Stock market boom, crypto market slow and steady? South Koreans' all-in bets never seem to cool down.

Author: Zen, PANews

When it comes to aggressive investing, South Koreans are serious. The historic surge in the South Korean stock market that began in the first half of last year proves this once again.

As of the end of February 2026, the Korea Composite Stock Price Index (KOSPI) has risen by nearly 50% this year, making it the best-performing stock market in the world.

On February 25, the KOSPI broke through 6,000 points intraday for the first time; the following day, it closed above 6,300 points for the first time, recording gains in 10 out of the past 11 trading days and continuously setting new historical highs. On February 28, Samsung Electronics' market capitalization surpassed the $1 trillion mark, becoming the first South Korean company to join the "trillion-dollar club".

As the founder of on-chain data analytics platform CryptoQuant said, "We Koreans love gambling, don't underestimate this country."

Market reform: an indispensable catalyst

The surge in the South Korean stock market is the result of a series of government reforms and the convergence of global industrial benefits.

On January 22, South Korean President Lee Jae-myung had lunch with members of the Democratic Party of Korea's "KOSPI 5000 Special Committee." Coincidentally, prior to lunch that day, the KOSPI index broke through the 5000-point mark for the first time in trading. Bringing South Korea into the "KOSPI 5000 era" was a grand vision that Lee Jae-myung repeatedly emphasized as a presidential candidate. Now, that vow has been fulfilled, and even surpassed.

In less than a year, the South Korean stock market has risen from 2,300 in April of last year to its current level above 6,200. But perhaps even Lee Jae-myung never imagined that the South Korean stock market would be so volatile, accomplishing in a few months what other countries take years or even decades to achieve.

This surge may be far from over, with strong upward momentum driving the KOSPI index to new highs. Both JPMorgan Chase and Nomura Securities have recently raised their target levels for the Korea Composite Stock Price Index (KOSPI): JPMorgan predicts the KOSPI will reach 7,500 points this year, while Nomura expects it to reach 8,000 points in the first half of 2026.

The strong and frenzied performance of the South Korean stock market is undoubtedly benefiting from the global artificial intelligence boom. The "arms race" among tech giants in the AI ​​field has continuously increased the prices and strategic importance of DRAM and NAND flash memory, the two main types of memory chips, as well as high-bandwidth memory (HBM). Against this backdrop, memory chip manufacturing giant Samsung Electronics and SK Hynix, a major supplier of HBM to Nvidia, have both recorded gains exceeding 60%.

If the fundamental demand for AI services provided support for the rise in the South Korean stock market, then the government-led stock market reforms were the catalyst that propelled the surge.

The real structural change in the South Korean stock market is that the government has targeted the long-standing "Korea Discount" as a policy objective. South Korea is employing a comprehensive reform of corporate governance, shareholder returns, market systems, and trading infrastructure to attract foreign and long-term capital willing to offer higher valuations.

Since taking office last June, the Lee Jae-myung administration has rolled out a more aggressive set of capital market reforms:

• Promote the expansion of the scope of fiduciary duty of the board of directors to strengthen the board's accountability to shareholders and capital efficiency;
• The proposal suggests adjusting the dividend-related tax system to incentivize listed companies to increase dividends and improve shareholder returns.
• At the same time, it will increase law enforcement resources and regulatory tools, strengthen the crackdown on insider trading, market manipulation and other violations, and announce a roadmap for striving to be included in the MSCI developed markets.

Before Lee Jae-myung took office as president, South Korea had already initiated reforms to its trading system in March of last year. The country launched its first alternative trading system, Nextrade (NXT), extending stock trading hours to 8:00–20:00 (including pre-market and after-hours trading) and attracting participants with lower fees and longer trading hours. At the same time, South Korea ended its longest-ever short-selling ban, emphasizing systemic reforms and stricter enforcement to improve market transparency and price discovery efficiency—a significant advantage for foreign investors who value "predictable market rules."

Taken together, the surge in the South Korean stock market is not solely due to the rise of AI, but also to a series of policy reforms that have shaped the market. To some extent, industry narratives are responsible for raising profit expectations, while institutional reforms are responsible for raising the upper limit of valuations.

Therefore, KOSPI's rise is not simply a rally driven by the AI ​​theme; the South Korean government is also playing a significant role in guiding institutional reforms and value reassessment.

South Korea's slow-progressing new crypto policy

Compared to the turbulent stock market, the new cryptocurrency policy appears more cautious, even somewhat slow.

As an extension of the "Korea discount" and capital market repricing plan, South Korea's approach to managing the crypto industry is also changing. It has shifted from a passive regulatory approach focused on combating fraud and anti-money laundering (AML) to a capital market logic that systematically protects users, regulates the market, and promotes institutionalization.

