Key Takeaways

• 82.9% of Korean crypto investors opposed the current plan or supported a further delay. However, 63.4% would accept taxation if the system were improved, showing greater concern about readiness than taxation itself.

• If the tax takes effect, 69.7% expect to reduce or stop investing, while 73.1% are likely to use Korean CEXs less. Trading volume at Korea’s three largest CEXs could fall 30.0%, from KRW 860 trillion to KRW 602 trillion.

• Lower trading volume could reduce the three CEXs’ combined revenue by 29.5%, from KRW 1.033 trillion to KRW 728.2 billion, weakening the broader domestic industry.

• Activity could shift to global CEXs, self-custody wallets, and DeFi. In 2025, CARF-excluded routes accounted for 59.1% to 76.6% of CEX outflows across Japan, the UK, the US, and Italy, highlighting persistent limits in transaction tracking.

1. Why Crypto Taxation Needs a Second Look

South Korea is set to introduce a tax on crypto asset income in January 2027 after three delays. With just over three months remaining, public attention is growing. A related petition to the National Assembly has already received support from more than 50,000 people. As the debate gains momentum again, the discussion should go beyond simple support or opposition. It should also examine whether the current tax plan reflects how crypto is actually traded.

The principle of taxing gains from crypto investments is separate from whether the current tax plan can be implemented as it stands. Crypto assets move across domestic exchanges, global exchanges, personal wallets, and DEXs. Investors also frequently exchange one crypto asset for another. For the tax system to work properly, it must connect fragmented transaction records and calculate acquisition costs and actual gains and losses under consistent rules.

The problem is that if these systems are not fully in place, both investors and tax authorities may bear the burden. Investors may have to verify and prove their own transaction histories and acquisition costs. Tax authorities may also struggle to identify taxable income and the tax base accurately. The key question is therefore not only whether to introduce the tax. It is also whether investors can calculate gains and losses, file their taxes, and track transaction records properly under real-world trading conditions.

For these reasons, the current debate should not stop at whether people support or oppose the tax. It should also examine how well the current plan reflects actual trading conditions, what concerns investors have, and how the tax could affect trading behavior and the domestic market.

2. What Korean Investors Think About Crypto Taxation

Tiger Research surveyed 2,423 Korean crypto investors about their views on crypto taxation. Tiger Research led the survey, and PMI, a Korean polling firm, conducted it. The survey covered not only support for the tax and its timing, but also the adequacy of the current tax plan, the readiness of the reporting and payment system, and how investors expect their trading behavior to change after implementation.

Opposition to crypto taxation appeared across all age groups. Overall, 73.7% of respondents opposed the tax. Opposition exceeded 75% among respondents in their 20s, 30s, and 40s. Among those in their 50s and those aged 60 or older, 61.5% and 63.9% opposed the tax, respectively. Opposition was strongest among respondents in their 20s to 40s, but negative views were not limited to younger investors.

Support or opposition alone did not fully explain investors’ views. Among respondents who opposed the tax, 51.5% said they could accept it if the problems with the current plan were adequately addressed. At the same time, 74.5% of those who agreed that crypto should be taxed said the current plan should be postponed or revised rather than implemented as it stands.

These results show that many investors distinguish between crypto taxation itself and the current tax plan. Some who opposed the tax said they could accept it if the system improved. At the same time, many who agreed that crypto should be taxed did not support implementing the current plan as it stands. The gap became even clearer when investors assessed the specific rules and how ready the system is.

3. Investors' Main Concerns with the Current Tax Plan

The detailed survey responses show why investors viewed crypto taxation and the current tax plan differently. Their concerns centered on three areas:

• Whether the tax rate and deduction are appropriate and fair compared with other financial assets

• Whether the system properly accounts for losses and acquisition costs when calculating taxable gains

• Whether the system is ready to support tax filing and payment, track transactions, and protect investors

Investors looked beyond whether crypto should be taxed. They also considered how much they would pay, how the system would calculate taxable gains, and whether it was ready for implementation. The following sections examine these three issues.

3.1. Is the Tax Burden Fair?

Most respondents were critical of the tax burden under the current plan. Among all respondents, 73.5% said the 22% tax rate was too high. Another 65.2% said the annual basic deduction of about $1.8K was too low. In addition, 72.1% said the tax rules for crypto were unfair compared with those for other financial assets.

Lower-income investors also expressed strong concerns. Investors earning less than about $2.1K per month accounted for 24.9% of all respondents. Among this group, 87.9% opposed implementing the current plan as scheduled or called for another delay. This figure was higher than the 82.9% for all respondents. The results show that concerns about the current plan were not limited to higher-income investors.

Respondents also worried about the impact on younger people’s ability to build wealth. Overall, 73.0% agreed that crypto taxation could limit wealth-building opportunities for people in their 20s and 30s. Respondents in their 20s showed the highest level of concern at 78.7%. Those in their 30s followed at 77.2%. Support for this view also exceeded 65% in every other age group.

The survey shows that investors’ concerns went beyond the tax rate and deduction. They also questioned whether the rules were fair compared with those for other financial assets. Lower-income investors shared these concerns. Respondents across age groups also worried about the impact on younger investors. Investors considered both the size of the tax burden and how the rules would affect different groups.

3.2. Can Taxable Gains Be Calculated Accurately?

To calculate taxable gains accurately, the tax system must first determine how much an investor actually gained or lost. It also needs clear rules for losses, acquisition costs, and different types of crypto income. The survey found strong concerns in all three areas.

First, 65.9% of respondents said the current treatment of losses was inappropriate. Under the current rules, investors can offset crypto gains and losses within the same year. However, they cannot carry losses forward to offset gains in future years.

Crypto investors can experience gains and losses over several years. How the tax system treats those losses can therefore affect how accurately it calculates taxable income.

Respondents expressed even greater concern about acquisition costs and transaction records. Among respondents, 70.6% expressed concerns about the burden of calculating and reporting gains and losses based on their own transaction records and acquisition costs.

Crypto assets move across Korean and overseas CEXs and personal wallets. Investors also frequently exchange one crypto asset for another. As transaction paths become more complex, investors may find it harder to connect the original acquisition cost with later transactions.

Crypto income can also come from many different activities. These include trading, lending, staking, mining, airdrops, and liquidity provision. The current tax framework mainly covers income from transfers and lending. The rules therefore need to clarify which gains are taxable and when the tax applies. About 65% of respondents said the current framework does not adequately account for these different types of transactions.

The survey shows that investors were concerned about more than the tax rate. They also focused on how the system treats losses, determines acquisition costs, and classifies income from different transactions. These rules ultimately determine how the system calculates taxable income from an investor’s actual gains and losses.

3.3. Is the System Ready?

A tax system needs more than clear rules. It also needs the administrative and IT systems to put those rules into practice. In the survey, 66.4% of respondents said the government was not adequately prepared in these areas. Another 65.7% said it would be difficult to track and tax transactions accurately across Korean and overseas CEXs and personal wallets. In addition, 68.8% said investors would face a substantial burden when filing and paying the tax. Investors cared not only about the rules themselves, but also about whether the system could work in practice.

Crypto assets can move and trade outside Korean CEXs. When investors use global CEXs and personal wallets, transaction data can spread across multiple channels. This makes it harder to collect and connect the information needed for taxation. It also makes both reliable transaction tracking and the filing burden on investors important considerations.

Investors also looked beyond administrative and IT readiness. Overall, 85.1% agreed that an investor protection framework should be in place before the tax takes effect. The tax would create new tax obligations for investors. Investors saw market safeguards as part of overall readiness, alongside the government’s ability to assess and collect the tax.

Responses on timing made this concern even clearer. Overall, 82.9% of respondents opposed implementing the current plan as scheduled or called for another delay. Another 75.2% said 2027 was too early. The survey then asked the 1,823 respondents who chose a later date what should happen if the necessary rules and preparations were still not in place by then. Among them, 93.4% said the tax should be postponed again until the system was ready.

For investors, the key issue was not simply how many years to delay the tax. They focused on whether the conditions for implementation were actually in place. These included tax administration, transaction data management, the filing system, and investor protection.

4. Impact on the Korean Market

Investors’ views of the current tax plan also point to how their trading behavior could change after implementation. A substantial amount of Korean crypto investment has already moved overseas. According to estimates from a previous Tiger Research report, about KRW 700 trillion, or roughly $490 billion, moved overseas between 2021 and the first half of 2026. Investors also already make wide use of trading routes outside Korean CEXs, including global CEXs and personal wallets.

The survey also examined how investment levels and trading routes could change after the tax takes effect. The results suggest that investors may reduce their investments, use Korean CEXs less, and make greater use of other trading routes. If these intentions translate into actual behavior, the changes could weaken the trading base of the Korean crypto market. They could also make it harder for authorities to identify taxable activity and supervise the market.

4.1. Impact Beyond CEXs on Korea’s Crypto Industry

The survey suggests that the tax could reduce both crypto investment and the use of Korean CEXs. Overall, 69.7% of respondents said they expected to reduce or stop their crypto investments. Another 73.1% said they were likely to use Korean CEXs less. This could reduce both the amount of capital invested in crypto and trading activity on Korean CEXs.

Investors also expected these changes to affect the broader Korean market. Overall, 66.4% of respondents said the tax would have a negative impact on Korea’s crypto market. If investors reduce their crypto exposure or move capital to other financial assets, trading volume and liquidity in the Korean market could decline.

To estimate the potential scale of this impact, Tiger Research analyzed how trading volume and revenue at major Korean CEXs could change. The analysis combines the survey results with changes in crypto trading volume observed in countries that already tax crypto.

Tiger Research estimates that annual trading volume at Korea’s three largest CEXs, Upbit, Bithumb, and Coinone, could fall from about $601 billion in 2026 to $421 billion in 2027. This represents a decline of about $180 billion, or 30.0%. Over the same period, revenue at the three CEXs could fall from about $722 million to $509 million. This represents a decline of about $213 million, or 29.5%.

A decline in trading activity could also affect tax revenue and the broader crypto industry. Lower trading fees could reduce related value-added tax revenue. Lower CEX profits could also reduce corporate tax revenue.

Crypto income taxation could create a new source of tax revenue. However, a contraction in the Korean market could reduce existing tax revenues at the same time. This could weaken the overall revenue gains from the new tax. Lower liquidity and a smaller user base at Korean CEXs could also weaken the foundation for related financial services such as custody and prime brokerage.

4.2. The Shift to Offshore Trading and the Limits of CARF

If investors use Korean CEXs less after the tax takes effect, some may shift their trading to global CEXs and personal wallets. Among investors who said they would use Korean CEXs less, 88.0% said they might increase their use of global CEXs or personal wallets. Among all respondents, 60.0% had already used a global CEX, and 33.3% had used a DEX.

Younger investors showed the strongest tendency to shift their trading. Among respondents in their 20s, 76.8% said they would likely use global CEXs more after the tax takes effect. Another 73.2% said they would likely increase their use of DEXs or P2P transactions through personal wallets. Investors who already use overseas CEXs and on-chain services may find it relatively easy to move their trading outside Korean CEXs.

As more trading moves outside Korean service providers, tax authorities may find it harder to obtain the same level of transaction information. CARF can help address this gap. It allows tax authorities across countries to exchange transaction data reported by overseas crypto service providers.

However, countries plan to begin these exchanges at different times. Korea plans to start in 2027. Hong Kong, Singapore, and the UAE plan to start in 2028, while the United States plans to start in 2029. These different timelines could limit access to overseas transaction data during the early years of the tax.

CARF also cannot capture the full flow of every transaction. According to Chainalysis, 59.1% of assets leaving CEXs in Japan moved to CARF non-covered routes in 2025. The share reached 65.2% in the United Kingdom, 75.4% in the United States, and 76.6% in Italy. In Italy, the share rose from 50.4% in 2024 to 76.6% in 2025. Transfers to personal wallets also increased by 45.7% over the same period.

These figures do not show that taxation directly caused the shift. However, they show that even in countries with crypto taxation and reporting systems, a substantial share of activity still moves through routes that service provider reporting alone cannot fully track.

This information gap could also raise concerns about tax fairness. Tax authorities can verify transactions on Korean CEXs more easily through data reported by service providers. They may need to rely more heavily on taxpayer reporting and subsequent verification for transactions through overseas CEXs and personal wallets. If investors believe that tax authorities can track some trading routes more easily than others, that perception could encourage more activity to move to overseas CEXs and DEXs.

Before the tax takes effect, the government needs to clarify the rules for acquisition costs and information reporting. It also needs to establish how tax authorities will verify gains and losses from transactions through overseas CEXs and personal wallets.

5. Rushing the Tax Risks Both the Industry and Tax Revenue

The central issue is not taxation itself. The question is whether Korea should implement the current plan in 2027 before the system is ready. Under current law, the tax on crypto income will take effect in January 2027. The survey shows that investors distinguish between the need for taxation and the current tax plan. Even supporters of crypto taxation said the rules need improvement. Some opponents also said they could accept the tax if the system improves.

Policymakers also need to consider the market impact of implementing the tax before the system is ready. As discussed above, investment and trading in Korea could decline. Some activity could also move to global CEXs and personal wallets.

These changes could weaken the trading base and competitiveness of the Korean market. They could also spread transaction data across more channels. This would make it harder for tax authorities to track the tax base. Creating a new tax base and managing it reliably in practice are separate challenges.

Policymakers should first determine whether the system can work under real market conditions. They should not set the implementation date first and address the remaining gaps later. The survey shows that investors cared more about whether the system was ready than about any specific year. Policymakers should define the conditions required for implementation before deciding when the tax should take effect.

Three areas require particular attention.

First, policymakers should assess tax readiness together with the broader state of market regulation. Tax administration alone is not enough. The market also needs clear rules, investor protection, and standards for new assets and services. Policymakers should assess both the government’s ability to collect the tax and the readiness of the market in which the tax will apply.

Second, policymakers need clear criteria to determine whether the tax can work in practice. They should assess how well the system can connect transaction data and calculate gains and losses. They should also confirm that taxpayers can correct errors when they occur. These criteria would allow policymakers to judge readiness based on actual implementation rather than a fixed schedule or the completion of IT systems alone.

Third, policymakers should conduct mock filings and pilot programs that reflect real trading conditions. The tests should cover more than simple cases involving Korean CEXs. They should also include global CEXs, personal wallets, and DEXs. Policymakers should identify missing transaction data, problems with acquisition costs, and recurring filing errors before the tax takes effect.

Policymakers should also consider public acceptance. The survey found strong concern that the tax could limit wealth-building opportunities, particularly among younger investors. Respondents across age groups also raised concerns about fairness compared with other financial assets. Technical readiness alone is not enough. Investors also need to view the tax rules and burden as fair.

The debate over the 2027 tax should go beyond whether Korea keeps the current start date. Policymakers need to assess whether the system can calculate gains and losses accurately under real trading conditions. They also need to confirm that tax authorities can obtain the necessary transaction data. Market rules and investor protection also need to be in place. Investors must also see the tax standards as fair. If Korea moves ahead before the system is ready, it could weaken both the competitiveness of the domestic market and the government’s ability to manage the tax base.

Appendix. Chainalysis-Based CARF Transaction Classification Criteria

This report uses analysis from Chainalysis to examine the share of crypto transactions that fall within CARF’s practical reporting scope across countries. Chainalysis analyzes activity across CEXs, personal wallets, DEXs, and DeFi. This allows us to examine transactions that service provider reporting alone may not fully capture.

