South Korea Crypto Trading Volume Drops 54% in H1 2026, Upbit Gains Market Share

South Korea’s crypto market saw trading volumes collapse in the first half of 2026, with liquidity concentrating heavily on market leader Upbit and smaller exchanges feeling the squeeze. NexBlock data show South Korea’s five major won-based exchanges—Upbit, Bithumb, Coinone, Korbit and Gopax—handled about $366.58 billion in combined trading volume in H1 2026, a 54.6% decline versus the same period in 2025. The slowdown extended into July: from July 1–27 the five platforms recorded roughly 17.34 trillion won in trading volume, down 16.9% from the comparable period in June. Upbit expanded its dominance even as volumes fell. During the July period Upbit processed about 11.69 trillion won; its own volume dropped about 10%, but its market share rose from 62.3% to 67.4% as rival platforms experienced steeper declines. Bithumb handled roughly 4.71 trillion won, seeing its share fall from 30.7% to 27.1%, widening the market-share gap between Upbit and Bithumb to 40.3 percentage points. NexBlock attributes the market reshuffle to liquidity migrating toward the largest venues during a broader downturn. Deep order books reduce slippage for large trades and tend to attract more participants, reinforcing the position of dominant exchanges while leaving smaller platforms with thinner order books and fewer trades. Pressure is mounting on Coinone, Korbit and Gopax to diversify beyond retail spot trading. NexBlock reports these platforms are exploring partnerships with securities firms, expanding institutional services and reorganizing internally. Going forward, competition in Korea could hinge less on headline trading volume and more on factors such as stablecoin liquidity, regulatory compliance, institutional access and cooperation with traditional financial firms. Why it matters beyond Korea - For U.S. and global investors, South Korea’s trading data is a useful barometer of retail demand in a major Asian market, although won-based exchanges primarily serve domestic users. - A sustained drop in Korean volume can remove an important source of altcoin liquidity and price discovery—especially for tokens that historically enjoyed strong local interest. Tax timeline and policy The volume contraction comes as South Korea prepares to implement a long-delayed crypto tax. Finance Minister Koo Yun-cheol confirmed on July 29 that the government will begin taxing cryptocurrency gains on Jan. 1, 2027, as scheduled. Koo said, “We are pushing forward with the plan to tax cryptocurrency starting next year as scheduled.” Under the framework: - Income from transferring or lending virtual assets will be classified as “other income.” - Annual gains above 2.5 million won (about $1,740) will face a 20% national tax; a local income tax raises the combined rate to about 22%. - Investors with annual gains below the threshold will not owe tax. - Taxpayers are expected to file their first returns in May 2028 for gains realized in 2027. The eventual impact of the tax on trading volume will depend in part on how exchanges implement transaction reporting and cost-basis calculations ahead of enforcement. After three prior delays, the new policy adds another consideration for domestic traders. Macro backdrop: state-directed capital into tech Separately, the government is expanding state-backed investment in strategic industries through the Korea Investment Corporation (KIC). The finance ministry approved a new KIC account that will start with at least 20 trillion won (roughly $13.7 billion) to invest domestically in sectors such as AI and data centers. The move signals a push to channel institutional capital into domestic strategic assets even as KIC has historically focused on overseas investments. Outlook for exchanges The immediate challenge for Korea’s crypto venues is to rebuild activity while complying with tighter rules and new tax reporting requirements. Upbit’s growing share underscores how liquidity concentration can entrench leaders in a down market. Smaller exchanges will likely need to lean on institutional partnerships, stablecoin services, or structural changes if they hope to regain footing in a market where total trading volume is continuing to fall.