Analysis of the South Korean Web3 Market in Q1 2025: From Speculation to Industrial Ecosystem

Overview

In the first quarter of 2025, the South Korean Web3 market is witnessing a significant turning point. This market, once regarded as a "liquidity export" for global projects, is transitioning into a structured self-sustaining industrial ecosystem. Institutional entities are gradually being allowed to conduct cryptocurrency transactions through corporate accounts, and global projects are actively establishing a long-term presence in South Korea, focusing on developer community building and hosting hackathons.

Market Transformation

Despite active participation from retail investors and ample liquidity, the institutional infrastructure development in South Korea's Web3 market has been limited. Regulatory efforts prioritize investor protection over ecological development, delaying broader industry growth. Major obstacles include restrictions on the association between corporate accounts and cryptocurrency exchanges, as well as high entry barriers for obtaining licenses for virtual asset service providers (VASP).

However, 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 signify substantial progress in structural transformation. With the dual support of institutional readiness and sustained investment interest, greater long-term value is expected to be generated.

Regulatory Progress

The Financial Services Commission announced the "Roadmap for Corporate Participation in the Cryptocurrency Market" on February 13, 2025, gradually lifting the corporate cryptocurrency trading restrictions that have been in place for seven years:

1. Phase One (starting in the second quarter of 2025): Accounts will be opened to law enforcement agencies, non-profit organizations, and cryptocurrency exchanges, limited to asset liquidation purposes.
2. Phase Two (starting in the second half of 2025): Allow professional investors such as listed companies and registered investment companies to conduct transactions.
3. Third Stage (Mid to Long Term): Fully open the market to ordinary enterprises

This progress establishes a key entry point for businesses to operate in compliance, promoting the regular development of crypto-related business activities. It is expected to drive the diversification of financial services, including cryptocurrency funds and custody services.

Potential Risks

1. Gradual relaxation of regulations may lead to an imbalance between supply and demand, putting downward pressure on prices.
2. With the entry of publicly listed companies and institutional investors into the market, the government's 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 a decline in the activity level of the altcoin market.

Global Project Strategic Layout

Following the US-China relationship, South Korea has become a core strategic market for global Web3 projects. 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.

Project Support

A certain public chain and a certain foundation are directly supporting local teams in South Korea to build an ecosystem. These ecosystem support strategies have produced tangible results that go beyond short-term exposure or participation metrics, laying the groundwork for the international expansion of Korean projects.

Hackathon

The high participation in large-scale hackathons reflects the existence of a strong builder ecosystem. These events have now become strategic launching platforms, providing builders with clear market entry paths and bridging the gap between prototype development and actual deployment.

Conclusion

In the first quarter of 2025, the South Korean Web3 market is undergoing a pivotal transformation, shifting from an investment-driven environment to a mature industrial ecosystem. Regulatory advancements lay the groundwork for structured market participation, while ongoing ecological development 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 South Korea's central bank digital currency (CBDC) "Han River Project". Major commercial banks in South Korea are also beginning to explore the issuance of a won stablecoin. In terms of infrastructure, discussions on the "one exchange - multiple banks" system indicate potential structural breakthroughs.

In summary, the Web3 sector in South Korea is evolving towards a sustainable industrial ecosystem, entering a new stage characterized by policy collaboration, institutional participation, and the initial signs of industrial-level growth.