The Crypto-Asset Reporting Framework (CARF) is an international reporting framework. It requires crypto-asset service providers to report user and transaction information to tax authorities, which can then exchange the information across jurisdictions. Based on Chainalysis’ classification, this report defines transactions within CARF’s practical reporting scope as “CARF-covered” and transactions outside that scope as “CARF non-covered.” CARF non-covered activity includes some transactions after assets move to personal wallets, as well as activity involving DEXs, P2P transfers, DeFi, mining, and staking.

However, “CARF non-covered” does not mean that a taxpayer failed to report a transaction or evaded tax. A service provider may report the initial withdrawal to a personal wallet, but it may not have visibility into every transaction that follows. In this report, “CARF non-covered” refers only to the scope of transactions that service provider reporting can identify.

🐯 More from Tiger Research

Read more reports related to this research.

• Korea Crypto Market: A Guide to the Rest of 2026

• KRW 700 Trillion Abroad: The Market Korea Missed

• Crypto Exodus: 160 Trillion Won Leaves Korea

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

Key Takeaways

• Despite high trading volumes, Korea’s crypto market still relies heavily on retail investors because regulation limits corporate participation. Corporate account access could broaden the market’s demand base and support its next stage of growth.

• Corporate crypto assets under management could reach up to KRW 82 trillion by 2030. Trading, custody and prime brokerage could also create about KRW 570 billion in annual revenue.

• Further delays could push Korean demand and business opportunities offshore. This shift is already visible in payments and asset management, and overseas markets could build customer relationships and operating experience before Korea fully opens its market.

1. Korea’s Crypto Market: Limited Upside Without Institutional Participation

Korea is one of the world’s most active crypto markets. The Korean won has accounted for around 30% of global crypto trading volume by fiat currency in recent years, second only to the US dollar. At one point, its share exceeded 50% and even surpassed that of the dollar. Given Korea’s population and economic size, this level of activity is unusually high.

Yet Korea’s domestic crypto industry has not grown at the same pace. The valuations of major Korean and global crypto companies highlight this gap. Direct comparisons have limits because capital market size and business scope differ across countries. Even so, the valuation gap remains substantial. Dunamu, Korea’s largest crypto company, has a valuation of only about one-seventh of Coinbase’s.

Retail investors drove the growth of Korea’s crypto market, while regulation restricted corporate participation. The United States shows a different pattern. Institutional investors account for more than 80% of Coinbase’s trading volume, making institutional demand a core part of the market. Korea has generated substantial trading volume, but corporate demand has remained largely absent. This has limited the industry’s ability to move into its next stage of growth.

2. Corporate Account Delays Put a KRW 82 Trillion Market on Hold

Korea has delayed corporate account access beyond the original timeline. In 2025, the Financial Services Commission planned to first allow around 3,500 listed companies and registered professional investor corporations to trade crypto for investment purposes, then expand access in phases. Yet the first phase has not started, and the government has not set a timeline for broader corporate access. These delays continue to limit corporate capital inflows into Korea’s crypto market.

Corporate account access could broaden demand in Korea’s crypto market. We estimated the potential market based on assets under management at private financial firms and public funds such as pension funds. For 2027, we used crypto allocation levels in markets with more established corporate participation, such as the United States, as a benchmark. This puts the upper end of Korea’s corporate crypto assets under management at about KRW 16 trillion.

The market could grow further as more corporations participate. From 2028, we factored in asset growth and higher crypto allocations. We applied a 5% allocation to private financial firms based on the investment limit discussed in Korea. We applied 2% to public funds to reflect their more conservative approach. Under these assumptions, corporate crypto assets under management could reach KRW 35.2 trillion in 2028, KRW 57.1 trillion in 2029 and up to KRW 82 trillion in 2030. This represents the upper end of the potential market. The actual size will depend on the pace of regulatory changes and market conditions.

2.1. A KRW 570 Billion Corporate Financial Services Market

Corporate account access could expand Korea’s crypto financial services market beyond trading. Corporations need reliable execution for large orders, secure custody, and treasury and risk management. These needs create demand for custody, prime brokerage and other services beyond CEX trading.

Based on revenue models in overseas corporate markets, KRW 82 trillion in corporate assets under management could generate about KRW 570 billion in annual revenue by 2030. This includes trading fees and revenue from custody, trade execution and treasury management.

As corporate assets under management grow, demand for these services will rise as well. Custody, prime brokerage and other corporate services could give Korea’s crypto industry new revenue streams beyond retail trading fees.

2.2. Beyond Trading: Expanding the Crypto Industry

Corporate accounts matter not only for investment trading but also for businesses that use crypto. Stablecoin payments and remittances are key examples. These services require companies to trade crypto directly and settle in KRW. In Korea, restrictions on corporate trading have also held back the growth of these businesses.

Overseas markets already support a wide range of crypto businesses. Companies such as Rain, BVNK and Mesh provide payment and settlement infrastructure. Public and private companies use different valuation methods, which limits direct comparisons. Even so, several companies in this sector have reached multi-trillion-won valuations.

Corporate account access could open the door to similar businesses in Korea. Payment and fintech companies could expand crypto-based payment and remittance services. Other companies could also use crypto for payments and settlement. Corporate account access could help Korea’s crypto industry expand beyond trading into new business areas.

2.3. Corporate Participation Could Improve Market Liquidity

Strong retail participation has driven high trading volumes in Korea’s crypto market. Yet the market still struggles to absorb large orders compared with major global CEX. Our analysis of Bitcoin spot trading over the past week found that a KRW 10 billion order produced 213.2bp of round-trip slippage across Korea’s three largest CEX combined. Under the same conditions, Binance recorded just 12.2bp. The gap widened as order size increased.

This suggests that Korea’s market lacks sufficient depth relative to its trading volume. Even with high trading activity, the order book may not hold enough liquidity to absorb large trades. As order size rises, price impact increases. Korea therefore has less capacity to handle large trades despite its high trading volume.

Corporate account access could help address this gap by broadening market participation and attracting professional liquidity providers. Deeper order books could reduce price impact and trading costs for large orders. Better liquidity could improve trading efficiency for both corporate and retail investors

3. Delayed Access Pushes Opportunities Offshore

As Korea delays corporate account access, domestic crypto demand is already shifting overseas. Allium data shows that B2B stablecoin payments between Korea and other countries reached about USD 620 million from January 2021 to September 2026. The data excludes CEX deposits and withdrawals and investment-related transactions. It covers only payments for goods and services. This shows that businesses already use stablecoins for payments and settlement beyond investment activity.

Much of this demand is already moving into overseas markets. Some import-export businesses cannot easily handle stablecoins in Korea, so they rely on overseas entities or partners in markets such as Hong Kong for conversion and settlement. Hyperithm provides crypto asset management services to corporate clients in Japan, while Mirae Asset Securities is expanding its digital asset business in Hong Kong. Korean demand and business capabilities are already creating commercial opportunities in overseas markets with the regulatory framework to support them.

If this trend continues, companies operating overseas will build not only customer bases and revenue but also business relationships and operating experience. Once companies establish payment networks and commercial relationships abroad, those activities may not return quickly even if Korea opens its market later. Businesses are also likely to keep investing in markets where they have already built customers and operating experience. Delays in corporate account access therefore do more than postpone capital inflows. They could push business opportunities that might otherwise develop in Korea to take root overseas first.

4. The Next Step for Korea’s Crypto Market: Corporate Account Access

Corporate account access could do more than bring corporate capital into crypto. It could create a new financial services market. As estimated above, corporations could manage up to KRW 82 trillion in crypto assets by 2030. Trading, custody and prime brokerage could generate about KRW 570 billion in annual revenue. More corporate capital would also increase demand for services that support trading, custody and asset management.

The impact could extend beyond financial services. Greater corporate use of crypto could drive demand for payments, remittances, accounting, tax, security, anti-money laundering (AML) and data services. The key question is whether these opportunities develop in Korea. If they do, Korean companies can capture the revenue and build operating experience at home. Domestic transactions would also make transaction flows easier to track and strengthen taxation and market oversight.

Korea already has high trading volumes and strong demand for crypto. Yet restrictions on corporate participation have kept this demand from driving growth across financial services and related industries. Corporate account access could connect existing demand with the growth of Korea’s crypto industry and expand a market built around retail investors to include corporate investors and businesses.

🐯 More from Tiger Research

Read more reports related to this research.

• Korea Crypto Market: A Guide to the Rest of 2026

• KRW 700 Trillion Abroad: The Market Korea Missed

• Crypto Exodus: 160 Trillion Won Leaves Korea

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

Key Takeaways

• The Bank of Korea’s CBDC has entered live-transaction testing under Project Han River Phase 2, but a won-denominated stablecoin still has no legislative basis.

• The revised STO bill has passed, but permitted assets and licensing details are left to presidential decree. The market’s direction will be set when those regulations appear, not when the bill passed.

• With the consultative council aligned on a tokenization roadmap for stocks, bonds, and money market funds, the priority is bringing proven, standardized securities on-chain rather than sourcing new fractional-investment assets.

• Hana Bank’s stake in Dunamu (6.55%, 1.0033 trillion won, about $733 million) and Mirae Asset Consulting’s stake in Korbit (97.15%, 141.4 billion won, about $103 million) point to securing infrastructure for combined STO, RWA, and stablecoin services, not fee income alone.

• Overseas tokenization pilots take six months to a year, while domestic financial institutions close their budgets in early December. Implementation should start now, not wait for the detailed rules.

1. A Fragmenting Global Crypto Market and Korea’s Position

The crypto ecosystem appears borderless on the surface, but in practice national borders are becoming sharper as each country establishes its own regulatory framework.

The EU has implemented MiCA, the United States is advancing the GENIUS Act and the CLARITY Act, and in Asia, Singapore, Hong Kong, and Japan have each settled on their own regulatory approaches. Major economies are embracing the market through clear policy, but because those policies diverge, the global market is fragmenting along regional lines.

Korea is building its own environment within this trend. Investment demand and public interest in Korea are very high, but the country’s regulatory pace lags somewhat behind that of major economies.

2. Where Korea’s Crypto Market Stands Today

In the first half of 2026, Korea’s regulatory environment raised expectations of full incorporation into the formal financial system, including passage of the STO-related bill, but a series of market-restraining statements, including discussion of taxation, added to confusion within the ecosystem.

2.1. Bank of Korea’s Project Hangang Phase 1 Results (March 29, 2026)

The Bank of Korea released the first-phase results report for its deposit-token-based CBDC live-transaction pilot on December 18, 2025, then formally announced the start of Phase 2 on March 29, 2026.

Phase 2 goes beyond simple technical verification to test real conditional fund disbursement, including electric vehicle subsidies and official expense accounts. The number of participating banks has expanded to nine, and the pilot has added peer-to-peer transfers, biometric authentication, and automatic deposit conversion. Live transactions are expected to begin as early as September, though no separate testing period has been set. The absence of a fixed end date reflects an effort to sustain the service on an ongoing basis rather than treat it as a one-time demonstration.

While the CBDC has advanced substantially through Project Hangang, a won-denominated stablecoin remains far from realization.

While Project Hangang has moved forward, Phase 2 of the Digital Asset Basic Act, which would institutionalize a won-denominated stablecoin, has been delayed by roughly a year. The delay stems from disagreement between the Bank of Korea and the Financial Services Commission. The Bank of Korea has argued that a bank consortium should hold a stake of at least 51 percent, while the Financial Services Commission has opposed that requirement on the grounds that it would stifle innovation.

Various policy alternatives were subsequently proposed, but legislative discussion came to a complete halt in the aftermath of the June local elections, and the process has remained stalled without clear progress since. The government and the Financial Services Commission announced plans in July to resume work in the second half of the year and pass legislation before year-end, but the process has been delayed again after Rep. Park Min-gyu of the Democratic Party, a member of the National Assembly’s Political Affairs Committee, signaled that the task force would be reorganized after the party’s August convention, with the bill to be introduced in September.

The Bank of Korea-led CBDC has already entered the live-transaction verification stage and is producing visible results, while a won-denominated stablecoin remains in an uncertain state without even a legislative basis. Premature optimism about this area should therefore be treated with caution, and it should be recognized as a long-term undertaking that will require considerable time before the market settles.

2.2. Passage of the STO-Related Bill in the National Assembly (January 15, 2026)

On January 15, 2026, revisions to the Act on Electronic Registration of Stocks, Bonds, etc. (the Electronic Securities Act) and the Financial Investment Services and Capital Markets Act (the Capital Markets Act) passed a plenary session of the National Assembly. This brought to an end the three-year regulatory sandbox regime that had been in place since the Financial Services Commission released its “Plan to Reorganize the Regulatory Framework for Issuance and Distribution of Security Tokens” in February 2023.

The revision rests on three pillars: recognizing the legal status of the distributed ledger, introducing the issuer account management institution system, and detailing a distribution roadmap for investment contract securities.

• Legal recognition of the distributed ledger: extends the legally valid forms of securities registration, previously limited to physical certificates and electronic securities, to include blockchain-based distributed ledgers.

• Introduction of the issuer account management institution system: gives issuers that meet the qualification requirements the authority to register and manage securities directly with the Korea Securities Depository, without going through a financial institution as intermediary.

• A more concrete distribution roadmap for investment contract securities: establishes a legal basis for securities firms to broker trading, improving the secondary trading environment and market liquidity for fractional-investment assets that had previously been fragmented.

The revised law was promulgated on February 3, 2026, and will take full effect on February 4, 2027, following a one-year grace period. It is still too early to expect immediate market activation from the legislative basis alone, because key practical requirements, including the specific scope of permitted assets, have been delegated to presidential decree and supervisory regulations, and detailed guidelines have not yet been announced.

The public-private Token Securities Council, launched on March 4, 2026, to work out those guidelines, is discussing the detailed plan. The Financial Services Commission originally planned to publish the subordinate regulations and guidelines around July 2026, but the timeline slipped when the process remained at a closed-door consultation stage with the legal and financial sectors as of July 31. As of late August, working-level officials expect the announcement sometime between September and November.

One encouraging aspect of the council’s discussions is the inclusion of standardized securities such as stocks. At the second meeting, held on May 15, the council reached consensus on a phased roadmap that includes tokenizing existing standardized securities such as stocks, bonds, and money market funds, and building on-chain settlement infrastructure. This suggests that the market, previously confined to fractional investment, could expand.

Rather than concentrating on sourcing new assets, as existing fractional-investment operators have done, building a model to distribute on-chain the standardized securities whose demand has already been proven could create a larger market opportunity. Domestic institutions should therefore study concrete precedents closely and build diverse global partnerships early, moving quickly enough to be well positioned once the market matures in earnest.

2.3. Amended Special Financial Information Act Takes Effect (August 20, 2026)

The amended Act on Reporting and Using Specified Financial Transaction Information, commonly known as the Special Financial Information Act (Act No. 21358), was promulgated on February 19, 2026, and took effect on August 20, 2026. Not all of its provisions apply as of that date. Stricter screening for virtual asset service provider (VASP) registration took effect on August 20, while strengthened Travel Rule requirements and rules governing transactions with overseas providers and personal wallets will apply around February 2027, six months after the enforcement decree is promulgated.

• Stricter VASP registration screening: introduces review of major shareholders and raises financial soundness and creditworthiness requirements, raising the barrier to entry (effective August 20)

• Strengthened Travel Rule: removes the 1 million won (about $730) threshold that had triggered the information-sharing requirement and extends it to all transactions (effective around February 2027)

• Stricter rules for overseas providers and personal wallets: differentiates permitted transaction scope by risk level (effective around February 2027)

The core change to VASP registration screening is an expanded definition of major shareholder. The review now closely examines the financial soundness and creditworthiness of the largest shareholder, any shareholder who has appointed a majority of the CEO and directors, and, where the shareholder is itself a corporation, that corporation’s largest shareholder and representative.

