Stablecoin Outflows From South Korean Exchanges Persist in Crypto Slump, June Net Outflows Reach $367 Million

Stablecoin transfers from South Korean exchanges to offshore platforms continued at several hundred billion won a month despite the broader slump in the crypto market.

Data submitted by the Financial Supervisory Service to Lee Jong-wook, a People Power Party lawmaker on the National Assembly's Strategy and Finance Committee, showed 2.7625 trillion won ($1.81 billion) of stablecoins were transferred from South Korea's five biggest crypto exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — to overseas exchanges in June. After deducting 2.2022 trillion won ($1.44 billion) transferred from overseas exchanges to domestic platforms during the same period, net outflows totaled 560.3 billion won ($367 million).

That was close to the amount South Korean investors spent on net purchases of overseas stocks in the same month. Korea Securities Depository data showed domestic investors were net buyers of $472.54 million of foreign stocks in June, equivalent to about 722 billion won at the average monthly exchange rate of 1,527.95 won per dollar. Stablecoin net outflows amounted to 77.6% of that figure.

As recently as early last year, stablecoin net outflows were around 20% of net overseas stock purchases. The share has risen as demand for foreign equities eased while stablecoin outflows continued. While overseas stocks posted net selling in some months, stablecoins recorded net outflows for 18 straight months from the start of data collection early last year through June this year. In the second quarter, overseas stocks posted net selling of 1.6185 trillion won ($1.06 billion), while stablecoins logged net outflows of 1.6872 trillion won ($1.10 billion).

The stablecoins sent abroad are believed to be used mainly for derivatives trading not available on domestic exchanges. Overseas platforms offer crypto futures, as well as spot and futures products tied to major South Korean stocks, high-leverage products, real-world asset offerings and decentralized finance services, attracting investor demand.

Lee said investors are being exposed to high-risk derivatives and other products as funds continue to flow to overseas exchanges. He called for a broad review of investor protection and oversight systems and for institutional improvements.