Q1 2025 South Korea Web3 Report: Is it still a speculation-dominated market?

Author: 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 Relaxation of Corporate Account Regulation: 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 to focus on developer community building and hosting hackathons.

1. The South 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, 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 obtaining a Virtual Asset Service Provider (VASP) license. Companies are unable to connect their corporate accounts to local exchanges, making it legally unfeasible to convert the cryptocurrencies obtained through operational activities into fiat currency via 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 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 primarily view South Korea as a customer acquisition channel. Against this backdrop, the assertion from outsiders that the South Korean market can simply be defined as a "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 conduct cryptocurrency transactions, signify 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. Institutional Progress: Allowing Corporate Accounts to Engage in Cryptocurrency Trading

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

Source: Tiger Research

To address these limitations, the Financial Services Commission (FSC) officially announced 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 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 the prosecution, tax authorities, and local governments will begin to gain access to account permissions, 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. Beginning in the second half of 2025, publicly traded companies and professional investment firms will be permitted to conduct cryptocurrency transactions for investment and financial management purposes.

Most Web3 projects belong to the ordinary enterprises of the third stage. To qualify for the second stage, enterprises must maintain a financial investment product balance of at least 10 billion KRW (approximately 7 million USD) according to the Capital Markets Act, while the requirement for external auditing entities is 5 billion KRW (approximately 3.5 million USD) — a threshold that most Web3 enterprises cannot meet. As a result, 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

• Lay the legal foundation for South Korean enterprises to develop Web3 businesses.
• Enhance market stability through institutional investors with structured risk management and long-term strategies.
• 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 key entry point for companies to operate in compliance, promoting the regularization 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. Furthermore, broader corporate participation may improve the ongoing inefficiency issues 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. Financial technology companies may develop corporate treasury tools that support crypto account management. These developments will help expand the Korean Web3 industry by strengthening the supporting service infrastructure and attracting more traditional financial institutions.

2.2. Potential Risks of Allowing Enterprises to Encrypt Accounts

• Gradual relaxation of regulations may lead to an imbalance between supply and demand, putting downward pressure on prices.
• With the entry of listed companies and institutional investors into the market, government efforts to ensure tax revenue are expected to strengthen.
• 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 of buying and selling pressure. According to the corporate roadmap of the FSC, 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. Although the expected selling volume may remain moderate relative to the overall market, low liquidity tokens may face greater volatility.

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

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

3. Industrial Transformation: Strategic Layout of Global Web3 Projects

Following the US-China situation, South Korea has become a core strategic market for global Web3 projects. In response, numerous international teams are actively recruiting Korean talent and establishing substantial 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 South Korea to build ecosystems. After successfully collaborating with "MapleStory," Avalanche has expanded its cooperation with small and medium-sized projects in Korea. The team hosts demo days each quarter to showcase available products and actively attract users, creating 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 way.

These ecosystem support strategies have produced tangible results 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 a single event to become a key turning point in the South Korean Web3 ecosystem. In March, Ripple held a two-day "DE-BUTHON 2025," attracting 24 teams and 203 participants. Superteam Korea, in collaboration with 22 global partners, hosted the "SEOULANA HACKATHON," with over 300 participants.

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 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, 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), the South Korean Web3 industry is beginning to show quantifiable progress. Strengthened collaboration with mature participants, along 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 will undergo a critical transformation—from an investment-driven environment to a mature industrial ecosystem. Regulatory progress, including the phased opening of corporate crypto trading accounts, lays the foundation for structured market participation. Meanwhile, ongoing efforts in the global Web3 project ecosystem will support the South Korean market in achieving long-term growth positioning.

Another important milestone is the successful completion of the first retail user real-world transaction of South Korea's central bank digital currency (CBDC) "Han River Project". At the same time, major commercial banks in South Korea began joint exploration of 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 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 stage characterized by policy synergy, institutional participation, and the initial signs of industrial-level growth.