South Korea's Crypto Demand Ranks Among the World's Highest, but Institutional and Cross-Border Curbs Weigh on Competitiveness

South Korea's cryptocurrency market has remained among the world's leaders in trading demand, but institutional limits including restricted access for companies and weak cross-border openness have left the country near the bottom of global competitiveness rankings.

According to the Global Crypto Competitiveness Index, or GCCI, report released by crypto-focused media outlet The Block on Oct. 1, South Korea ranked 12th out of 15 countries with an overall score of 1.81. The US placed first with 3.95, followed by the United Arab Emirates at 3.91, Switzerland at 3.83, Hong Kong at 3.56 and Singapore at 3.43.

South Korea ranked among the top major markets in crypto demand. Spot crypto trading volume in the country reached $66.6 billion in the first quarter, second only to the US. In the market environment category, which reflects trading volume and crypto ownership rates, South Korea placed sixth with a score of 3.09.

By contrast, competitiveness in regulation and industry infrastructure lagged behind the size of the market. South Korea scored 1.68 in the industry category, ranking ninth, and 2.08 in regulation and accessibility, ranking 13th. Its cross-border openness score was 0.46, the lowest among the 15 countries surveyed.

The report cited institutional market access as a key constraint on South Korea's crypto market, pointing to hurdles in corporate account openings, custody services and bank onboarding. It also identified rules governing crypto issuance, tokenized securities and stablecoins, as well as foreign-exchange regulations and conditions for overseas investors seeking to enter the market, as factors limiting competitiveness.

The report said deep liquidity and strong trading demand driven by retail investors have not fully translated into an expansion of the institutional market. "Strength on the demand side is not the limiting factor," it said of South Korea's market. Regulatory pathways that would enable institutional participation have instead constrained market growth.

Still, South Korea's crypto policy stance has recently shifted from suppressing the market toward strengthening industry competitiveness, the report said. Corporate participation in the crypto market is being expanded in stages, while custody infrastructure and a framework for tokenized securities are also advancing.

Even so, corporate participation in the crypto market, token issuance, taxation and cross-border transactions were cited as areas that still require regulatory work. Debate is also continuing over which entities should be allowed to issue won-denominated stablecoins and which authorities should regulate them. Whether South Korea expands market access for institutional investors and broadens cross-border openness will determine the competitiveness of the domestic crypto market, the report said.