of South Korea as a speculation-driven market. The high participation in large hackathons reflects the existence of a strong builder ecosystem. These events have now become strategic launch platforms—providing builders with clear market entry pathways and bridging the gap between prototype development and actual deployment.

By the first quarter of 2025, driven by ecological construction initiatives dominated by a globalized network (rather than mere capital inflow), South Korea's Web3 industry is beginning to show quantifiable progress. Strengthened collaboration with mature participants, combined with developer support programs, is nurturing a new generation of local builders.

These developments mark the entry of South Korea's Web3 sector into a new phase of momentum. On this basis, South Korean projects are expected to deliver substantial innovations to the global stage in the coming years.

4. From Investment-Driven to Industry-Driven: The Turning Point of the South Korean Web3 Market

In the first quarter of 2025, the South Korean Web3 market is undergoing a critical transformation—from an investment-driven environment to a mature industrial ecosystem. Regulatory advancements, including the phased opening of enterprise crypto trading accounts, lay the foundation for structured market participation. Meanwhile, the ongoing ecological construction efforts of global Web3 projects support the South Korean market in achieving a long-term growth positioning.

Another important milestone is the successful completion of the first retail user real-world transaction of the South Korean central bank digital currency (CBDC) "Han River Project." At the same time, major commercial banks in South Korea began to jointly explore the issuance of a Korean won stablecoin in early April. The Bank of Korea has also indicated that it will play a more active role in future regulatory legislation.

In terms of infrastructure, the ongoing discussion about the "One Exchange - Multiple Banks" system suggests a potential structural breakthrough. Under this model, cryptocurrency exchanges will no longer be limited to a single banking partner and can connect with multiple commercial banks. This move is expected to significantly enhance market flexibility and user accessibility.

Overall, these developments clearly demonstrate the evolution of South Korea's Web3 sector towards a sustainable industrial ecosystem. After years of regulatory constraints and structural inefficiencies, South Korea is entering a new phase characterized by policy coordination, institutional participation, and the emergence of industrial-level growth.