South Korea's Crypto Exchange Inflows Halve Ahead of Taxation as Funds Flee Overseas

Ahead of South Korea's virtual asset taxation scheduled for January next year, funds flowing into the country's major exchanges have nearly halved over the past year, while money moving to overseas exchanges has surged by more than 70%. Concerns are mounting both inside and outside the National Assembly that the tax is accelerating capital flight abroad.

According to an analysis by People Power Party lawmaker Park Soo-young of data submitted by South Korea's five major virtual asset exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax), net asset inflows into these exchanges totaled 2.05 trillion won (approximately $1.5 billion) from January to August this year. That marks a 56.8% decline from the 4.74 trillion won (approximately $3.5 billion) recorded during the same period last year.

Korean won funds held at the exchanges also declined rapidly. Won deposits across the five major exchanges fell 32.3% from 7.69 trillion won (approximately $5.7 billion) in January to 5.2 trillion won (approximately $3.8 billion) in August. Over the same period, funds heading to overseas exchanges actually increased. Net outflows from Korbit and Gopax to foreign exchanges reached 480.2 billion won (approximately $355.2 million) in the first eight months of this year, up 74.2% from 275.7 billion won (approximately $203.9 million) a year earlier.