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

This report is written by Tiger Research, studying the South Korean Web3 market in the first quarter of 2025, analyzing its evolution from liquidity export to a structured industrial ecosystem, and highlighting key regulatory developments and global project initiatives.

Key Points Summary

• From Liquidity Export to Industry 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 industry ecosystem.
• Impact of Relaxation of Corporate Account Regulation: As part of the Financial Services Commission's roadmap, institutional entities are gradually being permitted to conduct cryptocurrency transactions through corporate accounts.
• Global Project-led Ecological Construction: Projects such as Avalanche, TON, Ripple, and Solana are actively establishing long-term foundations in South Korea. Their activities have transcended marketing and are focused on building developer communities and hosting hackathons.

1. The Korean Web3 Market in the First Quarter of 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 ecological development, which has delayed broader industry growth.

The two main obstacles are: 1) the association restrictions between corporate accounts and cryptocurrency exchanges; 2) the high entry barriers for obtaining a Virtual Asset Service Provider (VASP) license. Companies cannot connect their corporate accounts to local exchanges, making it legally unfeasible to convert the cryptocurrencies acquired through Korean financial institutions into fiat currency. While 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 barrier for VASP registration has also become a major constraint on market development. Although small-scale operations can technically operate without registration, large projects always face legal and regulatory uncertainties.

These institutional constraints, combined with investor activities that far exceed the local ecological maturity, have led some projects to view South Korea primarily as a customer acquisition channel. In this context, the external assertion that the South Korean market can simply be defined as "Liquidity Export" becomes difficult to refute.

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 trading) signify substantial progress in structural reforms. Beneath the surface, global projects are steadily building a local ecosystem, supported by an expanding community of builders and emerging new initiatives.

South Korea's Web3 market is at a critical inflection point. As the ecosystem matures beyond an investor-driven development model, it is expected to generate greater long-term value, underpinned by institutional readiness and continued investment interest.

2. Institutional Progress: Allowing corporate accounts to conduct cryptocurrency transactions

In South Korea, restrictions on cryptocurrency trading by legal entities began with the "Park Sang-ki Ban" in 2017. The policy, led by then-Minister of Justice Park Sang-ki, effectively prohibited financial institutions and companies from participating in cryptocurrency trading. Although the guidelines have expired, the practice continues to this day, creating a dual-track system where individuals can trade within the regulatory framework while investment and financing activities of legal entities are restricted.

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 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 professional investors such as listed companies and registered investment companies to trade.
• Phase 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 prosecutors, tax authorities, and local governments have begun to gain access to account privileges, allowing for 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. Starting in the second half of 2025, listed companies and professional investment firms will be allowed to trade cryptocurrencies for investment and financial management purposes.

However, most Web3 projects belong to ordinary enterprises in the third phase. To obtain qualifications for the second phase, enterprises must maintain a financial investment product balance of at least 10 billion KRW (approximately 7 million USD) according to the Capital Market Act, while for external auditing entities, it is 5 billion KRW (approximately 3.5 million USD) — a threshold that most Web3 enterprises cannot meet. Therefore, most Web3 projects cannot immediately benefit from the new regulations. However, the roadmap still indicates a gradual relaxation of regulatory constraints. As the third phase progresses, direct market access for Web3-native enterprises will become increasingly feasible.

2.1 The Positive Significance of Allowing Enterprises to Trade Accounts

1. Lay the legal foundation for South Korean enterprises 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 token 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 key entry point for companies to operate in compliance, promoting the regularized development of crypto-related business activities.

The progress is expected to further expand in the second half of the year, at which point 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. In addition, broader corporate participation may improve the ongoing inefficiencies in the local market – most notably the "kimchi premium."

The increase in institutional participants is also expected to broaden the range of crypto-related financial services. Asset management companies may launch cryptocurrency funds or acquire custody service providers to offer integrated solutions. Financial technology companies may develop enterprise treasury tools that support crypto account management. These developments will help the expansion of the South Korean Web3 industry by strengthening the supporting service infrastructure and attracting more traditional financial institutions.

2.2 Allowing potential risks of encrypting enterprise accounts

1. Gradual relaxation of regulations may lead to an imbalance between supply and demand, putting downward pressure on prices.
2. The government's efforts to secure tax revenues are expected to intensify as listed companies and institutional investors enter the market
3. The conservative risk management of 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 the perspective of market dynamics, a phased relaxation of regulations could lead to an imbalance in buying and selling pressure. 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, it is possible that only selling side Liquidity will enter the market, resulting in downward price pressure. Although the expected selling volume may remain moderate relative to the overall market, low Liquidity tokens may face greater volatility.

At the regulatory level, once publicly listed companies and institutional investors fully enter the market, government 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, could change the policy direction, warranting close attention.

In terms of investment behavior, corporate capital may concentrate on Bitcoin. As shown by the American Strategy (formerly MicroStrategy) and Japan's Metaplanet, institutional investors tend to allocate to large-cap stable assets due to conservative risk management. This could lead to a significant influx of funds into Bitcoin or impact the altcoin market—South Korean retail investors have historically been highly active in this market. Therefore, the altcoin market may face weakened interest and decreased liquidity in the short to medium term.

3. Industry Transformation: Strategic Layout of Global Web3 Projects

After China and the US, South Korea has become a core strategic market for global Web3 projects. In response, numerous 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 the industry direction by supporting mature teams.

Source: Avalanche Korea X

Avalanche and the TON Foundation are global project models that directly support local teams in South Korea to build ecosystems. After a successful collaboration with "MapleStory", Avalanche has expanded its cooperation with small and medium-sized projects in Korea. The team holds demo 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 framework, and expanded network access to strengthen the local TON ecosystem in a scalable manner.

These ecological support strategies have resulted in tangible outcomes that go beyond short-term exposure or participation metrics. Verified local developers have gained 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 the scope of a single event, becoming a key turning point for the Web3 ecosystem in Korea. In March, Ripple held the two-day "DE-BUTHON 2025", attracting 24 teams with 203 participants. Superteam Korea, in collaboration with 22 global partners, hosted the "SEOULANA HACKATHON", with participation exceeding 300 people.

The scale and success of these events help to reverse the perception of South Korea as a speculation-driven market. The high participation in large-scale hackathons reflects the presence of a strong builder ecosystem. These events have now become strategic launch platforms—providing builders with a clear market entry path 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 inflows), South Korea's Web3 industry is beginning to show quantifiable progress. Strengthened collaboration with mature participants, coupled with developer support programs, is cultivating a new generation of local builders.

These developments mark the entry of the South Korean Web3 sector into a new momentum stage. 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 key transformation—from an investment-driven environment to a mature industrial ecosystem. Regulatory advancements, including the phased opening of corporate crypto trading accounts, lay the foundation for structured market participation. At the same time, the ongoing ecological development efforts of global Web3 projects support the long-term growth positioning of the South Korean market.

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 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 signals 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 access.

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 synergy, institutional participation, and the initial emergence of industrial-level growth.

Original link: Tiger Research