--- title: "South Korean retail investors withdraw: Banks invest 1 trillion won in 10 days to seize crypto infrastructure." type: "News" locale: "en" url: "https://longbridge.com/en/news/288008845.md" description: "The South Korean crypto market is shifting from retail investor dominance to institutional control, with banks investing 1 trillion won in key infrastructure like STOs and stablecoins. Partnerships and equity acquisitions among institutions are increasing, although many remain at the MOU stage. The competition for exchange shares is intensifying, as financial institutions seek to secure customer access and liquidity. The landscape is complex, with custody services leading, while RWA and STOs face regulatory challenges. Institutions are adapting strategies to navigate these obstacles and capitalize on emerging opportunities." datetime: "2026-05-29T04:18:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/288008845.md) - [en](https://longbridge.com/en/news/288008845.md) - [zh-HK](https://longbridge.com/zh-HK/news/288008845.md) generator: "portal-rs" --- # South Korean retail investors withdraw: Banks invest 1 trillion won in 10 days to seize crypto infrastructure. Author: Tiger Research; Translator: Deep Tide TechFlow The South Korean crypto market is undergoing a power shift. The era of retail investor dominance is ending, and traditional financial institutions are frantically scrambling for key infrastructure such as STO standard-setting rights, stablecoin payment tracks, and the custody market, even before regulations are fully clear. Behind this seemingly calm MOU race lies a struggle for control of the future front-end of digital asset finance—whoever controls these infrastructures controls the customer gateway for the next decade. Partnerships and equity acquisitions between South Korean institutions and securities firms are accelerating simultaneously in the crypto market. However, the overall landscape remains difficult to discern at a glance. Many partnerships have been announced, but actual commercial deployments are still rare. This report explores why conversion rates are so low and why institutions are still pushing forward. Key Takeaways: South Korean institutional crypto activity has moved beyond the MOU (Memorandum of Understanding) stage, entering into concrete business operations and exchange equity acquisitions. Institutions are secretly intensifying competition for key financial infrastructure, including STO standard setting, stablecoin payment tracks, and the custody market. Domestic infrastructure builders are becoming the core pillar of institutional business, constructing domestic tracks that comply with the Bank of Korea's CBDC framework and local regulatory requirements, reducing reliance on foreign technology. Overseas Web3 foundations have completely shifted their strategy in South Korea, moving from building retail communities to partnering with large corporations and financial institutions, as traditional finance is rapidly taking over the market. ## 1\. The MOU Arms Race The above diagram, compiled by Tiger Research, depicts the connections within the South Korean institutional crypto landscape. However, this structure is not easily understood at a glance. It's difficult to distinguish which lines represent active business operations and which are merely MOUs; the lines between central hubs and peripheral participants remain blurred. It's worth noting that this complexity itself accurately reflects the current state of the South Korean institutional crypto market. As confirmed by Tiger Research's dataset—150 institutions and 196 partnerships—no single hub has achieved dominant control of the market. Domestic institutions are simultaneously establishing their positions in the market before regulations become fully clear. Competition currently unfolds on three fronts: stablecoins, STOs (Security Token Offerings), and custody (crypto asset storage). Also noteworthy is the continued acquisition of exchange equity by financial institutions, a move interpreted as a confidence-driven attempt to gain a foothold before regulations become fully clear. 2. The Battle for Exchange Shares Less than 10 days after Hana Bank announced its acquisition of a 6.55% stake in Upbit operator Dunamu for approximately 1 trillion won (about US$720 million), Hanwha Investment & Securities approved an additional 3.90% acquisition. On May 28th of the same month, Samsung Securities, Samsung SDS, and Samsung Card jointly announced a 4.0% acquisition. Mirae Asset Consulting had already signed an agreement in February to acquire a 92.06% stake in Korbit, and there were also reports that Korea Investment & Securities and global exchange OKX were in discussions regarding a joint acquisition of Coinone. This competition reflects a revaluation of crypto exchanges, which are now seen not just as trading fee platforms, but as key customer touchpoints for distributing stablecoins, custody services, security tokens, and RWA products. Banks and securities firms have gained indirect access to licenses such as VASP registration, while securing the exchange's user base and liquidity. The current battle for control is ultimately a race to see who will control the financial front end of digital assets. 