According to research, South Korean exchanges carry around 30% of global crypto trading volumes. According to Kaiko’s research, 85% of that activity is linked to altcoins, while BTC and ETH carry a much smaller weight. The ratio is skewed from the usual dominance of BTC and blue-chip assets. On Coinbase, which caters to US-based traders, BTC and ETH pairs make up 70% of all volumes.

South Korea maintains its status as an altcoin hub

Over 85% of volumes in South Korea come from altcoins. At the same time, the share of altcoin trading on Binance is down to around 30%. South Korean listings are relatively conservative, and the exchanges carry altcoins from previous bull markets. The KRW pairs also mean the available liquidity is localized rather than global. Since the exchanges are not dependent on the inflow of altcoins, some altcoins benefit from local hype and the general high-risk retail investment culture.

Weekly trading volumes on local exchanges are at around $2.66B, a relatively low baseline. South Korean exchange trading, including Upbit, Bithumb, and KuCoin, may also affect futures markets for selected assets. Overall, trading in Southeast Asia has shifted to a lower baseline. Japan’s market supplements a steady volume of $20-$30B weekly, while providing significant liquidity for BTC trading.

One notable effect of South Korean exchanges is that trending coins also spark acceleration on derivative markets. For instance, Enjin Coin, a relatively old asset, was among the top 5 assets on Bithumb as of April 15. Over 20% of ENJ volumes are against the South Korean won, allowing the asset to achieve a strong trend. Coinciding with the Bithumb rally, where ENJ reached a new high for 2026, open interest also increased to a three-year high.

Other altcoins with significant activity on South Korean markets include XRP and the recently trending ZAMA. In the case of ZAMA, open interest also spiked in accordance with the increased Bithumb and Upbit trading. However, for tokens trading on South Korean exchanges, futures still depended on Binance. Those assets may be watched by international traders, making use of strong directional moves to also benefit from the more easily available futures markets.

The markets in South Korea are still isolated due to local banking regulations, and foreign traders have found a workaround through Binance or perpetual futures platforms. However, not all older altcoins are available as perpetual futures. The recent examples of altcoin activity show that not all assets were abandoned, as long as they could attract sufficient liquidity and gain a clearer direction.

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The move is part of a legal compliance initiative to assist users in transitioning to crypto trading platforms that adhere to Japan’s stringent regulatory requirements.

Legal compliance and user transition

Gateio’s exit from Japan is primarily driven by the need to comply with the country’s regulations. The Japanese Financial Services Agency (FSA) mandates that all cryptocurrency exchanges be registered and adhere to specific rules. 

One of these rules includes a leverage limit of 25 times, significantly lower than Gateio’s previously offered leverage of over 100 times. By shutting down its services, Gateio aims to ensure its users switch to platforms meeting these regulatory standards.

Appeal and regulatory challenges

Despite not being licensed by the FSA, Gateio had been a popular choice among Japanese traders. The exchange’s high-leverage options and zero-cut system, which protected users from falling into debt by covering negative balances caused by market fluctuations, made it attractive. However, operating without an FSA license meant that Japanese users were trading at their own risk, as Gateio was not under the regulatory body’s oversight.

Unlike other major exchanges, Gateio did not establish a local entity in Japan nor actively marketed its services to Japanese users. Instead, it provided a Japanese version of its website, allowing it to operate under the radar. This approach allowed Gateio to avoid confrontation with the FSA while serving Japanese users.

Precedent and market impact

Due to regulatory pressures, Gateio is one of many cryptocurrency exchanges to exit the Japanese market. Binance, another major exchange, left Japan in 2022 following a warning from the FSA but re-entered the market by acquiring a local exchange. Similarly, Coinbase exited Japan last year after facing regulatory warnings. BitMEX also left in 2020 for the same reasons.

Due to stringent regulations, the Japanese market has seen a pattern of major exchanges withdrawing. These regulations aim to protect investors and ensure market stability but have also made it challenging for foreign exchanges to operate without compliance. Gateio’s departure highlights the ongoing regulatory challenges in the cryptocurrency market in Japan and the need for exchanges to adapt to local laws.

Gateio’s move is expected to significantly impact its Japanese user base, who must find alternative platforms that comply with local regulations. It also underscores the importance of regulatory compliance for cryptocurrency exchanges operating in Japan and other markets with strict financial regulations.

Gateio’s exit from Japan indicates cryptocurrency exchanges’ difficulties in navigating complex regulatory environments. As the market continues to evolve, compliance with local laws will remain a critical factor for the successful operation of cryptocurrency exchanges worldwide.

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