Korea Crypto Volume Falls 21.7% in Q1; Bithumb Posts Loss

Average monthly crypto trading volume across South Korea's five major won-based exchanges fell 21.7% to 98.1 trillion won in Q1 2026 from 125.2 trillion won in Q4 2025, CoinGecko data show. The contraction at Upbit, Bithumb, Coinone, Korbit and Gopax has already hit exchange earnings.

Upbit, which controlled roughly 72% of domestic trading activity in Q1, saw volumes decline 23.4%. Bithumb's drop was steeper at 32.1%, according to CoinGecko. Together the two platforms handle approximately 96% of all Korean crypto trading, a concentration the Financial Services Commission aims to reduce through ownership caps under Phase 2 of the Digital Asset Basic Act.

The decline deepened through the first half. Combined trading volume across the five exchanges fell 54.6% year over year in H1 2026, generating roughly $366.58 billion in total volume, NexBlock reported. The broader market contributed. Bitcoin fell more than 30%, dropping from roughly $90,000 at the start of 2026 to about $60,000 by the end of June. Ethereum declined from approximately $3,000 to $1,600 over the same period.

Bithumb's first-half operating revenue fell 48.7% to 168.8 billion won ($120 million) from 329.2 billion won ($233 million). Operating profit dropped 83.4% to 14.9 billion won ($11 million), according to its filing with the Financial Supervisory Service. The exchange swung to a net loss of 108.7 billion won, reversing a 55 billion won ($39 million) profit a year earlier.

Virtually all of Bithumb's revenue comes from platform trading fees, leaving the company acutely exposed to volume swings. "The recent decline in performance is attributed to a contraction in liquidity across the global digital asset market," Bithumb said in its filing.

Upbit parent Dunamu fared better but still posted sharp declines. Consolidated operating revenue fell 49.1% to 408.1 billion won ($289 million). Operating profit dropped 79.7% to 111.5 billion won ($79 million). Net profit fell 74.1% to 108.4 billion won ($77 million). Dunamu at least remained profitable, the pace of decline matching Bithumb's.

Korean regulators have continued to tighten the environment. On 18 August, the Korea Communications Standards Commission ordered domestic ISPs to block access to Polymarket, ruling that the prediction market constitutes illegal gambling under the Criminal Act. The decision followed a formal review that began in May. It closes off a potential revenue diversification path that US competitors like Coinbase and Robinhood have pursued with their own prediction market offerings.

The regulatory stance also includes stricter operational requirements imposed after Bithumb accidentally distributed 620,000 BTC to user accounts in February, triggering a 17% flash crash in the BTC/KRW pair. The Financial Supervisory Service now requires all domestic exchanges to implement automated ledger-to-wallet reconciliation every five minutes, following a rule developed with DAXA.

The volume decline is not unique to Korea, its severity stands out. Trading economics are under pressure across global platforms: Coinbase's transaction revenue fell 21% year over year in Q2, and Payward's adjusted EBITDA dropped 71% even as its revenue rose 17% on non-trading lines. Upbit and Bithumb offer no derivatives, no margin and no staking yields that would sustain fee income when spot activity dries up.

When Samsung Electronics and SK Hynix delivered record profits on AI-driven semiconductor demand, capital rotated out of crypto and into the KOSPI, which roughly doubled over the preceding 12 months. Korea's combined crypto trading volume fell 54.6% year over year in H1, compared with Payward's 18% decline in platform volume and Coinbase's 21% drop in transaction revenue.

The Senate is scheduled to hold a procedural vote on the CLARITY Act on 15 September. Korean exchanges, meanwhile, face ownership caps under DABA Phase 2 and an ISP block on Polymarket.