3. The Korean Crypto Market by Industry A sector-by-sector analysis of the relationship graph reveals an uneven landscape. Custody services are the most active, with many players already operating live services after regulatory hurdles were cleared. In contrast, RWA and STOs remain largely at the contract or MOU stage, awaiting relevant legislation. Stablecoins face similar stagnation, with no clear standard setter in a position to dominate the market. Due to the different nature of the obstacles in each industry, the strategies for overcoming them also differ. Some participants are consolidating domestic alliances, awaiting regulatory liberalization. Others are turning to overseas markets where regulatory progress is faster, opening up alternative paths. The following sections explore the specific obstacles and participant strategies for each industry. 3.1. RWA/STO: Legislation Has Been Passed, Commercialization Infrastructure is the Bottleneck The domestic STO market is divided into two camps: the alliance led by KOSCOM and the fragmented investment alliance led by Shinhan Investment & Securities. Mirae Asset Securities has taken an independent path, utilizing overseas operations instead of waiting for domestic infrastructure. KOSCOM, a core financial network operator 76.6% owned by the Korea Exchange, is pursuing a neutral infrastructure model aligned with its founding mission, providing shared infrastructure for securities firms. Instead of signing exclusive agreements with individual issuers, it integrates 11 securities firms onto its platform, aiming to establish technical standards for issuance and distribution and ensure interfaces compatible with Korea's securities depository and custody management requirements. Shinhan Investment & Securities has rapidly built its own STO ecosystem. Starting with a proof-of-concept with Lambda 256 in 2022, it launched the joint platform PULSE in 2024 and officially launched its multi-platform account integration service in 2025. In 2025 alone, it participated as an account manager in 10 investment contract securities issuances and acquired a controlling stake in the OTC exchange NXT, establishing an end-to-end pipeline from issuance to distribution within its own ecosystem. Mirae Asset Securities completely bypassed domestic infrastructure development and went directly overseas. It issued digital bonds in Hong Kong, obtained a digital asset retail license from the Hong Kong Securities and Futures Commission, and plans to launch a Market Transaction Service (MTS) for retail investors in June. In the US, it is the only Korean securities firm to join the DTCC-led tokenization working group, which includes JPMorgan Chase, Goldman Sachs, and BlackRock, participating in discussions on global standards development. This strategy gives Mirae Asset an advantage in regulatory alignment and negotiating leverage when domestic STO infrastructure finally aligns with global standards. 3.2. Stablecoins: Legislation, Not Technology, is the Bottleneck The stablecoin market has a more diverse range of participants than other sectors. Card companies, exchanges, fintech companies, and infrastructure companies are all entering the market through different routes, leveraging their respective strengths. The largest camp is the Kakao Group. Kakao, KakaoBank, and Kakao Pay have formed a joint working group to build a "super wallet" covering stablecoins, cryptocurrencies, and native currencies. Their key asset is the infrastructure accumulated since operating the Kaia public chain since the Ground X era. Kaia has already deployed Tether (USDT) on its network and is conducting real-time payment tests. Shinhan Card is focused on migrating its existing payment network to the blockchain track. Shinhan Card signed an MOU with Solana in April, although groundwork on the technical aspects predates the agreement. The company has already completed initial proof-of-concept work with Solana, Visa, Mastercard, and Fireblocks and is now conducting advanced testing in six areas, including wallets and smart contracts. The exchange camp is circumventing the delays of the Korean won stablecoin through USD stablecoins. Dunamu is developing a Korean won stablecoin business with Naver Financial based on its proprietary blockchain GIWA. Bithumb, facing regulatory delays for Korean won stablecoins, has opted to secure its USD stablecoin distribution network first through partnerships with Circle and WLF. A joint Korean won stablecoin plan with Toss is also under discussion, though progress has been slow. All camps are active, but all face the same regulatory hurdles. The Bank of Korea is pushing for a 51% rule, requiring only consortia with a majority of banks to be allowed to issue stablecoins, while fintech companies are vying for access, delaying government-ruling