The strengthened Travel Rule targets transaction splitting used to avoid reporting. For transfers between reported VASPs, the information-sharing threshold expands from 1 million won or more to all transactions, and the obligation to obtain that information now also falls on the receiving provider.

Overseas transactions are also being brought out of the regulatory blind spot. Rather than an outright ban, the rule applies three tiers of risk-based restriction. Transfers to low-risk overseas exchanges are permitted without a same-name requirement for sender and recipient. Transfers to other overseas exchanges and personal wallets are permitted only when the sender and recipient are the same person, meaning the wallet must be held in the user’s own name. Transactions with high-risk overseas exchanges are banned entirely. For overseas exchange and personal wallet transactions of 10 million won (about $7,300) or more, reported VASPs must build and operate their own suspicious transaction monitoring system.

2.4. No Additional Deferral for Virtual Asset Taxation (August 3, 2026)

Virtual asset taxation, whose effective date was set at January 1, 2027, through a December 2024 amendment to the Income Tax Act, will proceed as scheduled under current law after the government’s August 2026 tax reform proposal excluded any additional deferral provision. Bills from the People Power Party seeking deferral or repeal remain pending, however.

In addition, a petition submitted through the National Assembly’s public petition system points to inadequate tax infrastructure, capital outflows overseas, and declining corporate tax revenue from weaker exchange earnings, but the National Assembly and the government remain divided in their response.

2.5. Exchange Stake Investment Gains Momentum

Traditional financial institutions and large capital groups are acquiring stakes in virtual asset exchanges not simply to generate returns but to secure an early position in the digital finance market. With VASP (virtual asset service provider) regulation making direct market entry difficult, equity investment offers an efficient alternative that reduces regulatory risk while providing immediate access to a large user base and liquidity.

• Dunamu (Upbit’s parent company): Hana Bank acquired a 6.55% stake (1.0033 trillion won, about $733 million, resolved May 15, 2026), becoming the first commercial bank to hold a large stake in the company. On August 18, BitGo Korea’s VASP registration was accepted, completing a dual-track structure combining the Upbit stake with BitGo custody services. Hanwha Investment & Securities expanded its stake to 9.84%, becoming the third-largest shareholder, while Samsung affiliates, Samsung Securities (2%), Samsung SDS (1%), and Samsung Card (1%), together acquired a combined 4% stake (612.8 billion won, about $448 million), establishing a division of roles across security tokens, infrastructure, and payments.

• Korbit (acquisition completed): Mirae Asset Consulting acquired a 97.15% stake (141.4 billion won, about $103 million), completing the acquisition. Because the acquiring entity is Mirae Asset Consulting, a non-financial affiliate, the Fair Trade Commission’s approval was likewise explained as not constituting direct investment by a financial company.

• Coinone (change of largest shareholder approved July 22, 2026): Korea Investment & Securities and OKX Ventures each acquired a 20% stake (roughly 80 billion won, about $58 million, each). The ownership structure was reorganized to CEO Cha Myung-hoon at 30.36%, Com2uS Holdings at 24.54%, and Korea Investment & Securities and OKX Ventures at 20% each, marking a case of a securities firm holding a direct stake.

• Bithumb (unresolved): Negotiations with Kiwoom Securities effectively broke down on August 5 over valuation and management control, and talks with Kakao have also dragged on. A multi-layered governance structure and the second-largest shareholder Vidente’s effective stake of more than 32% make a sale of existing shares difficult.

Exchange stake investment continues on this basis, and the pattern suggests that investors see exchanges over the long term as the next-generation financial infrastructure where STO, RWA, and stablecoin functions converge, positioning themselves ahead of an anticipated opening of corporate accounts and a fuller entry of institutional investors.

3. What Lies Ahead for Korea’s Crypto Market

As outlined above, Korea is in a transitional period of building its institutional framework, but regulatory barriers that hold back industry growth remain widespread at the same time. Because the market’s direction will depend heavily on the corporate governance changes among major virtual asset service providers and on legislative progress concentrated in the fourth quarter, these turning points warrant close attention.

3.1. Deal-Closing Season (September to December)

The stock swap between Dunamu and Naver Financial is likely to be the first matter to conclude.

Because the Fair Trade Commission’s business combination review has been delayed, the completion date for the comprehensive stock swap has been pushed back twice, first from June to September, then to December 31. The shareholders’ meeting has been rescheduled accordingly to November 19, and Naver Financial has set a target of listing within five years of the merger, with a clause allowing an extension if that timeline proves unworkable.

For Bithumb, a concrete three-stage roadmap has been laid out: securing new investment starting in early August, filing a preliminary listing review in 2027, and completing an IPO in 2028. However, with negotiations with Kiwoom Securities effectively broken down and discussions with Kakao continuing to stall, there is a risk that the roadmap could fall behind schedule at its very first step, the investment round.

The VASP re-registration process is also concentrated toward year end. Preliminary submissions begin in late October, formal applications close on November 20, and the Financial Intelligence Unit’s substantive review follows. In addition, registration for virtual asset transfer businesses becomes mandatory when the amended Foreign Exchange Transactions Act takes effect in early December, making this an important juncture for regulatory compliance as well.

3.2. Legislative Turning Point (September Regular Session of the National Assembly)

The government’s draft of the Digital Asset Basic Act is likely to take shape during the September regular session, introduced as member-sponsored legislation. The most sensitive issue is whether to require private stablecoin issuers to secure a bank stake of at least 51 percent and whether to cap major shareholder stakes at exchanges to improve corporate governance.

At the same time, the authorities regard amending the Capital Markets Act to regulate single-stock leveraged ETFs as an urgent priority, raising concern that legislative momentum for the Digital Asset Basic Act could weaken more than expected.

Because passage of this bill is directly tied to whether won-denominated stablecoins become institutionalized, it stands as the most decisive variable likely to reshape the market going forward.

3.3. Finalizing STO Subordinate Regulations

The enforcement decree and guidelines that will set the detailed standards for the STO market have missed their original July target and remain delayed as of late August. An announcement is expected sometime in the second half of the year, but no specific date has been set.

Once the guidelines are finalized, they will clarify the scope of underlying assets eligible for issuance as security tokens, the licensing requirements for over-the-counter exchanges, and investor trading limits. The Korea Securities Depository has begun building its system with a target of 2027 implementation, and as the subordinate regulations continue to lag, concerns are growing that a gap between actual issuance and distribution could leave the market with a period of inactivity.

4. How Companies Should Approach the Korean Market

As shown in the landscape of domestic institutional relationships that Tiger Research has mapped, major institutions are continuing to expand cooperative relationships across the board to build a genuine business value chain.

Established financial institutions are leading the effort to build concrete business precedents, and Web3 projects, both domestic and international, are increasingly concentrating their resources on securing strategic partnerships with institutions rather than retail users.

This shift partly reflects the current slowdown in retail market liquidity, but it also reflects a longer-term strategic view, that real value creation within the formal financial system must come first before retail demand can be reignited.

4.1. Domestic Institutions: Making the Attempt Matters

Large-scale equity investment by traditional financial institutions continues, but the current regulatory framework limits the ability to develop a genuine business model within Korea. Institutions are left waiting for the STO subordinate regulations to be finalized or confined to limited testing through the regulatory sandbox, which makes the most effective alternative building out a business preemptively in an overseas jurisdiction where the institutional groundwork is already complete.

Waiting passively for regulatory clarity has clear limits when it comes to securing market position, and the sandbox track is confined to the narrow scope of fractional investment, making it difficult to extend to standardized securities. Domestic institutions should therefore treat building operational capability centered on an overseas base, difficult as that is right now, as their top priority.

Hong Kong manages security tokens within its existing financial regulatory framework and permits secondary distribution through licensed exchanges, offering an integrated environment for issuance and trading. Singapore offers excellent regulatory transparency but a considerably high barrier to entry, while the United States offers an issuance path through exemption provisions when using specific platforms.

Domestic financial institutions that already have overseas networks would therefore do better to focus first on the potential of their existing footholds rather than spend time exploring new jurisdictions. Rather than getting absorbed in extensive legal interpretation, a more strategic approach is to quickly test feasibility through working-level meetings with leading local platforms.

This moment in particular is a critical window.

Overseas tokenization projects typically take six months to a year or more, from initial analysis through issuance and distribution. Given Korea’s STO regulations and the February 2027 enforcement of the Electronic Securities Act, now is the right time to pursue overseas pilots that can work in tandem with the domestic market. Waiting until the domestic system is fully in place would waste more than a year, so institutions should confirm a concrete checklist and roadmap and act now.

4.2. Web3 Projects: The Same Applies, Act Now

The first gate to collaborating with Korean financial institutions is not technical capability but contracting-entity eligibility. Even for a proof of concept, information security review and vendor registration must come first, and registration is frequently denied outright when the applicant has no Korean corporate entity. Where establishing a local entity is not feasible, projects need a strategic structure that puts a credible Korean partner forward as the contracting entity.

Another key variable is the budgeting cycle specific to Korean financial institutions. Most begin drafting next year’s strategy in October and finalize their budget allocations in early December. After the budget is actually executed from January onward, available resources are quickly depleted and momentum for pursuing new projects drops sharply. Projects planning to do business with these institutions should treat the current period as the window for making a proposal, because missing it substantially lowers the odds of a project moving forward.

Retail strategy also needs a full overhaul. The current market slowdown stems from a broader global downturn, so retail marketing is unlikely to deliver the results it once did. Messaging now needs to center on track record rather than promotion. Because institutional references have already accumulated to the point that a simple memorandum of understanding no longer moves the market, securing references with substantive weight has become the more important strategy.

Many foundations are also eliminating their retail budgets entirely, but AI technology is lowering costs, so unless a project is prepared to give up retail engagement altogether, the better approach is to make retail spending more efficient rather than cut it entirely.

5. An Opportunity to Observe Market Change

These rapid shifts in Korea’s virtual asset market and its move toward institutional incorporation are expected to become clearer and take more concrete shape around Korea Blockchain Week 2026 (KBW2026), to be held in September. KBW2026 is expected to serve as more than a technical or academic exchange or a networking event, functioning instead as a venue for substantive discussion of the shift underway between established finance and the Web3 ecosystem.

At this year’s event, rather than retail-focused marketing, the dominant theme is expected to be multilateral strategic discussion among financial institutions, policy authorities, and major virtual asset service providers, aimed at building business models that comply with regulatory guidelines within the formal financial system and establishing real-world use cases.

Domestic and international companies and research institutions should therefore closely analyze the policy recommendations and inter-institutional cooperation roadmaps presented during KBW2026, and use that analysis to secure an early position in the institutionalized virtual asset market expected to fully emerge going forward.

🐯 More from Tiger Research

Read more reports related to this research.

• The Crypto Market’s Shift: From Narrative to PMF

• Korea Institutional Crypto: 2026 Landscape

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

Crypto exchanges are expanding into traditional assets through perpetual futures. Korean stock-linked perpetual futures have already reached KRW 307 trillion in trading volume within months. This report looks at the rise of offshore liquidity and what Korea needs to participate in this market.

Key Takeaways

• Crypto exchanges are rapidly expanding into stocks, commodities, and other traditional assets through perpetual futures.

• Korean stock-linked perpetual futures reached KRW 307 trillion in trading volume within months, increasing the importance of offshore markets.

• Korea needs corporate access to domestic crypto exchanges, a formal derivatives framework, and KRW stablecoin infrastructure.

1. Crypto Exchanges Are Expanding into Traditional Markets

Crypto exchanges are expanding beyond digital assets and into traditional markets. Bitcoin and Ethereum once dominated trading on these platforms. Today, exchanges are rapidly adding products linked to stocks, commodities, and other traditional assets.

Hyperliquid, a leading decentralized exchange, has seen a growing share of trading in traditional asset-linked products in 2026. More users are also trading these products. Infrastructure originally built for crypto is now emerging as a new venue for traditional financial markets.

Perpetual futures are driving this shift. These derivatives let investors gain exposure to price movements without owning the underlying asset. Unlike traditional futures, they have no expiration date and do not require physical delivery.

This structure allows exchanges to launch products linked to stocks and commodities with relative ease. It also gives crypto exchanges a practical way to expand beyond digital assets and into traditional markets.

2. Korea Is No Exception: Korean Stock Trading Moves Offshore

Korea is already at the center of this shift. Offshore crypto exchanges actively trade perpetual futures linked to major Korean stocks such as Samsung Electronics and SK hynix. These products trade at night and on weekends. They also offer high leverage. As a result, they give both Korean and global investors a new way to gain exposure to Korean stocks. An offshore market is rapidly emerging where investors can trade Korean stock price movements regardless of domestic market hours.

The market is growing rapidly. From February through August 2026, cumulative trading volume in perpetual futures linked to Korean stocks reached about KRW 307 trillion. In August alone, trading volume reached KRW 166 trillion. This was nearly four times the KRW 42 trillion traded on Korea’s five largest crypto exchanges over the same period. In just a few months, offshore perpetual futures linked to Korean stocks have grown to a scale that exceeds Korea’s major domestic crypto market.

For some products, perpetual futures trading already far exceeds trading in the underlying ETF. In August 2026, perpetual futures linked to KORU, a U.S.-listed 3x leveraged Korea ETF, recorded about USD 24.1 billion in trading volume. KORU ETF itself recorded USD 8.9 billion. The perpetual futures volume was about 2.7 times that of the ETF. More trading took place in the derivative than in the ETF itself. If derivatives trading exceeds the underlying market, offshore venues could play a larger role in price discovery.

More importantly, offshore derivatives markets can also affect the spot market. Market makers that provide liquidity for perpetual futures hedge their exposure by buying and selling related stocks or ETFs. Higher derivatives volume can increase these hedging trades. Sharp price moves can also increase them. These flows can then affect prices in the spot market.

This structure can create a “tail-wags-the-dog” effect, where derivatives drive spot prices rather than simply follow them. The impact may remain limited for large-cap stocks such as SK hynix because spot trading volume is still much larger. However, the gap between derivatives and spot trading volumes is narrowing quickly. This trend warrants close attention.

3. Liquidity Shifts Offshore as Global Markets Evolve

Offshore trading in Korean stocks is not unique to Korea. Perpetual futures are rapidly expanding across stocks and indices in markets such as Korea, Japan, and China. Their reach now extends beyond listed securities. Offshore venues already offer perpetual futures linked to private companies such as Anthropic. They also offer products linked to Chinese memory chipmaker CXMT ahead of its stock market debut. Assets that were once difficult to trade through traditional securities markets are now entering the perpetual futures market. This is rapidly blurring the traditional boundaries of what investors can trade.

The participants in this market are changing too. Among Hyperliquid accounts with more than USD 10 million in assets, the share that trades traditional assets such as stocks and commodities has risen rapidly. The Wall Street Journal (WSJ) has also reported that professional Wall Street traders use perpetual futures after regular market hours and on weekends. A market that once centered on crypto investors now attracts professional traders and investors that manage large pools of capital.

Liquidity in the perpetual futures market also deserves attention. Based on the latest 15-day average, a USD 1 million trade in SK hynix perpetual futures results in only single-digit basis-point slippage. Slippage remains relatively low even outside regular market hours. This means the market has enough depth to absorb large orders even when the Korean stock market is closed. Perpetual futures are moving beyond simply extending traditional market hours. They are becoming markets with liquidity of their own.