At the level of exchanges and market order, the Virtual Asset User Protection Law, which came into effect in July 2024, explicitly requires virtual asset service providers to securely safeguard user deposits and virtual assets, establish stricter custody and management obligations, and establish a legal basis for punishing "unfair trading" such as insider trading and price manipulation. To some extent, this aligns with the direction of "improving transparency and accountability" in its stock market reforms.

Last year, South Korea's Financial Services Commission (FSC), in a policy briefing to the National Policy Planning Committee, clearly stated its intention to formulate a plan to introduce spot ETFs for virtual assets and to advance a regulatory framework for stablecoins. This reform in South Korea's cryptocurrency industry does not imply a full-scale embrace of crypto assets in the short term. On the contrary, it is characterized by a tiered approach, cautious implementation, and even a somewhat slow pace.

In February 2025, the FSC released a regulatory roadmap, planning to allow approximately 3,500 listed companies to conduct virtual asset transactions with licensed investors starting in the second half of last year. However, according to the Seoul Economic Daily, the draft of the "Guidelines for Virtual Asset Transactions by Listed Companies" only entered the public communication and finalization process in January of this year, meaning its official implementation date can only be set for the more general period within this year. This time lag between announcement and implementation reflects the issue of South Korea's gradual regulatory progress and slow pace of implementation.

South Korea has historically maintained a conservative stance on cryptocurrency ETFs. In January 2024, after the US approved a Bitcoin spot ETF, South Korean financial authorities stated they would not assess the necessity of following suit in the short term. However, over the past year, South Korea has shifted from a policy of rejection to acceptance. In its 2026 economic growth strategy, the South Korean government proposed establishing a comprehensive regulatory structure covering issuance, circulation, and trading through the "Digital Asset Basic Law," and plans to introduce digital asset spot ETFs, while also establishing a regulatory framework for stablecoins.

Discussions surrounding stablecoins for the Korean won have been intense for the past six months. However, official agencies have consistently emphasized caution, and no resolution has been reached to date. The biggest challenge currently facing regulators is the debate over the issuer of the stablecoin. The banking sector, represented by the Bank of Korea, has consistently stressed that without bank participation, KYC/AML procedures may not be properly implemented, potentially impacting South Korea's capital market openness and financial stability.

Bank of Korea Governor Lee Chang-yong strongly advocates that stablecoins should be bank-centric.

While policy direction has become more flexible and the legislative framework continues to be developed, the regulatory and participation mechanisms remain unresolved, which accurately reflects the state of the South Korean crypto market. Overall, South Korea adopts a similar regulatory engineering approach for both the capital market and crypto assets: first, it establishes clear boundaries of responsibility, disclosure, and enforcement tools, and then expands the number of participants and the amount of capital through phased access and product-based tools.

Koreans are passionate, resilient, and eager for wealth.

Since the middle of last year, after a large influx of South Korean investors into the country's stock market, mainstream media and social media have frequently portrayed a pessimistic sentiment that "South Koreans are no longer trading cryptocurrencies."

These reports and claims are partially corroborated by data released by the FSC—in the first half of 2025, the average daily trading volume of South Korea's five major exchanges was approximately 6.4 trillion won, a decrease of about 12% compared to the previous period; furthermore, according to data submitted to the National Assembly by the Financial Supervisory Service of South Korea, the total trading volume of South Korean cryptocurrency exchanges fell by about 11% last year. This indicates that the activity level of the South Korean cryptocurrency market has indeed declined.

However, the situation is actually more complex when compared to global trading volume. The global cryptocurrency market is currently in a downturn, and the shrinking market is not limited to South Korea.

Conversely, against the backdrop of a global crypto winter, the resilience of the South Korean market remains remarkable.

According to CryptoQuant data, after peaking in the fourth quarter of 2024, South Korea's share of the global crypto market has remained relatively stable between 8% and 11% since 2025. Surprisingly, in recent months, amidst negative sentiment and liquidity shortages, the country's global market share has even slightly rebounded.

Another indicator of resilience is the continued expansion of South Korea's cryptocurrency user base. An FSS report shows that the number of South Korean cryptocurrency traders increased from 8.91 million in 2024 to 9.91 million last year. Even with a decline in total market transaction volume, the number of participants and market penetration are still increasing, demonstrating the country's solid market foundation.

The stock market and the crypto market are never a zero-sum game where one is the other.

In South Korea, whether it's KOSPI breaking the 6,000-point mark or the millions of cryptocurrency investors, they all reflect the same social psychology: in a highly competitive society with increasingly solidified social classes, ordinary people have an extreme desire to break down barriers and achieve wealth leaps.

The "discount in South Korea" eliminates undervalued areas in the capital market, while the tireless investment frenzy among South Koreans aims to eliminate the "discount" on the fate of ordinary people. As stock market dividends are being realized, nearly ten million South Koreans who still hold expectations for the crypto market may be patiently waiting for another "KOSPI 5000 era" for cryptocurrencies.