party negotiations. Once issuance guidelines are released, the camp with the most comprehensive public reach is expected to gain market leadership. ### 3.3. Custody: The Need for More Institutional Capital The custody market is structurally simpler than other sectors. The four major custody institutions have each secured domestic and international financial and technology partners to establish their market positions. KODA was jointly founded by KB Kookmin Bank, Hashed, and Haechi Labs, combining traditional financial capital with crypto-native VC. Hanwha Investment & Securities, IBK Capital, and Kyobo Securities subsequently joined as investors, and a dedicated custody insurance agreement with Samsung Fire & Marine Insurance further enhanced its stability. KDAC is a traditionally financially-led custodian institution with Shinhan Bank and NH Nonghyup Bank as major shareholders. NH Nonghyup Bank was initially an investor in another custodian institution, Kardo, and became a shareholder of KDAC after the merger. Following the merger, KDAC's shareholders include two of South Korea's five largest banks. BDACS has adopted a unique approach focused on technology and partner development. Expanding its custody and payment infrastructure through partnerships with Woori Bank and international digital asset infrastructure companies including Galaxy and GK8, it has also signed an MOU with Circle to issue the Korean Won stablecoin KRW1 on Circle's Arc blockchain and is the only VASP and key custody partner in the KRX-led KDX consortium. BDACS is currently conducting a proof-of-concept for KRW1, positioning itself as a custodian simultaneously targeting both custody and payment infrastructure. BitGo Korea has entered the domestic market leveraging the technological strength of its global parent company. BitGo, headquartered in China, manages over $70 billion in assets and handles approximately 20% of global Bitcoin on-chain transactions. Domestically, it is backed by Hana Financial Group and SK Telecom, making it a custodian backed by financial and telecommunications capital. These institutions have entered the market through their respective custody relationships. However, all major custodians reportedly suffered net losses last year, indicating that their development outpaced the institutional capital inflows needed to maintain operations. In summary, the infrastructure development of STOs, stablecoins, and custody reveals a clear common constraint: domestic institutions have built the business framework, but the underlying technological infrastructure still largely relies on overseas solutions. 4. Infrastructure Builders Reliance on overseas solutions incurs structural costs: as the market grows, a significant portion of revenue will flow overseas in the form of technology licensing fees. Domestic infrastructure also faces the risk of disruption if overseas partners change policies or increase costs. The more fundamental problem is that areas requiring integration with the specific regulatory environment of South Korea—such as the issuance of Korean won stablecoins, STO distribution rules, and the integration of domestic corporate accounts—cannot simply be directly applied to global solutions. This is precisely why, once the relevant legislation is finalized and capital begins to flow seriously, domestic technology companies capable of directly designing and controlling the underlying mechanisms within the South Korean regulatory framework will be indispensable. Domestic companies that have identified this technology gap and are building South Korea-specific financial infrastructure are already in action. Leading technology providers are listed below. 4.1. LG CNS Among traditional IT service companies, LG CNS stands out most prominently. Since launching its proprietary blockchain platform "Monachain" in 2018, it has accumulated operational experience by providing services to over 220 local governments through the Korea Mint's local currency platform. This permissioned blockchain experience has translated into orders for CBDC and STO projects. As the prime contractor for the Bank of Korea's CBDC project "Han River," LG CNS is developing a government subsidy distribution system utilizing deposit tokens. Through this process, it has established the system architecture capability to run institutional CBDCs and private digital currencies on a single network, effectively porting traditional financial security standards and procedures to the blockchain. The development of the KOSCOM joint STO issuance platform and the Mirae Asset Securities STO platform follows the same logic. LG CNS is not directly issuing assets but is targeting three directions: building issuance and distribution platforms for banks, providing SaaS to payment operators including credit card companies, payment gateways, and simple payment services, and developing digital asset payment platforms for securities companies. Once the regulatory framework is finalized, it appears to be the most likely candidate to gain access to