The capital used for trading is changing as well. Some global exchanges now accept tokenized U.S. Treasury assets as collateral. These include BlackRock’s BUIDL and Hashnote’s USYC. Over the past year, cumulative transfers of USYC to exchanges reached about USD 2.75 billion. Not all of this amount served as derivatives margin. Still, institutions can hold familiar U.S. Treasury-backed assets and use them as trading collateral when needed. Traditional financial assets now serve as collateral in these new markets. This creates a new channel for capital to move between traditional finance and the new trading market.

What we are seeing is more than crypto markets expanding into traditional assets. An offshore market that offers exposure to Korean stock prices is growing rapidly without going through the Korean won, domestic brokerages, or Korean exchanges. Tokenized U.S. Treasuries serve as collateral in this market. Professional traders and investors that manage large pools of capital also participate. The shift now extends beyond the assets being traded. The market participants and the capital they use are changing as well.

Korean stock-linked perpetual futures recorded KRW 307 trillion in trading volume in just a few months. That figure shows how quickly this shift is unfolding. But KRW 307 trillion does not represent the size of a mature market. It reflects the current scale of a market that is still taking shape. If more assets become tradable and institutional capital enters at scale, offshore liquidity could grow further. This could reshape market structures that have long been divided by national borders and trading hours. It could also change how capital moves across markets.

4. Offshore Markets Grow: What Role Can Korea’s Financial Industry Play?

Korea can restrict Korean investors from trading these products, but it cannot easily stop offshore markets from growing. Some global exchanges, including Binance, restrict perpetual futures trading for users identified as Korean through KYC. But Korean stock-linked markets can continue to grow through overseas investors and global capital. In practice, Korean regulation limits the participation of Korean investors and financial institutions more than the offshore market itself. Even if Korea restricts local demand, trading and liquidity can still develop overseas.

Korea therefore needs to look beyond simply blocking this trend. It should also turn the growth of these new markets into an opportunity for its financial industry. Korea already has a starting point: its crypto exchanges. They cannot launch stock-linked perpetual futures right away. But they have experience operating 24-hour digital asset markets and already have a large user base. These strengths could support expansion into new markets. Global crypto exchanges are rapidly expanding into traditional assets. Korea should also review the rules and market structure needed to support this shift.

Trading infrastructure alone is not enough. Korea also needs corporate access to the market, a regulatory framework for derivatives, and KRW-based payment and settlement infrastructure. Corporate accounts would bring in professional capital for market making, hedging, and arbitrage. They would also add liquidity. A formal framework for derivatives such as perpetual futures would support products linked to a wider range of assets. KRW-based payment and settlement tools, such as a KRW stablecoin, could improve access for overseas investors and ease capital flows. These are not separate regulatory issues. They are all necessary for the market to function.

Korea should build a framework that allows these elements to work together rather than address them one by one. This would allow Korean crypto exchanges to move beyond crypto trading and connect a wider range of assets with global liquidity. Trading linked to Korean assets is already growing rapidly offshore. The challenge is not simply to stop that growth. What matters more is how large a role Korea’s financial industry can play in this market.

🐯 More from Tiger Research

Read more reports related to this research.

• KRW 700 Trillion Abroad: The Market Korea Missed

• Crypto Exodus: 160 Trillion Won Leaves Korea

• Korea Institutional Crypto: 2026 Landscape

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

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The industry shift driven by AI is already underway. Decades of advertising-supported web content are giving way to a world in which agents pay for the data they use. This report, produced with EastPoint, examines that shift.

Key Takeaways

• As AI agents extract only the data they need and move on, the banner advertising model is breaking down, and platforms are shifting toward charging agents directly.

• To handle the vast number of automated micropayments agents generate, fee-free stablecoins and on-chain payment standards such as x402 are emerging as essential infrastructure.

• As happened with payments in the music streaming market, the per-transaction price will fall, but the sheer volume of machine-driven usage will outweigh that decline, making the overall market substantially larger.

• Actual commercial adoption today remains at an early, roughly 1% to 10% adopter stage. Before the market matures, companies that build agent payment infrastructure now are the ones best positioned to remain relevant in the next paradigm.

1. An Agent World Without Web Ads

Over the past three decades, the internet content industry has grown on an advertising-based business model.

Users were exposed to advertising in exchange for free access to services, and the fees advertisers paid formed the financial basis for running these platforms.

Services could be offered for free because people visited sites and viewed the ads. As AI agents become the primary consumers of the web, however, there are fewer people left to view them.

AI agents access the web differently than people do. A person who visits a site reads its content and, in the process, is naturally exposed to banner ads. An AI agent, by contrast, extracts only the information it needs from a platform and leaves. As a result, the structure that once reliably exposed people to advertising is breaking down.

This shift undermines the revenue models that existing content and data companies rely on, seriously enough that many incumbents are now grappling with what the agent era means for their business.

2. Payment Infrastructure to Replace Web Ads

Consider a recipe platform that, anticipating the agent era, decides to charge every agent that accesses it. For an agent to retrieve a recipe from that platform, several conditions have to be met.

1. Payment rails: the platform needs infrastructure that allows agents to make payments.

2. A means of payment: the agent needs funds it can spend.

3. Payment delegation: controls that keep the agent from making payments outside its owner’s intent.

2.1. Payment Rails: The Emergence of the x402 Standard

Platforms need a machine-to-machine (M2M) channel that lets agents receive bills and settle them automatically, without human involvement. This requires pay-per-call billing infrastructure: a system that charges and settles each API call immediately.

One approach, taken by incumbents such as Mastercard and Ant Group, converts their existing large-scale card and simple-payment networks into agent-specific API solutions.

Existing financial networks, however, are structurally too heavy to run an approval process every time an agent requests data, which can happen dozens of times per second.

The crypto-based x402 standard has moved into that gap. Because wallet addresses communicate directly, without intermediaries such as value-added networks (VANs) or payment gateway providers, x402 allows atomic settlement similar to paying a toll, and it has emerged as a major alternative optimized for machine-to-machine transactions.

2.2. Payment Method: The Rise of Stablecoins

For an agent to purchase recipe data, it needs a way to hold and spend funds. One approach already in use links the agent to a user’s existing fiat-based fintech account or credit card infrastructure, giving it access to those payment methods. This approach, however, is better suited to conventional shopping.

Few people would pay a dollar for a banana cake recipe that used to be free. Conversely, when a transaction requires a micropayment as small as $0.0001, processing it through a conventional credit card or payment gateway network incurs fees that exceed the value of the transaction itself.

Stablecoins have drawn considerable attention as an alternative to this problem, because they function as programmable money, which makes them far better suited to an environment in which agents settle micropayments automatically and in real time, without a complex approval process.

2.3. Payment Delegation: The Delegation Framework as a Safeguard

Even with payment rails and a funding method in place, a wallet cannot simply be handed to an agent without safeguards. Strict controls are needed to prevent unintended overspending or exposure to malicious activity.

The mechanism that limits an agent to spending within a defined scope, rather than granting it unrestricted authority, is known as a delegation framework. To maintain smooth and secure control, a delegation framework verifies three main elements.

1. Identity: verifies who is making the payment. It identifies the owner of the requesting agent and assesses its trustworthiness, using mechanisms such as Know Your Agent (KYA) checks and decentralized identifiers (DID), to prevent identity theft and misuse.

2. Permissions: sets detailed rules for how the agent can spend funds, including the specific platforms it can use, the maximum amount per transaction, and the validity period.

3. Settlement: through smart contracts or on-chain rules, funds are finalized atomically only when the conditions set above are fully met, which removes the risk of disputes at the source.

The following section examines how, from 2025 to the present, companies have standardized these technologies and connected them to the market.

3. From Standards Competition in 2025 to Distribution Competition in 2026

In 2025, crypto-native firms and incumbent financial and technology companies competed to establish technical specifications favorable to their own positions, each vying for leadership in agent payments.

Major standards emerged, including Coinbase’s x402 and Visa’s Trusted Agent Protocol (TAP), but most amounted to little more than published specification documents or developer SDKs.

For an agent to actually transact, identity verification, payment channels, final settlement, and counterparty matching all need to work together as an integrated system; however, each camp offered only a fragmented, self-centered layer of the protocol, and none produced the integrated ecosystem an agent would need to function.

Accordingly, 2026 is becoming the year in which the technical standards established so far move beyond nominal specification competition and into actual distribution.

Incumbent payment and financial infrastructure players are entering the field on the strength of their large merchant networks and the trust built into fiat-based systems. Ant International and Mastercard, for example, are layering agent-specific APIs on top of their existing large-scale payment networks, building a bridge between the established commerce ecosystem and AI agents.

Crypto-based infrastructure providers, meanwhile, are expanding into agent commerce and real-world usage on the strength of wallets and blockchain networks.

Coinbase has built infrastructure, through wallet and Model Context Protocol (MCP) payment integration, that lets developers and agents execute micropayments instantly within AI client environments such as Claude. Circle has extended its stablecoin payment infrastructure to nine major blockchain networks, and OKX has leveraged its existing crypto user base to secure a channel for agent transactions.

Where 2025 was a year in which each camp offered only a technical blueprint, the first half of 2026 has become a year of direct competition, as on-chain payment standards and traditional financial networks each press their respective strengths to integrate with actual AI platforms and commerce environments and claim the position of de facto standard.

4. Usage Is Real, but Adoption Is Not Yet Mass

A figure of 100 million users means something entirely different depending on whether the ecosystem that service belongs to totals one billion people or ten million.

The technology adoption lifecycle proposed by management scholar Everett Rogers, known as diffusion of innovation theory, divides adoption into five segments.

• Innovators: 2.5%

• Early adopters: 13.5% (16% cumulative)

• Early majority: 34% (50% cumulative)

• Late majority: 34% (84% cumulative)

• Laggards: 16%

Reaching what is commonly called mass adoption, meaning more than seven in ten respondents actually using the technology, requires moving past the early majority and into the late majority segment.

Using this framework, the following sections examine adoption in the consumer and enterprise segments. Agent payments do not yet have a single authoritative global statistic, so what follows draws on individual company disclosures and data from specialized research firms.

4.1. Consumers

• Alipay AI Pay: Ant Group has disclosed 100 million users for AI Pay. Set against Alipay’s total user base of 1.3 billion, that represents an actual usage rate of 7.7%.

• NielsenIQ: according to NielsenIQ, 34% of consumers delegate product search to AI and 23% delegate review summarization. Only 8% of respondents had let AI complete a purchase entirely on its own.

• Accenture: in an Accenture survey of 25,000 people across 16 countries, 9% said they would allow an agent to make purchases autonomously.

• Gartner: in a survey of U.S. consumers, only 11% said they would allow AI to make purchasing decisions even in low-risk categories.

Taken together, these figures put average consumer adoption in the low teens, indicating that agent usage is still at an early stage.

4.2. Enterprises

On the enterprise and developer side, agent payment adoption remains a small sample by any measure. Individual company case studies, ecosystem metrics reviewed by independent auditors, and industry-wide adoption surveys all point to the same conclusion. As with the consumer segment, there is no single official statistic for this sector, so the following draws on individual disclosures.

When OpenAI launched Instant Checkout in September 2025, it was announced as covering more than one million Shopify merchants, but only about 12 merchants had actually activated live payment functionality.

Measured against Shopify’s total merchant base, estimated at 5.5 million to 6.8 million depending on the source, a range with nearly a twofold spread, that puts the usage rate at roughly 0.0002%.

The state of the x402 ecosystem, the agent payment specification, makes clear how early this adoption remains. Only about 500 services are registered in its payment directory, and when the auditing firm ScoutScore examined all of them, just 43% operated correctly according to the specification.

As a result, only a small number of companies are running agent payment infrastructure commercially in production.

5. What Mass Adoption Would Bring

The core change that agent payments bring to the content and data markets is a mechanism combining falling per-unit prices with rising usage volume.

A single human visit to a webpage generates roughly $0.005 in ad revenue, while a machine reading and paying for the same data pays around $0.001, about a fifth of the per-visit figure. Machines, however, read far more often and in far greater volume than people do.

The music industry has already gone through this same structural shift once. As the industry moved from CDs priced at $15 apiece to streaming, which pays $0.003 to $0.005 per play, the per-unit price collapsed by a factor of thousands.

Once that micropayment model, charging roughly $0.003 per track, took hold, however, hundreds of millions of people worldwide began playing music continuously: during commutes, while exercising, and even while sleeping.

In other words, per-unit revenue from individual pieces of data will fall as agents take over, but the sheer volume of machine-driven calls and usage will outweigh that decline, and the overall size of the market and total revenue will end up larger.

6. This Is the Innovator and Early Adopter Stage

Both the consumer and enterprise segments have so far seen limited active participation in agent AI payment adoption.

On Everett Rogers’s adoption curve, both segments remain within the innovator (2.5%) and early adopter (13.5%) range, roughly 5% to 14% combined, well short of the mass adoption stage in which more than seven in ten people use the technology regularly.

These early figures need not be read as disappointing. If anything, they point to why companies should act now, while it is still possible to identify and correct problems before mass adoption arrives.

Security vulnerabilities that recently surfaced in the x402 ecosystem illustrate the transitional problems facing this early-stage infrastructure. An examination of the 15 major providers that together account for 99% of transactions found payment verification and settlement violations at every one of them, along with 31 newly identified vulnerabilities.

A handful of companies, including Coinbase, have since moved to fix some of these flaws, but most providers and the foundations governing the protocol have not made corresponding improvements at the specification level, leaving the underlying structural problems largely unresolved.

Moving straight to mass adoption without first resolving the instability in this early infrastructure would mean building on an unstable foundation.

The AI agent payment market today, then, is better understood as a period requiring patience: rather than rushing into premature mass adoption, the priority is to build technical trust and infrastructure ahead of the mainstream market to come.

This restructuring of the industry has become a trend that cannot be reversed, and a significant industry challenge. To address this rapid paradigm shift and its implications for the industry from multiple angles, EastPoint: Seoul 2026 will be held on September 28 at the Westin Parnas Seoul.

In particular, the session “Autonomous AI in the Real World: From Decentralized Systems to Robotics“ will be moderated by Jun Park of Hashed, with participation from experts including Chi Zhang of Kite AI, Jaemin Jin of Magic Labs, Jan Liphardt of Openmind, and Junghee Ryu of RLWRLD.

The panel will examine, in depth, the conditions under which AI agents and robots can function as genuine economic actors in trustless environments, along with ways to integrate finance and digital assets into that shift.

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• Payments 3.0 The AI Agent Payments Market

• AI Agent Wallet Infrastructure: The Layer Behind a 700% Revenue Scale-Up

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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The global digital asset market has expanded into derivatives, payments, and on-chain services, while Korea remains centered on spot trading. Korean investors have moved unmet demand overseas. Tiger Research and Chainalysis tracked roughly 120,000 Korea-linked wallets to analyze about KRW 700 trillion in outflows from 2021 to 2026.

Key Takeaways

• Korean investors are moving money overseas to access products unavailable in Korea. About KRW 700 trillion left domestic exchanges between 2021 and 2026.

• The money does not stop at foreign exchanges. Korean investors also trade derivatives on DEXs, participate in prediction markets, and spend stablecoins with crypto cards.

• Foreign exchanges capture more than trading fees. They also gain customers, data, and operating know-how from Korean demand.

