South Korea's crypto market is seeing steep outflows and lower activity: assets on local exchanges fell to 60.6 trillion won (~$41.4B) by end-February 2026 and average daily trading volumes dropped to about 4.5 trillion won. Regulators will automatically flag transfers over 10 million won to overseas exchanges and report them to the FIU, and a proposed 22% tax on crypto gains from next year risks accelerating outflows since authorities can effectively track only five won-based platforms. The market was further shaken when Bithumb accidentally distributed a 620,000-Bitcoin reward (meant to be 620,000 won); users sold roughly 1,788 BTC before a rollback, order books filled with “ghost coins,” Bithumb recovered 99.7% of funds, sued to recover the remaining ~7 BTC, and the Bank of Korea urged exchanges to adopt automated circuit-breakers.

Facts from the summary show shrinking on-exchange balances (60.6 trillion won) and lower daily volumes (~4.5 trillion won), new AML rules flagging transfers over 10 million won, and a proposed 22% tax — all likely to push capital away from local platforms. The Bithumb incident (accidental 620,000-BTC reward, ~1,788 BTC sold, 99.7% recovery) created short-term liquidation pressure and prompted calls for circuit-breakers. These concrete regulatory and exchange events support a strongly negative sentiment and a moderate short-term market impact for traders.