Digital asset investors are moving their funds beyond overseas centralized exchanges (CEX) and into decentralized exchanges (DEX).
Tiger Research analyzed approximately 120,000 wallets estimated to belong to Korean investors and found that in July, about 1,200 wallets that traded on Hyperliquid recorded a combined notional trading volume of 7.4 trillion won ($5.31 billion).
Investment trends have also shifted. From January through July, SK Hynix-based products — including American depositary receipts — topped all assets traded by estimated Korean investor wallets on Hyperliquid, reaching 5.3 times the volume of Bitcoin-based products. In July, the average monthly notional trading volume per wallet climbed to 6.02 billion won.
"The trading volume of tokenized SK Hynix shares has grown remarkably fast in just six or seven months," said Jo Yun-seong, a senior researcher at Tiger Research. "Overseas centralized exchanges are also seeing a significant uptick in trading of equity products these days."
Binance has been aggressively expanding its tokenized stock listings beyond spot trading, and Kraken has announced plans to launch more than 500 tokenized products on its xStocks platform by the end of this year.
These developments are rapidly erasing investment boundaries in the global digital asset market. As stocks, raw materials and prediction products become tradable alongside Bitcoin and Ethereum on digital asset platforms, investor demand is shifting well beyond traditional spot markets.
The concern is that Korean investors' money is following that demand overseas. A joint analysis of on-chain data by Tiger Research and Chainalysis estimated that digital assets worth approximately 700 trillion won moved from domestic exchanges to overseas platforms between 2021 and 2026.
Particularly notable is that while the absolute outflow has recently declined, the pressure driving funds abroad has actually intensified. Outflows to overseas exchanges fell from 41.5 trillion won in the fourth quarter of last year to 20 trillion won in the second quarter of this year, but the net outflow intensity as a share of domestic trading volume rose from minus 0.5 percent to 0.6 percent over the same period.
The longer Korean investors' money continues to flow abroad, the more the domestic market stands to lose beyond just trading volume. Trading fees paid by Korean investors to overseas exchanges are estimated at approximately 5 trillion won last year and around 1.4 trillion won in the first half of this year alone. When trading and service activity concentrates overseas, customer and transaction data accumulate with foreign operators — along with the experience of designing and running new products based on that data.
Jo attributed the outflow to investors seeking products unavailable in the domestic market. He argued that perpetual futures — given the wide range of products available and the confirmed depth of real demand — should be treated as a legitimate financial instrument, with regulators working out how to bring them within an established framework.
However, ensuring the reliability of price data and sufficient liquidity are prerequisites before such products can be brought into a regulated framework. Perpetual futures based on unlisted companies or foreign equities carry the risk of large-scale liquidations from even minor shocks if benchmark prices are not properly reflected or liquidity is thin.
"Pre-IPO products have yet to achieve proper price discovery, meaning a single large investor's buy or sell order can cause significant price swings," Jo said. "Liquidity providers such as market makers are needed to cushion that volatility."
kyoung@heraldcorp.com