1. A Growing Global Market, a Stalled Korean One

The global digital asset market is taking a different shape. Institutional capital is entering a market that grew up around retail spot trading, and blockchain now extends across the financial value chain. Both the type of capital the market draws and the ways investors use digital assets are changing.

Bitcoin and Ethereum spot ETFs have widened institutional access to the market, and derivatives markets for perpetual futures and options are growing quickly. Stablecoins have expanded beyond a means of trading crypto into payments and remittance, and tokenization of real-world assets is changing how issuers create and distribute assets. The global market reaches well beyond trading into finance more broadly.

These changes are not moving at the same pace everywhere. The Korean market still centers on retail spot trading, and institutional participation remains limited. Derivatives and newer financial services that are growing in the global market have yet to form a meaningful market in Korea. As the global market broadens, the structural gap with Korea widens.

This gap is visible in trading volume as well. Global exchanges have expanded into perpetual futures and other products alongside spot, while trading in Korea remains concentrated in spot alone. Korean exchanges therefore account for a steadily smaller share of combined volume across major Korean and global venues. Volume is only one measure of a market, yet it shows that the Korean market is losing ground as the global market expands.

2. Unmet Demand, Investors Heading Offshore

The Korean market’s declining share does not mean Korean investors have lost interest. Products and services difficult to access at home have expanded rapidly abroad, and investors have moved to foreign exchanges and on-chain services to reach them. Unmet demand in Korea has not disappeared. It now shows up as actual trading and service use abroad.

The scale is significant. Tiger Research partnered with Chainalysis to analyze on-chain data that tracks cryptocurrency flows from Korean to overseas exchanges. Between 2021 and 2026, an estimated $530 billion moved overseas through these channels. Outflows reached approximately $120 billion in 2025 and are projected to reach approximately $52 billion in 2026. These figures capture only identifiable flows, and the true scale is likely larger.

Absolute outflow figures alone can make outflows look as though they have slowed. Market-wide contraction pulls down trading volume in Korea and outflows together, so absolute amounts say little about how strong the outflow is. To measure this more accurately, the analysis introduces a net outflow ratio. The ratio divides net outflows to foreign exchanges by the combined spot volume of Korea’s three major exchanges, Upbit, Bithumb, and Coinone. Absolute outflows have declined, but the net outflow ratio has risen. Capital is leaving faster than the Korean market is shrinking.

When unmet demand moves abroad, the economic value moves with it. Trading fees are the most direct case. Korean investors generated an estimated $3.5 billion in fee revenue for foreign exchanges in 2025 and another $0.9 billion in the first half of 2026, based on Tiger Research’s own methodology. Demand originating in Korea is becoming revenue for foreign operators.

The value accumulating abroad goes beyond fee revenue. The more Korean investors trade and use services abroad, the more customer relationships and transaction data accumulate with foreign operators. Those operators read Korean demand more precisely on that basis, and they build the capacity to design and run new products. Unmet demand does not only generate revenue abroad. It also builds the competitive strength foreign operators need to create and expand new businesses.

3. Beyond Foreign Exchanges: Investment Demand Moves On-Chain

Capital leaving Korean exchanges does not stop at foreign ones. Tiger Research used Chainalysis’s fund-tracing tool, Reactor, to track fund flows from wallets it identified as Korean-owned. Funds that moved abroad did not stay at foreign exchanges. They passed through personal wallets and moved into on-chain services including decentralized exchanges and prediction markets.

To confirm this pattern went beyond a small set of wallets, the analysis extended to approximately 120,000 wallet addresses that Tiger Research attributes to Korean investors. The results showed significant investment activity outside foreign exchanges, including leveraged trading through decentralized exchanges and participation in prediction markets. Unmet demand in Korea now reaches beyond foreign exchanges into on-chain markets.

3.1. Derivatives Demand Moves to Decentralized Exchanges

Unmet demand for derivatives trading is moving to decentralized exchanges. On-chain analysis covering January 2024 through July 2026 found that Korean-owned wallets deposited a cumulative approximately $1.64 billion into three decentralized exchanges: Hyperliquid, Lighter, and Variational. These platforms run active leveraged trading centered on perpetual futures, and they absorb demand for derivatives that Korean investors find difficult to access at home.

Leverage turns deposited capital into far larger trading volumes. In July 2026 alone, approximately 1,200 Korean-owned wallets generated $4.97 billion in notional trading volume on Hyperliquid. Leverage can inflate notional figures, but nearly $5 billion in a single month shows that on-chain derivatives trading by Korean investors has reached a meaningful scale.

Trading on Hyperliquid reaches beyond cryptocurrency into traditional assets. Between January and July 2026, Korean-owned wallets traded products based on SK Hynix, Samsung Electronics, and crude oil among their top instruments. High leverage and access outside regular market hours appear to drive part of this demand. Investors want to trade traditional assets in ways the existing market does not offer, and that demand is finding its way on-chain.

The size of capital involved varies widely. Over the analysis period, the research identified approximately 7k Korean-owned wallets, and some of them managed capital at considerable scale. One Korean-owned wallet put approximately $780k in margin behind a 10x leveraged short on an SK Hynix-based perpetual future on Hyperliquid in July 2026. Trading sizes across these wallets range broadly, and large-scale capital works in on-chain derivatives markets as well.

3.2. Prediction Markets: Another Option for Korean Investors

Korean investors are also active in prediction markets, one of the fastest-growing segments in global digital assets. Prediction markets let participants trade on the outcomes of future events across politics, economics, and sports. Korea restricts this type of trading, but Korean investors trade actively on Polymarket. On-chain analysis covering January 2024 through July 2026 identified approximately 3,700 Korean-owned wallets on Polymarket, and their cumulative trading volume reached approximately $438 million.

Trading rose sharply alongside major political events in Korea. Between March and June 2025, when impeachment proceedings and the presidential election followed one another, Korea-related markets accounted for more than half of total trading volume among Korean-owned wallets. Cumulative trading volume in Korea-related markets over the full analysis period reached approximately $62 million.

After the presidential election, the share of Korea-related political markets fell quickly, but trading continued across a wide range of subjects, including global affairs, the FIFA World Cup, the KBO League, the LCK, and even Seoul weather forecasts. Trading that had concentrated on Korean politics dispersed into other markets, which shows that Korean investor activity on prediction markets does not stop at specific political events.

A breakdown by market shows where Korean investor interest concentrated. Global issues such as the U.S. presidential election ranked at the top by volume, and Korea-related political markets including the election of President Lee Jae-myung also drew high volumes. Korean investors traded across major global issues, and they traded Korea-related markets at meaningful size as well.

Wallet counts make the character of Korea-related markets clearer. Korea-related political markets, including the election of President Lee Jae-myung and the removal of former President Yoon Suk-yeol, drew more Korean-owned wallets than U.S. presidential election markets did. Global issues and Korea-related markets both ranked near the top by volume, but Korea-related political markets drew broader participation by wallet count.

3.3. Payment Demand Flows to Offshore Crypto Cards

Crypto cards are spreading rapidly worldwide, and the market for spending digital assets is growing with them. A crypto card connects digital assets to existing card payment networks so users can spend much as they would with a traditional card. Users issue a virtual card through an app for online and mobile payments, and some services also provide physical cards for use at brick-and-mortar merchants. Digital assets are moving beyond trading and investment into everyday payments.

Demand for foreign crypto cards is growing in Korea as well. As of late July 2026, cumulative Korean downloads of major crypto card apps, including RedotPay, KAST, ether.fi, Tria, and Plasma, reached an estimated 38k. On-chain analysis of RedotPay and ether.fi identified approximately 1,000 Korean-owned wallets across the two services.

Funds flowing from these wallets into crypto cards have trended upward. Monthly top-up volumes for RedotPay and ether.fi rose notably from 2026, when the KRW/USD exchange rate stayed elevated. The data does not establish a direct causal link between the exchange rate and top-up volumes, but the pattern suggests that some users hold dollar-pegged stablecoins not only as a store of value but to fund card payments. Digital assets that moved abroad now serve as spending money as well.

Payment volumes come into clearer view through ether.fi. Both RedotPay and ether.fi let users spend deposited digital assets by card, but the range of data visible on-chain differs between them. RedotPay data covers top-up inflows to the card. ether.fi data extends to fund flows connected to payments, which lets the analysis measure spending by Korean-owned wallets. Funds deposited into ether.fi flow through to merchant payments, which shows that stablecoins serve everyday spending as well as holding.

Crypto cards matter because capital that moves abroad may never return after investment and may go on to fund consumption instead. Individual wallets show this pattern. One high-value Korean-owned wallet that Tiger Research tracked moved funds from a Korean exchange to a personal wallet, traded on Hyperliquid and Polymarket, then transferred a portion to an ether.fi card for payments. Capital that left a Korean exchange kept working abroad and on-chain, and it carried through from investment into consumption.

4. The Window to Turn Capital Flows Around

The scale of capital that has moved abroad is already substantial, but room remains to change its direction. As the analysis above shows, Korean investor demand has not declined. It turns into trading and service use at foreign exchanges and on-chain services instead. Future capital flows can look different if Korea builds a market able to absorb that demand.

What matters is building both at once: an environment that keeps capital at home, and a path for capital already abroad to come back. Widening the range of demand Korea can meet will slow new outflows, and lowering the institutional friction in the repatriation process will bring capital already abroad back home. Turning the direction of capital around requires both.

4.1. Building a Reason for Capital to Stay

For capital to stay in Korea, Korean firms need to absorb changing investment demand in the Korean market. The global digital asset market has expanded beyond spot trading into derivatives and a wide range of services, and traditional assets now trade in new forms through stock perpetual futures and tokenized stocks. Korea has yet to put in place the rules and standards these products require, and exchange businesses remain concentrated in spot trading. Demand exists in Korea. The structure makes it difficult for Korean firms to connect that demand to new products and markets.

Global operators have widened their business lines as the market changed. Major global exchanges including Coinbase and Binance expanded into adjacent areas such as derivatives and institutional services, and they built or acquired the technology and infrastructure they needed. When new demand formed, they connected it to existing business and grew it into new markets. Korean operators, by contrast, found it difficult to expand into new businesses within the digital asset market and had to look to other industries for growth. This difference stems less from the ambition of the operators than from the regulatory foundation available for turning new demand into business.

Stock perpetual futures show why Korean firms need the ability to respond to new investment demand. As the analysis above showed, Korean-owned wallets trade perpetual futures based on Korean stocks, including SK Hynix, on foreign platforms. The SK Hynix perpetual future tracks the Korean share price closely and keeps trading through evenings and weekends when the Korean stock market closes. It reflects the underlying asset with reasonable fidelity and forms a price outside regular trading hours, which suggests it could serve as a price signal that complements the Korean spot market. Unmet demand in Korea does not only turn into trading abroad. It also produces market functions that Korea could put to use.

Absorbing this demand in the Korean market requires more than case-by-case decisions on whether to permit individual products. Regulators need to set standards that let firms commercialize new products and services within the regulatory framework. Rather than permitting every product at once, they need to define clear investor protection and risk management requirements, and firms that meet those requirements should be able to expand as demand changes. That is how Korea can change a structure in which demand created at home becomes a market abroad first, and how firms can keep the business experience and competitive capabilities they build along the way inside Korea.

4.2. Widening the Path for Capital to Return

Capital that has already moved abroad will not return on its own, even as investment opportunities in Korea expand. Bringing funds back requires multiple verification steps, and unclear reporting and tax standards raise the burden further. Alongside building an environment that keeps capital at home, Korea needs to lower the burden on capital already abroad that wants to come back.

Amendments to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information (FTRA) are tightening anti-money laundering controls on virtual asset transfers. The Travel Rule will apply regardless of transaction size, while transactions with foreign exchanges and personal wallets will face risk-based controls. AML controls remain necessary, but unclear verification requirements can make it harder to bring funds back to Korea. Regulators should set clear standards to reduce unnecessary friction for legitimate transfers.

Once taxation takes effect, investors will face more to consider when they bring assets held abroad back to Korea. Assets that have moved across foreign exchanges, personal wallets, and on-chain services require confirmation of acquisition cost and past transaction history, but the standards for handling complex transactions and for accepting supporting documentation remain insufficiently specific. The problem lies less in the tax itself than in the burden and uncertainty investors face when they reconstruct and report past transactions before the rules are fully in place. Outflows from Korean exchanges tended to rise during periods when search interest in tax filing climbed, so the effect of that uncertainty on capital flows deserves attention.

Bringing capital back therefore requires two things. Korea needs to revise regulations that constrain legitimate fund movements without cause, and it needs to make the standards and procedures for necessary regulations explicit. AML controls and taxation both serve a purpose, but strengthening verification and reporting obligations before the underlying standards exist can discourage even legitimate capital from returning. Capital that moved abroad can come back only if Korea maintains the controls it needs while cutting the unnecessary burden that fund movements now carry.

5. When Capital Returns, Opportunity Follows

This analysis points to more than capital outflows. As unmet demand in Korea turns into trading and service use abroad, foreign operators capture the revenue and new business opportunities that demand generates. What matters is building a market in Korea that can absorb this demand and redirecting home some of the revenue and opportunity that now arises abroad.

The scale is significant even on trading fees alone. Korean investors paid an estimated $3.5 billion in trading fees to foreign exchanges in 2025. Assuming the same trading activity and fee rates, routing 10% of that activity through Korean operators would generate approximately $357 million in revenue, 25% would generate approximately $893 million, and 50% would generate approximately $1.79 billion. Korea does not need to create new demand to reach these figures. Redirecting home a portion of what Korean investors already do abroad is enough.

The value Korea could create runs beyond trading fees. Coinbase started in spot trading and widened into custody, institutional services, and stablecoins, and in the first quarter of 2026 it drew nearly half of its total revenue from businesses outside trading. Dunamu, by contrast, draws most of its revenue from KRW spot trading fees. The same digital asset demand can produce very different market sizes depending on whether operators can connect it to a broad range of products and services.

Korea needs to build the foundation that lets its operators turn new demand into business before this difference widens further. The global market is already expanding quickly, but Korea has yet to put in place the regulatory foundation for commercializing new products and services. Korea can still widen the scope of its market before the gap sets, which makes this a critical window for the Korean digital asset industry. Alongside building that foundation, Korea needs to give the trading and capital now heading abroad a reason to choose the Korean market.

Tax policy is one way to create that reason. Thailand exempts individual capital gains on digital asset transactions through licensed domestic operators from income tax from 2025 through 2029, which steers investors toward the regulated market. Korea can treat taxation not only as a source of revenue but as a policy instrument for drawing trading and capital into the Korean market.

Redirecting home even a portion of the demand and capital now heading abroad would produce effects beyond trading fees. It would widen the market in which Korean operators can build new products and services, which can translate into corporate growth and industrial competitiveness. Growth in the market and in the firms within it generates economic value that stays in Korea over the long term, and it broadens the tax base as well. This window calls for more than putting regulations in place. It calls for building the conditions under which a new market can grow in Korea.

Appendix. Methodology

This report identifies and analyzes wallets attributed to Korean investors using on-chain address labeling data that Tiger Research built in-house. Tiger Research has analyzed on-chain fund flows in the Korean digital asset market since 2023, accumulating the criteria and data needed to identify wallets linked to Korean investors. The current dataset holds approximately 5M address records associated with Korean and foreign exchanges, which served as the foundation for wallet identification.

Tiger Research drew on open-source intelligence (OSINT) alongside on-chain data to identify and verify these wallets. It checked wallet addresses linked to public accounts on Discord, Twitter, and GitHub, and examined activity records visible on decentralized applications including OpenSea and POAP. Korea-specific events, airdrops, and other region-limited campaigns have been relatively active, which yielded a range of signals for establishing a Korean connection to individual wallets.

