South Korea’s cryptocurrency market saw a sharp slowdown during the first half of 2026, with trading activity falling significantly across the country’s major exchanges.
According to a report from NexBlock, the five largest won-based crypto exchanges — Upbit, Bithumb, Coinone, Korbit, and Gopax — recorded a combined trading volume of about $366.6 billion during the first six months of the year. That represents a 54.6% drop compared with the same period in 2025.
The slowdown continued into July.
Between July 1 and July 27, the five exchanges processed approximately 17.34 trillion won in trading volume, a decline of nearly 17% compared with the same period in June.
The figures highlight weakening activity in South Korea, which has long been one of Asia’s most active retail cryptocurrency markets. However, while overall trading has fallen, the decline has not affected every exchange equally.
Upbit, the country’s largest crypto exchange, continued to strengthen its position despite lower trading activity.
During the July period, Upbit handled about 11.69 trillion won in trading volume. Although its volume declined by around 10%, its market share actually increased from 62.3% to 67.4%.
This happened because rival exchanges experienced even steeper drops in activity.
Bithumb, South Korea’s second-largest exchange, recorded approximately 4.71 trillion won in volume. Its market share fell from 30.7% to 27.1%, allowing Upbit to widen its lead even further.
The growing gap suggests that traders are increasingly concentrating their activity on the largest and most liquid platform.
Market analysts say this trend is common during periods of lower trading activity.
When market conditions become weaker, traders often prefer exchanges with deeper liquidity because they can execute larger trades more easily and with less price impact. This creates a cycle where bigger exchanges attract more users, while smaller competitors struggle to maintain trading activity.
As a result, Coinone, Korbit, and Gopax face increasing pressure to find new ways to compete.
Rather than relying solely on retail trading, these smaller exchanges are reportedly exploring partnerships with securities firms, expanding institutional services, and restructuring parts of their businesses.
Industry observers believe future competition may depend less on pure trading volume and more on factors such as stablecoin services, institutional access, regulatory compliance, and partnerships with traditional financial institutions.
The decline in Korean crypto activity also matters beyond South Korea.
The country’s retail investors have historically played an important role in global cryptocurrency markets, especially for altcoins. Lower trading activity could reduce liquidity and weaken one source of price discovery for certain digital assets.
Another major development on the horizon is South Korea’s upcoming cryptocurrency tax.
Finance Minister Koo Yun-cheol recently confirmed that the government will move forward with its long-delayed crypto tax plan beginning on January 1, 2027.
Under the new rules, profits from selling or lending cryptocurrencies will be classified as taxable income.
Annual gains above 2.5 million won, roughly $1,740, will be subject to a 20% national tax. After adding local taxes, the total tax rate will reach 22%.
Investors earning less than the annual threshold will not owe taxes under the system.
The first tax filings related to crypto gains are expected to take place in May 2028 for profits earned during 2027.
The tax policy has already been postponed several times in the past, but officials now appear committed to implementing it as scheduled.
How much impact the tax will have on trading activity remains uncertain. Some investors may reduce trading, while others may adjust their strategies to account for the new rules.
At the same time, South Korea is investing heavily in other sectors of the economy.
The government recently approved plans for a new investment account under the Korea Investment Corporation (KIC), the country’s sovereign wealth fund. The fund will begin with at least 20 trillion won, or approximately $13.7 billion, and will focus on strategic industries such as artificial intelligence, data centers, and other high-growth technologies.
While this initiative is separate from cryptocurrency regulation, it reflects the government’s broader effort to support long-term economic growth through targeted investment.
For South Korea’s crypto exchanges, however, the immediate challenge is clear.
Trading activity remains weak, competition is becoming increasingly concentrated around Upbit, and new regulatory requirements are approaching. As market conditions evolve, smaller exchanges may need new business models, stronger partnerships, and additional services if they hope to remain competitive in a shrinking market.
For now, Upbit continues to gain ground, while the rest of the industry searches for ways to adapt to a rapidly changing crypto landscape.
