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

Key Summary

• From liquidity export to industrial ecosystem: In the first quarter of 2025, the South Korean Web3 market is迎来转折点. This market, once regarded as a global project "liquidity export", is transforming into a structured self-sustaining industrial ecosystem.
• Impact of Relaxed Regulation on Corporate Accounts: 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 like Avalanche, TON, Ripple, and Solana are actively establishing a long-term foundation in South Korea. Their activities have gone beyond marketing to focus on building developer communities and hosting hackathons.

1. The Korean Web3 Market in Q1 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, which has delayed 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 cryptocurrencies obtained from operations into fiat currency through 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 operating on a small scale without registration is technically feasible, large projects always face legal and regulatory uncertainties.

These institutional constraints, combined with investor activities far exceeding the maturity of the local ecosystem, have led some projects to primarily view South Korea as a customer acquisition channel. Against this backdrop, the external characterization of the South Korean market as a "liquidity export" becomes difficult to refute.

Market developments in the first quarter of 2025 indicate 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 engage in cryptocurrency trading, signify substantial progress in structural reforms. Beneath the surface, global projects are steadily building local ecosystems, supported by 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, supported by both institutional readiness and sustained investment interest.

2. Institutional Progress: Allowing Corporate Accounts to Engage in Cryptocurrency Trading

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

! [2025 Q1 Korea Web3 Report: Is It Still a Speculative-Dominated Market?] ](https://img.gateio.im/social/moments-3aed1a8d05fe452f5b3f20b736b52934)

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 Q2 2025): Accounts will be opened to law enforcement agencies, non-profit organizations, and cryptocurrency exchanges, limited to asset settlement 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 to facilitate 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. Starting from the second half of 2025, publicly listed companies and professional investment firms will be permitted to engage in cryptocurrency trading for investment and treasury management purposes.

However, most Web3 projects belong to ordinary enterprises in the third stage. To qualify for the second stage, companies must maintain a financial investment product balance of at least 10 billion won (approximately 7 million USD) according to the Capital Markets Act, and for external auditing entities, it is 5 billion won (approximately 3.5 million USD) — a threshold that most Web3 companies cannot reach. Therefore, the majority of Web3 projects cannot immediately benefit from the new regulations. However, the roadmap still indicates a gradual relaxation 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

• Establishing a legal foundation for Korean enterprises to carry out Web3 business
• Enhance market stability through institutional investors with structured risk management and long-term strategies.
• Promoting 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 way to liquidate acquired crypto assets. The new policy establishes a key entry point for companies to operate in compliance, promoting the normalization and development of crypto-related business activities.

This development 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. Additionally, broader corporate participation may improve the persistent inefficiencies in the local market—most notably the "kimchi premium."

The increase in institutional participants is expected to broaden the scope of crypto-related financial services. Asset management companies may launch cryptocurrency funds or acquire custodial service providers to offer comprehensive solutions. Financial technology companies may develop enterprise treasury tools that support crypto account management. These developments will help expand the South Korean Web3 industry by strengthening supporting service infrastructure and attracting more traditional financial institutions.

2.2. Potential Risks of Allowing Enterprises to Encrypt Accounts

• Phased relaxation of regulations may lead to supply and demand imbalances, putting downward pressure on prices.
• With the entry of listed companies and institutional investors into the market, the government's efforts to ensure tax revenue are expected to strengthen.
• Conservative risk management by institutional investors may lead to concentrated holdings of Bitcoin, raising concerns about a 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 pressure between buyers and sellers. 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 seller 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.

In terms of regulation, after listed companies and institutional investors fully enter the market, the government's efforts to ensure tax revenue are expected to strengthen. Although cryptocurrency taxation has been postponed to January 1, 2027, the presidential election on June 3, 2025, may change the policy direction and is worth close attention.

In terms of investment behavior, corporate capital may concentrate on Bitcoin. As shown by US Strategy (formerly MicroStrategy) and Japan's Metaplanet, institutional investors tend to allocate to large-cap stable assets due to conservative risk management. This may lead to a significant influx of funds into Bitcoin or impact the altcoin market—Korean retail investors have historically been highly 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 and China, 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 South 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 supporting local teams in South Korea to build ecosystems. After a successful collaboration with "MapleStory," Avalanche has expanded its cooperation with small and medium-sized projects in Korea. The team holds demo days every 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 framework, and expanded network access to strengthen the local TON ecosystem in a scalable manner.

These ecological 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 category and become a key turning point for the Web3 ecosystem in Korea. In March, Ripple held a two-day "DE-BUTHON 2025," attracting 24 teams and 203 participants. Superteam Korea, in collaboration with 22 global partners, organized 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 hacker marathons reflects the presence of a strong builder ecosystem. These events have now become strategic launch platforms—providing builders with a clear market entry path and bridging the gap between prototype development and actual deployment.

By the first quarter of 2025, driven by ecological construction initiatives dominated by a global network (rather than mere capital inflow), the South Korean Web3 industry is beginning to show quantifiable progress. Strengthened cooperation with established participants, combined 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 momentum stage. 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 key transformation—from an investment-driven environment to a mature industrial ecosystem. Regulatory progress, including the phased opening of corporate crypto trading accounts, will lay the foundation for structured market participation. At the same time, ongoing ecological construction efforts of global Web3 projects 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 won stablecoin at the beginning of April. The Bank of Korea has also indicated that it will play a more proactive 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 the Web3 field in South Korea towards a sustainable industrial ecosystem. After years of regulatory constraints and structural inefficiencies, South Korea is entering a new phase marked by policy collaboration, institutional participation, and the emergence of industrial-level growth.