Tiger Research then used Chainalysis Reactor to analyze address relationships, fund flows, and clusters, and to cross-validate existing identification results. Reactor traced associated wallets that in-house data alone could not confirm, which significantly widened identification coverage. This analysis draws on approximately 120k wallet addresses attributed to Korean investors.

Tiger Research analyzed the on-chain activity of these wallets using the blockchain data platforms Allium and Dune. It traced fund movements and smart contract interactions at the wallet level, and it aggregated activity on major services including Hyperliquid, Polymarket, and crypto cards. This showed where funds held by wallets attributed to Korean investors go once they leave exchanges, and what activity follows.

These 120k addresses do not represent the full population of Korean digital asset investors. Most Korean investors trade inside centralized exchanges, and relatively few use personal wallets or on-chain services directly. This dataset does not aim to represent all investors. It analyzes the fund flows and behavior of Korean investors who move assets outside exchanges and use on-chain services. It includes wallets that use on-chain services repeatedly or manage capital at meaningful scale, which makes it well suited to examining the activity of that investor segment.

🐯 More from Tiger Research

Read more reports related to this research.

• Crypto Exodus: 160 Trillion Won Leaves Korea

• Korea Institutional Crypto: 2026 Landscape

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

Key Takeaways

• Asian markets lack the regulatory architecture needed to classify prediction markets, forcing regulators to leave them in a gray area.

• Western jurisdictions leverage existing frameworks like derivatives regulation in the US or betting laws in the UK, which create clear entry paths for operators and establish regulatory oversight.

• The absence of a framework in Asia does not suppress market activity, as evidenced by significant liquidity flowing into offshore platforms, but it prevents tax collection and consumer protection.

• Building a regulatory foundation requires a public deliberative process to determine whether prediction markets should be treated as derivatives, gambling, or a new third category.

1. Definition and the Importance of Classification

As that earlier report established, prediction markets have value as information platforms, but the law has never drawn a clean line between them and gambling.

That raises the question of how the law defines gambling, and in particular betting.

Section 9 of the UK’s Gambling Act 2005 broadly defines the subject matter of betting as follows, and brings any such activity within the scope of gambling regulation once monetary value attaches to it.

• the outcome of a race, competition or other event or process,

• the likelihood of anything occurring or not occurring, or

• whether anything is or is not true.

Under this legal definition, prediction markets attach economic value to the outcome of a specific event or the determination of a fact, which means they share much of their structural core with betting, the central element of gambling.

The core of the regulatory debate ultimately comes down to a question of definition: whether to 1) bring prediction markets within the traditional gambling regulatory framework, 2) reclassify them under a financial architecture such as derivatives, or 3) establish them as an independent category through separate legislation.

2. The West: How Institutional Pathways Produced Different Outcomes

Compared to Asia, Western jurisdictions have a more permissive stance toward prediction markets, but not because of a cultural tolerance for gambling. It reflects the availability of institutional architecture that allows them to bypass a direct confrontation with gambling law. The main pathways were as follows.

• United States: Prediction markets were classified as derivatives (swaps) under the Commodity Exchange Act and brought within the existing registration framework.

• United Kingdom: The market was accommodated within a general-purpose “betting intermediary” licensing regime.

• European Union: Where contracts are classified as financial instruments, a binary options ban applies; where that classification is avoided, strict national gambling laws present a second barrier.

The consistent pattern is that institutional incorporation was only possible in jurisdictions that possessed an alternative regulatory framework, derivatives law or a flexible licensing regime, independent of gambling statutes.

2.1. United States: Extending the Definition of Derivatives

The United States accommodated prediction markets not by endorsing the gambling framing but by applying the existing contract structure of the Commodity Exchange Act (CEA) in a purposeful way.

• Commodity Futures Modernization Act of 2000 (CFMA): Established the foundation through an open-ended definition of “excluded commodity,” which allowed non-financial variables such as election outcomes and weather events to be classified alongside conventional commodities such as crude oil.

• Dodd-Frank Act of 2010: Gave the CFTC two critical powers:

  1. Exclusive federal jurisdiction over event contracts.

  2. The authority under Rule 40.11 to prohibit individual contracts related to terrorism, assassination, war, and gaming.

Neither statute was designed with prediction markets in mind, but together they created the legal basis for treating such contracts as financial agreements rather than gambling. They also established a centralized regulatory counterparty in the CFTC, replacing what would otherwise have been a fragmented process of state-by-state lobbying.

The legal architecture that accumulated over time produced a market ordered around licensed entities.

In November 2020, Kalshi secured Designated Contract Market (DCM) status, allowing it to sell a broad range of event contracts to retail investors. Polymarket, after a 2022 enforcement action, moved toward regulatory compliance through its 2025 acquisition of licensed exchange QCEX.

2.2. United Kingdom: Incorporation Through a General Licensing Framework

Rather than treating prediction markets as an extension of derivatives, the UK approached them as a form of betting and used the existing Gambling Act 2005 to accommodate them within the regulatory perimeter. Three provisions were particularly important.

• Section 9: Defines betting broadly enough to provide a flexible legal foundation for prediction markets.

• Section 13, “betting intermediary”: Captures the structural feature of prediction markets precisely, as they match contracts between users rather than taking direct positions themselves.

• Section 65(4): Allows the licensing categories to be adjusted by ministerial order, giving the framework the capacity to absorb new market models without separate legislation.

In February 2026, the Gambling Commission clarified that prediction market platforms fall within the “betting intermediary” category and must obtain the corresponding license. ,. Rather than a blanket prohibition, this constituted a clearly defined entry path, with strict penalties for unlicensed operation on one side and an open registration window on the other.

Despite this established framework, the major global platforms have been cautious about entering the UK market, for reasons rooted in their US litigation strategy.

Both Kalshi and Polymarket have staked considerable legal argument on the position that prediction contracts are financial derivatives rather than gambling. Obtaining a UK “betting intermediary” license would formally designate them as gambling operators, which would undermine their legal position in ongoing US proceedings.

This gave the UK a market environment shaped differently from the global standard, one that in practice created ideal conditions for UK-local operators to build their business. Matchbook, an existing betting exchange, drew on its betting intermediary license to launch “Matchbook Predictions” in January 2026, and Versus, a newer entrant, obtained a UKGC general betting license and launched its own prediction market.

2.3. Europe: Dual Closure Under Financial and Gambling Regulation

The regulatory landscape on the European continent combines financial regulation under MiFID II with individual national gambling laws to form a two-layer barrier.

• Any contract classified as a financial instrument immediately encounters the binary options prohibition.

• Any contract that escapes that classification then faces strict national gambling definitions.

In July 2026, the European Securities and Markets Authority (ESMA) made the financial regulation dimension explicit in an official statement, which stated that the binary payout structure of event contracts falls squarely within the scope of the binary options ban. This effectively closed the financial product route into the European market.

Prediction markets face equally difficult conditions under gambling law. France is the clearest illustration: the Autorité Nationale des Jeux (ANJ) implemented a phased enforcement escalation that concluded by classifying prediction market operations as illegal gambling.

The one exception is Gibraltar. In July 2026, Gibraltar designed a dedicated legislative framework, the Prediction Market Regulations, that defines prediction markets as a distinct “third category.” This is a strategy of creating a new pathway rather than working within the existing frameworks, but as Gibraltar is not an EU member state, the approach has the limitation of not being subject to mutual recognition within Europe.

The closed structure in Europe is not necessarily permanent, however. The European Commission has currently made the legal treatment of prediction markets a formal item under review as part of its Markets in Crypto-Assets Regulation (MiCA) review process. Depending on the conclusions of the report due in June 2027, the door remains open to a shift toward a new institutional framework for accommodating prediction markets.

3. Asia: The Present State of Institutional Absence

Asian jurisdictions have two structural obstacles that do not exist in the same form in Western markets.

• State-controlled gambling licensing: There is no general-purpose licensing framework capable of accommodating private sector innovation in the manner of the UK’s “betting intermediary” category. Licensing authority is allocated through state-controlled monopoly structures.

• Constraints on financial product classification: The financial laws of South Korea and Japan use closed, positive-list definitions of underlying assets, which makes the kind of broad reclassification the US achieved through the concept of “non-financial contingent events”, legally unavailable.

As the Western cases demonstrate, whether a prediction market takes hold depends on which path defines it, either existing financial product architecture or gambling regulation. The fundamental constraint facing Asian markets, however, is that neither classification system offers an institutional foundation capable of accommodating this new business model.

Legal betting markets already exist across Asia, in Japan, South Korea, Singapore, and Hong Kong, so any view that denies the market on grounds of emotional resistance or cultural specificity diverges considerably from the actual situation.

The central question, then, is not whether the market is socially accepted, but how a regulatory foundation could be designed to accommodate this new market model.

3.1. South Korea: Absent Architecture and Criminal Enforcement as the Default

Domestic discussion of prediction markets has not reached the stage of debating their legal status or social value. The existing regulatory framework treats them as speculative products by default, which cuts off substantive deliberation before it can begin.

The relevant statutory provisions are already in conflict with how prediction markets operate. The Act on Special Cases Concerning Regulation and Punishment of Speculative Acts covers “prize businesses,” defined as businesses that distribute money or property in exchange for correctly predicting the outcome of a specific event. This is structurally similar to what prediction markets do.

The legal question is not fully resolved, however. Prize business law presupposes a casino-style structure in which the operator directly controls the stake pool. Modern platforms such as Polymarket use a matching architecture in which the operator facilitates contracts between users rather than holding funds directly. No judicial interpretation has yet addressed how this structural difference would be treated under existing statutes.

The financial regulatory route is also closed. The Capital Markets Act uses a positive-list approach to defining underlying assets. While financial indicators are covered, there is no explicit basis for classifying non-financial variables such as election outcomes as derivatives.

Because the right to operate betting businesses is in any case reserved for state-monopoly entities, private platforms cannot enter the market through this channel either.

3.2. Japan: Sophisticated Workarounds and the Limits of an Informal Practice

Prediction markets in Japan have followed a pattern of regulatory workaround rather than institutional incorporation.

The method local platforms have adopted resembles the three-shop system, a mechanism that originated in the pachinko industry, in that it physically severs the direct cash flow within the operating process.

• Platform operator: The platform blocks direct cash deposits and instead runs a free reward model based on activities such as watching advertisements. It also eliminates any cash exchange function within the platform itself, which removes “gain or loss through property” as a defining element of gambling.

• Reward issuer: A third party independent of the platform issues the reward, such as a gift certificate, for a successful prediction. Separating the platform operator from the issuing entity removes the legal risk of the operator becoming a direct party to the exchange of rewards for cash.

• External cash-out market: A peer-to-peer transfer market and affiliated merchants outside the platform form the ecosystem where the reward is actually spent or converted into cash. Because the operating platform does not participate in this distribution process, the structure remains independent and avoids meeting the legal elements of the offense of gambling.

This is ultimately an informal commercial practice that emerged in a regulatory grey zone rather than a structure built on firm legal footing. Global platforms are either blocked from the Japanese market or operating under strict constraints through cryptocurrency exchanges. The substantive level of policy discussion in Japan is not materially different from that in South Korea.

4. What Asian Markets Are Forgoing

The absence of institutional architecture in Asia does not mean that the market does not exist. More than $52 million (approximately ₩72.8 billion) in liquidity flowed into prediction markets tied to South Korea’s June 2026 local elections, demonstrating that user participation in offshore platforms has already crossed a meaningful threshold even without a domestic regulatory framework. These transactions fall outside the tax system, consumer protection mechanisms are absent, and market integrity oversight is impossible.

Regulators face three available responses:

1. Extend existing criminal statutes to impose sanctions (the current South Korean approach).

2. Use technical means to block platform access entirely (the Singapore model).

3. Bring prediction markets within the regulatory perimeter, capturing tax revenue and supervisory authority in the process.

Only the third option can precisely achieve the practical regulatory objectives of tax collection, consumer protection, and market transparency.

Global annual transaction volume in prediction markets is projected to exceed $200 billion in 2026. Assuming conservatively that South Korean domestic users account for 1% of that volume, transaction volume attributable to any given Asian market would reach $2 billion. Depending on the tax model adopted, that would generate estimated new annual tax revenue of between $4 million and $43.2 million.

The more important point is not the size of these figures in isolation. Without regulatory accommodation, these transactions will not disappear; they will continue in an unregulated environment. Regulators will forgo both tax and supervisory authority while continuing to bear administrative and criminal enforcement costs.

5. Reframing the Regulatory Approach to Prediction Markets

As noted above, the institutional accommodation of prediction markets depends on which existing regulatory architecture, gambling or financial product, is used to define them.

• Gambling regulatory framework: This path adapts existing Asian models for state-approved speculative activities, such as sports betting pools or integrated resort casinos. It is consistent with the state monopoly structure and can be justified through the public fund rationale, but it has inherent limitations in accommodating the business models of private platforms.

• Derivatives regulatory framework: This represents the most operationally viable path with the least legal friction. It would involve fine-tuning the definition of financial products, drawing on precedents such as the acceptance of non-financial variables under Japan’s Financial Instruments and Exchange Act (FIEA) or on the language of “economic risk” in Korea’s Capital Markets Act. This approach avoids direct conflict with existing state gambling monopolies while pre-empting concerns about speculation and market manipulation by limiting eligible underlying assets to publicly verifiable statistical variables.

• Creation of a standalone third category: This involves designing a dedicated legislative framework, as Gibraltar has done. It allows for the most precise regulatory calibration but carries the highest legislative and political costs, given the absence of precedent.

It is worth noting that this is a long-term institutional undertaking rather than a near-term outcome. In many Asian jurisdictions, basic public discourse on the legal identity of prediction markets has not yet formed. Securing the legislative momentum necessary for any of these paths requires first establishing a public deliberative process and building broad social consensus on the value of prediction markets.

One point worth noting is that prediction markets remain an unfamiliar concept across Asia, and no entity has taken the lead in shaping discourse around the prediction market. As a result, even the most basic agenda items have yet to be discussed.

Precisely analyzing how prediction markets function overall requires a formal public forum, such as a public-private roundtable, built around the core issues raised above, and establishing one is now an urgent priority.

Even once that level of discussion is set, an entity capable of carrying it onto the actual policy table is essential. Specialized research organizations such as Limitless Research demonstrate data-driven forecasting models in practice, and in doing so play a central role in establishing the market’s value system and shaping public discourse.

The process by which organizations with specialized analytical capacity, beginning with Limitless Research, demonstrate the reliability and public value of their data will be the decisive catalyst that elevates the fragmented discourse on prediction markets into a core agenda item within the institutional system.

Prediction markets carry distinct benefits and risks, though reaching an institutional conclusion before that debate has even taken place would be a hasty approach that overlooks the core issue. What is needed now is the constructive discourse that has not yet occurred.

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As of 2026, blockchain technology still hasn’t changed the world. But will it have brought major change by 2036?

All aboard — the time machine is departing for 2036.

1. “Does anyone still use paper money?”

The year 2036, A currency exchange booth in Zutopia, a fictional country vulnerable to inflation. Judy, thirty-four years into the job now, pulled a bill counter from the drawer and started counting Bucks.

“Still someone using Bucks.”

It made sense. The value of Bucks, the currency of an inflation-prone nation, fell a little more every day. It still existed by law, but in practice, no one used it anymore. Everyone used dollar stablecoins in daily life instead.

Tap-tap-tap-tap.