the infrastructure contract market. Among blockchain infrastructure companies, DSRV stands out for directly helping financial institutions access on-chain infrastructure. As a validator and infrastructure company operating on over 70 blockchain networks, DSRV manages over 4 trillion won (approximately $2.9 billion) in assets, ranking first in Ethereum staking in South Korea and among the top ten globally. A key development is its expansion from node operations to full-stack institutional on-chain infrastructure. Through the DSRV Portal, financial institutions can access wallet, payment, tokenization, custody, and staking capabilities via APIs and dashboard interfaces. Without building their own nodes and security infrastructure, financial companies can access user wallets, institutional wallets, recurring payments, token issuance, burning, transfers and locking, custody, and staking capabilities. Trust mechanisms are also in place. DSRV has taken the lead in obtaining VASP, ISMS, and SOC 1 Type 1 certifications, directly meeting the regulatory, security, and operational control requirements of financial institutions. In effect, this means that external infrastructure providers bear the most significant burdens for financial companies when deploying on-chain services: wallet security, internal controls, and operational risks. Its partnerships are geared towards payment infrastructure development. DSRV is collaborating with SBI Ripple Asia to develop remittance infrastructure compliant with Korean and Japanese regulations. It is working with Circle to develop a framework for institutional USDC issuance, redemption, and settlement that bypasses exchanges. It has signed an agreement with BC Card to connect traditional card payment networks to the blockchain for stablecoin payment infrastructure. DSRV recently completed a 30 billion won (approximately US$21.7 million) Series B funding round to accelerate technology development. 4.3. Altus (formerly B-Harvest) Altus (formerly B-Harvest) operates as an integration layer between legacy systems in financial institutions and blockchain environments. Founded in 2018, the company has contributed to the development of the EVM chain based on the Cosmos SDK. It is an organization of over 40 engineers and researchers who have directly built multiple production networks, including Canto, Crescent, Stable, and Ault. Altus handles protocol engineering and core architecture for Ault Blockchain, an institutional L1 focused on RWA, transactions, and payments. In 2025, it contributed EVM integration, performance improvements, and security audits to the Bitcoin staking L1 Babylon, enabling its production readiness. Its financial institution solutions originate from the same layer. Altus built from scratch to meet financial industry requirements: an on-chain and off-chain orchestration layer connecting legacy systems and blockchain execution environments, RWA tokenization, permissioned exchanges, stablecoin payments and settlements, and institutional wallets and custody infrastructure. Current internal R&D is running in parallel: the Canton Network architecture supporting selective data disclosure between institutions, and the Commonware Stack, a modular blockchain framework targeting 1 million TPS. The three companies start from different positions and possess different strengths. LG CNS leads in financial IT credibility, DSRV in blockchain validator infrastructure, and Altus in protocol-level custom design capabilities. But all companies share the same goal: to acquire the core operating system before a large influx of institutional capital. The deciding factor is how much credible building experience each company can accumulate before the market is fully open. 5. Retail Investors Exit, Institutions Enter The recent surge in partnership announcements should not be interpreted as ordinary business expansion. These are positioning moves: institutions are securing advantageous arrangements before regulations are finalized, and then using these arrangements to influence the final form of the regulatory framework. The current partnership race is less about market competition and more about regulatory design. The South Korean crypto market has undergone a major restructuring in just six months. Custody camps have formed, STO alliances have taken shape, and major financial holding companies have taken steps to acquire exchange equity. Meanwhile, retail trading volume has plummeted. The total trading volume of South Korea's five major exchanges declined by approximately 48% year-on-year. The market focus is rapidly shifting from retail investors to institutional investors. This shift has also changed the way overseas crypto foundations approach South Korea. Just as Solana was adopted as a partner by Shinhanka and Avalanche by Mirae Asset, foundations entering the domestic market have shifted their primary focus from exchange trading volume to partnerships with financial institutions and large corporations. 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