Judy listened to the counter clatter through the bills and thought back on the years.

In 2002, Judy was twenty-two. That year, Zutopia declared national default. Banks locked their doors, and people couldn’t withdraw the savings they’d spent a lifetime building.

“We need to go change it now.”

Judy’s father said. The moment your salary hit your account, you had to change it into dollars right away. Wait even a single day and the value of Bucks would visibly shrink. People checked the black-market dollar rate before they checked the front page.

“What’s the dollar at today?”

This question opened every day. Buying dollars at the official rate was next to impossible. The government set a monthly cap on how much foreign currency a person could buy, and no one knew when the banks might freeze dollar deposits.

Then, in the mid-2020s, young customers started asking a question she didn’t understand.

“Can I exchange USDT too?”

At first, only a handful of freelancers and exporters used it to receive money from abroad. No bank required, no lining up in front of a money changer. One phone, and you could turn Bucks into stablecoins, then back into Bucks whenever you needed.

At the time, Judy never thought it would replace her job. The elderly still wanted cash, and plenty of businesses still needed it too. But the line got shorter, bit by bit. The young customers disappeared first. Then the middle-aged ones.

By 2030, there was no line even on payday. Once companies had no reason to hold Bucks either, they started paying part of wages directly in stablecoins. Bucks became a currency you needed only to pay taxes and utility bills.

In 2033, the tax office changed its stance. The calculation was simple: it was better to collect overdue taxes in stablecoins than in Bucks. A short notice went up on the website.

“USDC and USDT accepted as alternative payment for tax filings”

Bucks still existed, but the state itself had just announced it would rather take someone else’s money than its own.

In 2034, the treasury followed. Bond auctions denominated in Bucks kept failing, and the treasury eventually issued new bonds denominated in dollar stablecoins. Civil servants’ pay came next. In 2035, some state governments began paying half of civil servant salaries in stablecoins — because the civil servants paid only in Bucks were the first, and the hardest, hit by inflation.

Printing money, collecting taxes, paying civil servants — these had always been the state’s power alone. That power moved to stablecoins, one piece at a time.

As of May 2026, the total stablecoin market stood at roughly $320 billion, with $28 trillion in annual transaction volume. Set against a U.S. wholesale payment network processing over $2 trillion a day, that was barely three weeks’ worth of volume. Strip out the wash trading and phantom volume, and less than 6% was actually used for real payments. The remaining 88% just circulated inside exchanges — trading, collateral, and back again.

The question was where that 6% was actually happening. It might have started in New York and Silicon Valley, but the place where that money actually changed hands wasn’t America. Americans got by just fine with their credit cards and bank accounts. The ones who desperately needed stablecoins were the people in countries where their currency melted away a little more every day.

Judy put the counter back in the drawer. Would there be a customer tomorrow?

2. Liquidated in Ten Minutes, at 2 A.M.

The year 2036, A small rented room in Singapore.

Two in the afternoon. A notification sound, and Lia checked her phone. A limit-order alert for Nvidia.

Two p.m. in Singapore is a time when the New York Stock Exchange isn’t even open. But on Lia’s screen, the Nvidia chart was still moving. She hit buy without hesitating. On the same screen, beside Nvidia, sat Treasury bonds, real estate REITs, and data-center infrastructure funds, all in one view.

By 2036, you didn’t just trade stocks — you could trade everything in the world.

“Investing never stops, no matter where you are.”

It was something Lia said often. For her, the world had always been like this.

In 2021, when Lia was nine, retail investors in the U.S. sent shares of GameStop, a brick-and-mortar game store, soaring. It was investing where participation itself became the point, more than the asset’s value — and the thing organizing that participation wasn’t a brokerage. It was an online community.

According to a 2025 World Economic Forum survey across 13 countries, 30% of Gen Z started investing the moment they became adults — far above Gen X (9%) and Baby Boomers (6%). Gen Z’s interest ran so deep that 86% had learned to invest before even entering the workforce, versus 47% for Boomers.

In Coinbase’s Q4 2025 survey, 73% of young respondents said it was hard to build wealth through traditional means — higher than the 57% among older generations.

For this new generation, investing had simply become a given — and they wanted exposure to more of everything.

June 2025. Tokens collateralized 1:1 against major U.S. stocks — Apple, Tesla, Nvidia — poured onto decentralized exchanges (DEXs). No nationality restrictions, no strict KYC checks. All you needed was a wallet address, and U.S. stocks were within anyone’s reach, with leverage effectively unlimited.

I can just try again tomorrow.

Lia logged into Lemming Brothers, a borderless trading platform, and bought a tokenized Korean real estate index product. Ten minutes later, her phone buzzed with a liquidation alert. She waved off the warning on her screen like it was nothing.

For Lia, phone notifications in 2036 are like background music to daily life. She checks the endless stream of signals from her trading apps and picks the phone back up again. It’s a complete contrast to her parents, who dollar-cost average into so-called “safe assets” on regulated exchanges.

In the world Lia lives in, every kind of value has been converted into an asset, moving nonstop, twenty-four hours a day. This vast market, which never pauses for even a moment, keeps tempting her toward the next trade — today, same as every day.

3. The Day $2.2 Billion Evaporated

The year 2036, A startup office in Pangyo Techno Valley.

Do-hyun, now twelve years into his career as an infrastructure engineer, was scrolling through the network status dashboard on his monitor when his hand stopped. Looking at the list of chains that now fit cleanly on a single screen, he murmured under his breath.

“Ten years ago you’d have scrolled forever. Now there’s not even ten left.”

2024, the year Do-hyun started his engineering career, was truly the Age of Discovery for Layer 2 (L2) rollups. Anyone could copy and paste a few lines of framework and stack code and launch their own blockchain under their own name. Do-hyun’s company rode the massive infrastructure wave too, building out validator nodes.

The chain’s name was Allchain. In June 2024, on airdrop hopes, Total Value Locked (TVL) swelled to $2.2 billion. He could still vividly remember clinking beer glasses in the conference room, cheering with the team.

“At this rate, aren’t we going to be the next Ethereum?”

But the joy of listing was fleeting. Once the token listed and the airdrop rewards ran dry, the token price and chain usage fell off a cliff. The projects and users who’d been chasing rewards turned their backs on Allchain the moment it stopped paying, and within a single year, 97% of the deposits had evaporated.

Allchain’s brutal ending wasn’t unique. The countless independent networks that had sprung up like mushrooms back then collapsed the same way. They’d lured development teams in with the sweet reward of incentives, but the moment the funding dried up, the ecosystem hollowed out in an instant, leaving nothing behind but silent, empty shells of infrastructure.

The astronomical fixed costs of running an independent chain were more than individual projects could bear. Unable to withstand the soaring infrastructure upkeep, the Allchains, one by one, declared they were shutting down and faded into history.

Only a select few survived capital’s cold scrutiny. The hundreds of chains that once looked ready to change the world carved up the ruins of a market share barely above 10%, then walked, without a sound, into extinction.

Back then we all thought we’d survive and build our own massive ecosystems…”

Back in 2026, people mistook the number of chains for blockchain scalability itself. But fragmented chains only broke the user experience apart and drove security costs through the roof. What people actually wanted wasn’t hundreds of complicated networks — it was a handful of massive, foundational infrastructures offering liquidity that would never crack, at optimized speed.

Do-hyun let out a long sigh, quietly closed his monitor, grabbed his bag, and headed home.

4. The “Human Eyes” That Used to Click Are Gone

The year 2036, A media startup office in Sangam-dong.

Jae-hoon happened to be browsing another platform when he saw a banner ad in the bottom right corner and laughed.

“There’s still a company out there sticking banner ads on their screen, waiting for readers.”

Jae-hoon was right. That platform’s daily visitor count was hitting new all-time highs every month, but the traditional banner ad revenue simply wasn’t coming, and that whole model of advertising had become a thing of the past.

Back in the early 2020s, when Jae-hoon first stepped into the media industry, the formula for the web economy was crystal clear. Write good articles, and readers came. Readers came, and advertisers paid to put up their banners.

“How many pageviews did we get today?”

This question, which opened the conference room every morning, decided whether a media outlet survived back then.

But that peaceful formula started to disappear in the late 2020s. As of 2029, more than half of all global web traffic began coming not from people but from AI agents and bots. AI would scrape an article and summarize it in a second flat — but machines simply didn’t have “eyes” to look at a banner ad.

At first, like most media companies, they blocked the bots. The server costs were exploding, and they simply couldn’t keep up. But blocking came at a brutal price. Buried entirely out of AI search and recommendation ecosystems, their brands were simply forgotten. Media companies faced an agonizing choice back then: block the bots and lose their traffic, or leave the door open and make no money.

“Who are we even selling our content to now?”

That desperate question filled the office. The answer wasn’t the ad board — it was putting a price on the content itself.

What opened the floodgates for change was the x402 standard, unveiled by Coinbase in May 2025. It resurrected, through technology, the HTTP 402 response code — the “Payment Required” signal — that had sat abandoned in a corner of the web standard for thirty years.

Up through 2029, the focus was on building foundational infrastructure: Know Your Agent (KYA) verification, settlement rails, and the like. The real explosion began in 2030, when one media company started selling data directly to AI through the x402 system. Once it proved out, other media and data companies wasted no time adopting x402 and jumped into data sales themselves.

At first there was plenty of mockery — pocket change, a few dozen won at a time, hardly worth the effort. But once hundreds of thousands, even millions, of machine calls piled up every day, real, substantial cash started landing in the account, far more than the old banner ad revenue ever brought in.

“No more worrying about what advertisers think — the machines pay full price, and the company runs on that.”

The old model of web advertising, catching human eyes to sell ads, slowly drew to a close, and the Machine Economy, where agents trade through APIs, moved into full swing.

Jae-hoon closed the dashboard and picked up his coffee cup. The visitor graph still traced that strange, near-vertical climb that made no sense by the old standards — but it’s just routine now. He doesn’t check how many people showed up. He checks how many AI agents paid today.

Tomorrow, hundreds of thousands of agents will knock on his server’s door again, and that honest line of transactions won’t be getting any shorter — not anymore.

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This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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On July 22, 2026, SEC Commissioner Hester Peirce issued a statement titled "Headstands and Summervaults," identifying on-chain vaults and lending strategies as potential subjects of existing securities law. This report examines the parties likely to be affected and how the industry is responding.

Key Takeaways

• Applied broadly, the legal reasoning could extend beyond vaults and curators to discretionary products generally, a segment representing approximately $25.9 billion in TVL.

• The SEC is not targeting code that operates outside its reach. It is targeting the human actors who exercise discretion over that code.

• Teams building compliance-oriented DeFi protocols, including Steakhouse Financial and Maple Finance, have been anticipating and preparing for exactly this kind of regulatory attention.

• Historical precedent suggests that only two outcomes have proven durable: full registration under existing securities law, or the creation of new statutory exemptions through legislation.

• The responses currently available to market participants are, at best, interim measures. Only curators with sufficient capital to build post-action compliance infrastructure will retain their market position. Smaller curators without those resources will be displaced.

1. The SEC Is Targeting Discretion, Not Code

On July 22, 2026, SEC Commissioner Hester Peirce issued a statement titled “Headstands and Summervaults,” arguing that the Howey Test, the legal standard established by a 1946 Supreme Court decision, could be applied to on-chain vaults and lending strategies under existing securities law.

The Howey Test evaluates the economic substance of how capital is raised and managed. It does not require new legislation or regulatory rulemaking to be applied. It is a fact-based standard that has been consistently applied to new financial instruments regardless of their technical form. An on-chain vault or decentralized lending strategy, however sophisticated its blockchain architecture, could qualify as an investment contract under securities law if its structure satisfies the test’s three core criteria. When all three are met, the product is classified as a security.

The statement carries no immediate enforcement authority, as it reflects the view of a single commissioner. It is, however, the first instance in which the SEC Crypto Task Force’s developing framework has been mapped onto specific products, and it has prompted concern among relevant market participants.

MORPHO, the token of the vault infrastructure protocol Morpho, fell roughly 5% immediately after the announcement.

If this legal reasoning were to be applied in practice, the regulatory target would almost certainly not be the smart contracts that power the vaults. It would be the risk curators and the DeFi actors who exercise real discretion over how assets are deployed. The vault infrastructure that Morpho has built is a technical instrument for asset management. Code with no controlling party is not a natural subject of direct regulatory sanction.

2. Why Curators Are the Target

Curators determine how much capital is allocated across a vault and what level of risk that capital is exposed to. In that sense, they exercise genuine discretion over depositors’ assets. The vault itself is simply a tool through which curators manage those assets. Most vaults are built as smart contracts deployed without admin keys or upgrade permissions, meaning even the original deployer cannot halt their operation or alter their logic.

Financial regulation, as it has historically operated, presupposes the existence of an identifiable legal entity capable of receiving a subpoena, having assets frozen, or complying with a cease-and-desist order. Immutable code with no controlling party has no such administrator.

The regulatory consequence is that enforcement attention has moved from code to discretion. Earlier cases involving Tornado Cash and Uniswap Labs illustrate the pattern.

The Tornado Cash case turned on whether immutable code could constitute sanctionable property. The Uniswap Labs case asked whether the company operating a non-custodial interface had effectively functioned as an unregistered broker or exchange. Both cases focused on the legal status of code and the act of running a service. Neither reached the question of investment discretion as a basis for securities liability.

This case is different. The operative question is no longer who built the protocol but who selects which assets a depositor’s capital is exposed to, how much is allocated to each market, and how interest rate conditions and collateral parameters are adjusted to influence returns. Consider a curator that selects specific lending markets from a broader set, withdraws capital when risk rises, and shifts weight toward higher-yielding markets. Depositors place their capital with that curator because they trust its judgment, not because they trust the underlying smart contract. Returns and losses flow directly from the curator’s decisions. That pattern of professional discretion exercised on behalf of depositors is precisely what gives rise to the “expectation of profits from the efforts of others” that the Howey Test identifies as a defining feature of an investment contract.

The curator is the most clearly identifiable party exercising that discretion within the on-chain vault ecosystem. That is why it sits at the center of the regulatory frame.

3. Which Categories Fall Within Scope

If this legal reasoning is applied broadly, its reach does not stop at risk curators. The SEC’s analytical focus is on who is making investment decisions on behalf of users.

Liquid restaking operators decide which validators or actively validated services (AVSs) receive asset allocations. Yield aggregators compare returns and risk across lending and liquidity markets and move capital accordingly. On-chain asset allocation services adjust holdings and weights over time. Where a specific team or operator is making ongoing decisions about asset selection and reallocation, the function is materially similar to that of a curator.

The relevant scope is therefore wider than the vault product category alone. Whether any specific service falls within it depends on who, within that service, is selecting assets, changing allocations, and controlling exposure to loss. Aggregating potential exposure across categories defined by that criterion produces a total TVL of approximately $25.9 billion.

The legal standard is unlikely to be applied uniformly across all of these participants. Its intensity will vary with the structure of the discretion involved.

• At higher risk, where regulatory scrutiny would be most intense, are structures in which discretion is exercised opaquely in ways depositors cannot verify on-chain in real time, such as off-chain delegation and undercollateralized lending.

• At medium risk are standard vault curators and liquid restaking structures that exercise allocation discretion, with capital flows recorded transparently on-chain and constrained by governance mechanisms such as timelocks and guardian roles.

• At lower risk, and closest to compliance, are immutable protocol deployments with no controlling party, and financial products already registered under securities law.

The parties most accurately positioned to assess their own legal exposure are the operators themselves. This is why curators and adjacent market participants began developing tailored responses, including investor qualification restrictions, third-party compliance arrangements, and formal private placement exemptions, before the commissioner’s statement was issued.

4. Four Design Approaches to Reducing Regulatory Exposure

The responses developed to date do not resolve the underlying legal question. They are focused primarily on reducing the probability of regulatory application and limiting the legal liability of the operating entity.

Two analytical axes separate the approaches: whether a recognized legal exemption has been obtained, and whether actual asset allocation authority has changed. Measured against those criteria, the market’s current responses fall into four types.

1. Direct investor qualification: advance verification and sales restricted to accredited or qualified investors.

2. Established regulated distribution channels: routing through exchanges or regulated entities that have completed KYC on their users.

3. Collateral-level whitelisting: controlling permitted collateral assets through coordination with asset issuers.

4. Structural separation of permissioned lending and permissionless yield tokens: bifurcating institutional lending execution from retail-accessible yield exposure.

4.1 Investor Qualification: Grove and GLDY

The most direct way to reduce regulatory exposure is to control investor eligibility before any capital is accepted.

Steakhouse Financial launched Grove in June 2025 as an institutional-only on-chain capital allocation channel. Access is restricted to institutional RWA investors who have passed advance qualification screening.

Orca, in May 2026, partnered with Streamex Corp (Nasdaq: STEX) to open the GLDY pool for accredited investors only. GLDY is a yield-bearing tokenized security backed by physical gold reserves, issued explicitly under Regulation D, Rule 506(c), the private placement exemption under U.S. securities law. Investor accounts begin with on-chain transfers frozen and are unlocked only after passing Streamex’s KYC and accredited investor verification.

Both approaches target institutional and accredited investors, establishing a logical basis for using the private placement exemption without full public registration.

Investor qualification, however, does not neutralize a product’s characterization as an investment contract under the Howey Test. Accredited investor status is more directly relevant to the distribution path than to the question of whether a security exists in the first place. This is a practical risk-management approach within the current legal framework, not a fundamental change in legal character.

The curator’s core function of selecting assets and setting allocation weights within the vault remains unchanged, which is the structural limitation these access controls cannot address.

4.2. Existing KYC and Compliance Infrastructure: Sentora

Rather than building its own qualification framework, Sentora combines existing KYC-based distribution channels with regulated asset issuance infrastructure.

Kraken’s DeFi Earn product is the clearest example. Veda provides the vault infrastructure; Chaos Labs manages the Balanced and Boosted vaults; Sentora serves as risk manager for the Advanced vault, overseeing capital allocation across on-chain protocols and managing risk and liquidity.

This arrangement has since been adopted more broadly. Coinbase has combined Morpho and Steakhouse Financial to launch USDC lending through Prime and High Yield vaults. Binance has connected its users to Morpho vaults managed by Steakhouse and Gauntlet.

Exchange-level KYC confirms user identity, and issuer compliance frameworks support reserve and redemption structures. Neither addresses who is deciding which assets and markets receive how much capital. External compliance infrastructure reduces risk at the asset and distribution level but does not absorb the regulatory exposure or legal liability of the risk manager making allocation decisions.

4.3 Asset-Level Whitelisting: Aave Horizon

Aave launched Aave Horizon in August 2025 as an institutional RWA lending market. The product is structurally separated from the core protocol and designed to the specifications required for institutional asset management.

Aave Horizon’s distinctive design choice is to share control over permitted collateral with asset issuers rather than restricting user access directly at the distribution stage. Whitelists for tokenized collateral assets are managed by the issuers themselves: Circle, Ripple, Superstate, and Centrifuge (which includes Janus Henderson products). The protocol itself remains permissionless for any wallet holding whitelisted assets.

The governing control is not who accesses the market but which assets are eligible. Risk parameters follow recommendations from LlamaRisk, and collateral valuations are supported by NAV data verified by Chainlink in real time. Aave Horizon builds on existing Aave lending infrastructure rather than constructing a new chain or independent protocol.

Sharing verification responsibility with asset issuers does not extinguish Aave Horizon’s own legal and operational liability for its risk parameter decisions.

4.4 Structural Separation of Permissioned Lending and Permissionless Yield: Maple Finance

In April 2024, Maple Finance converted its entire platform to a whitelist structure. All loans are now fully overcollateralized, and Maple Direct, its in-house credit team, conducts borrower underwriting, ongoing monitoring, and margin calls directly. Access is limited to approved institutional borrowers and lenders.

The most notable aspect of Maple’s design is the separation between the permissioned lending operation and permissionless yield access. In 2024, Maple launched the Syrup protocol, through which retail users can deposit USDC without KYC and receive SyrupUSDC in return. Those deposits flow into the same institutional lending pool that Maple Direct already manages with its accredited borrowers. The lending itself operates under rigorous institutional compliance. The right to receive the yield that lending generates is packaged into a permissionless token and made available to any user.

This structure relocates regulatory exposure rather than eliminating it. Maple Direct’s underwriting and management discretion, including borrower selection, collateral terms, and margin calls, remains intact. The arrangement by which institutional lending returns are passed to SyrupUSDC holders generates its own question of whether that token constitutes an investment contract under the Howey Test, together with separate distribution liability.

The structural separation of permissioned lending and permissionless yield is a deliberate repositioning of where regulatory scrutiny lands. It does not change the legal liability of the entities managing the capital or the fundamental nature of the product.

The cases above address different regulatory contact points but share a common limitation. They are operational defensive structures designed to manage regulatory exposure by separating investors, assets, and distribution channels. They are not final solutions that extinguish legal risk.

Mapped against the two analytical axes introduced earlier:

• One approach has obtained an explicit legal exemption: the Orca/GLDY structure, which applies Regulation D, Rule 506(c) directly.

• The remaining approaches manage and constrain regulatory exposure: Grove, Sentora, Aave Horizon, and Maple Finance, through a combination of institutional qualification restrictions, third-party compliance infrastructure, and collateral whitelisting.

Restricting distribution and filtering eligibility does not resolve the underlying legal liability that attaches to a curator or protocol’s discretionary asset selection and allocation decisions.

5. What History Shows Works

The future of the on-chain asset management market will be determined not by the surface appearance of the code but by the institutional frameworks established to govern the scope of discretion, the transparency of disclosure, and the allocation of legal liability.

The measures examined above reduce immediate regulatory exposure and provide room to use existing private placement exemptions. They do not answer the foundational questions of what criteria govern a curator’s allocation decisions and who bears responsibility when losses occur.

The historical record is consistent on one point: access restrictions alone have not produced durable institutionalization.

• Closed-end funds in the 1920s and 1930s saw widespread abuse of “blind pool” structures in which managers did not disclose their investment targets. The Investment Company Act of 1940 resolved this not by restricting access but by institutionalizing the asset management function itself.

• In 2008, when the SEC determined that LendingClub’s peer-to-peer loan notes were securities, the company suspended new registrations and restructured as an issuer of SEC-registered notes tied to its loans, eventually listing publicly in 2014.

• In 2012, the crowdfunding industry’s demand for reduced fundraising restrictions led to the JOBS Act and the creation of Regulation Crowdfunding.

What the three cases share is that they did not stop at restricting investor access. They established the legal character of the product, the obligations of the operating entity, the scope of required disclosure, and the allocation of loss. Sustainable growth for new financial instruments requires that market participants be able to predict, in advance, both their rights and their legal responsibilities.

On-chain vaults and DeFi markets face the same institutionalization challenge. The available paths are:

• Full registration under existing securities law.

• Private placement exemptions targeting qualified investors.

• Immutable protocol design that eliminates discretion entirely.

• New regulatory exemptions specific to on-chain finance, such as those proposed to the SEC by Ava Labs and the Solana Policy Institute.

Whichever path is taken, the central task is the same: establishing who makes investment decisions, what disclosures are required, and where liability falls when outcomes are adverse.

6. Compliance Costs as a New Barrier to Entry

The factor that will ultimately determine competitive position in the on-chain asset management market is the capacity to absorb compliance costs structurally and to demonstrate legal accountability.

Because regulators cannot directly control code, the framework that holds human actors legally accountable for the discretion they exercise over it will only become more clearly defined. Regardless of how effectively a firm has positioned itself in the interim, formal registration or explicit exemption frameworks will eventually require every operator to demonstrate the legal basis for its management structure and the boundaries of its liability. At that point, compliance obligations, encompassing KYC infrastructure, legal review, on-chain asset valuation, bespoke institutional contracts, and loss-absorption structures, will cease to be administrative overhead. They will become an independent cost item requiring sustained capital investment.

The internalization of these compliance costs will drive a meaningful reordering of the curator market. Large curators with capital, operating scale, and established institutional relationships will be able to distribute compliance costs efficiently and consolidate their market position. Smaller curators, without the capital to fund independent infrastructure, will face a choice between bearing disproportionate costs and accepting consolidation into larger regulated protocols or distribution channels.

The real value of the grace period that interim strategies have secured will be determined by what is built during it. Those who use this time to design formal registration pathways, identify viable exemptions, and establish clear liability structures in advance will find that regulatory requirements become a source of competitive advantage rather than a barrier. For those who defer, mounting compliance costs will erode profitability and, ultimately, foreclose market participation.

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Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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Headlines keep breaking about AI agents trading and handling payments on their own. Quietly, though, the crypto wallet industry had already been setting the stage. Right now, more than ten companies are building wallets built specifically for agents. What are they really after, and how big could the payoff be?

Key Takeaways

• When AI agents browse the internet in place of people and purchase goods or information, they end up making thousands of payments worth only a few cents each. Existing card rails cannot support payments this small, so a wallet that can automatically split and send funds according to preset conditions becomes essential.

• Companies such as Coinbase and Binance are building AI wallet infrastructure despite the lack of near-term revenue because doing so secures future customers before AI agents begin transacting at scale. The current phase is about establishing that base of users ahead of actual demand.

• A calculation based on Coinbase shows that rising AI agent usage could generate up to seven times its current revenue.

• Payment records accumulated in a wallet can show whether an AI agent is generating income, which opens the door to lending against future earnings, similar to extending credit to a small business based on its card sales history.

• This remains a stage of possibility rather than proof. AI agents still misfire and execute incorrect payments, rules vary by country and by company, and the legal standing of AI agents remains undefined. As a result, the competition underway is not about capturing revenue today. It is about establishing position years ahead of a market that is expected to take shape.

1. AI Agents Are Becoming Fully Active

Earlier this year, a widely discussed experiment on the prediction market Polymarket gave an AI agent $50 in seed capital and set it loose to trade autonomously, under the condition that it would cease to exist if it could not earn enough on its own to cover its API and server costs. The agent went on to trade successfully, and a range of other agents have since begun trading in similar fashion.

AI agents have yet to become part of everyday life. Still, it is clear that they will see widespread use in the near future.

2. Every Agent Transaction Starts With a Wallet

AI agents have not yet entered everyday payments. Their most active use today is in crypto trading bots operating within the crypto ecosystem, independent of traditional payment rails and focused specifically on crypto trading.

In the future, however, payment will extend to things not yet imaginable today. As covered in a previous report, AI changes the nature of payment itself. Once agents, rather than people, navigate the web directly, the size of individual payments falls sharply. A single API call or a single data query may cost as little as $0.001, or in extreme cases $0.00001.

Moving beyond current wallet usage, sending payments this small automatically, split according to preset conditions and without human involvement, requires a programmable payment system. This is the background behind the emergence of the x402 payment rail, and the wallet is the foundation on which that rail runs.

Current payment rails, however, are designed around people as the transacting party.

Cards are issued to an individual cardholder, run on a chargeback structure in which a person disputes and reverses a transaction when something goes wrong, and assume a fixed fee of tens of cents per transaction. None of this is a problem when a person makes an occasional $20 purchase, but the moment an agent starts sending thousands of payments a second, at $0.001 per API call or $0.00001 per data record, that payment model no longer works economically.

The central question is whether money itself is programmable.

Cards can automate the act of entering payment information, but they cannot be programmed to split, stream, or instantly settle the flow of money based on conditions. On the rails that wallets run on, that capability is the default. Storing payment details on a card only goes as far as executing a human-scale transaction on someone’s behalf. The moment the economy shifts to machines transacting directly with one another, the wallet becomes the only possible starting point.

3. Agents Are a $50 Billion Business

As the table shows, wallet providers span a wide range, from exchanges to stablecoin issuers. Why, then, are such a diverse set of players entering agent wallet infrastructure that carries no clear near-term profitability?

The answer is that these companies are positioning for future revenue and a future business, not today’s. Attaching agent functionality to a wallet now is not a revenue-generating move. It builds the underlying capacity to absorb transaction volume once agents begin generating large-scale activity.

The key point is that AI agents will eventually operate around the clock in a browserless environment, without human involvement. Consider a user who asks an agent to produce a piece of research. As the agent gathers information, it executes a small payment each time it pulls paid data from a different platform. A single instruction from the user can trigger 20 to 30 or more payments within moments.

A request that a person would see as a single, simple action turns into a large volume of payment transactions once it passes through an AI agent.

How this shift in the payment environment could affect corporate earnings can be estimated using Coinbase’s disclosed figures. The calculation uses Coinbase’s 9.2 million monthly transacting users (MTU) as the base, rather than its full base of roughly 120 million registered users.

Combining three variables, adoption rate, number of agents per user, and daily call frequency, produces the following scenario results.

• Conservative scenario (10% adoption, 1 agent per user, 50 calls per day): adds roughly $84 million in annual revenue, an increase of 1.2%.

• Neutral scenario (50% adoption, 2 agents per user, 200 calls per day): additional revenue rises sharply to about $3.36 billion, an increase of 46.8%.

• Aggressive scenario (100% adoption, 3 agents per user, 1,000 calls per day): annual revenue reaches roughly $50.37 billion, about seven times Coinbase’s current total revenue.

What stands out in this comparison is that the gap between the three scenarios widens geometrically rather than arithmetically. Adoption alone rises tenfold, from 10% to 100%, yet the resulting revenue gap widens roughly 600-fold, from $84 million to $50.37 billion.

Because the three variables, adoption rate, agents per user, and daily call volume, multiply together, even a small increase in any one of them produces an exponential rise in the total. As a result, once agents reach mass adoption and user numbers surge, the resulting revenue stream could reach up to about seven times current total revenue.

This is why Coinbase promotes agent wallet infrastructure even without meaningful revenue today. Doing so secures its share of the revenue that an agent-driven era is expected to generate.

4. Toward Agent Neobanking

Transaction data accumulated through wallet infrastructure amounts to more than a simple record. It provides a foundation for new business models, since payment history stored in a wallet can serve as a credit assessment standard that demonstrates an AI agent’s financial standing and performance.

Once this kind of data-driven credit assessment system is in place, wallet providers can extend naturally into next-generation financial services such as revenue-based financing (RBF) built specifically for agents.

Stripe Capital is a representative case of a company that built a new financial business successfully on top of existing payment data. When Stripe launched its lending service, Stripe Capital, in September 2019, it did not rely on outside credit bureaus or extensive loan paperwork. It assessed loan eligibility and limits using only the real-time sales data already flowing through its own payment network for each merchant.

The Stripe case suggests that a company can build a high-value financial business on top of a data pipeline from its existing operations, without a separate sales network or marketing effort.

Agent wallet providers are likely to follow the same expansion path. Steadily accumulating an agent’s revenue data through its wallet creates a basis for advancing operating funds through RBF and generating income as an agent-focused financial platform.

Building this new business line, however, depends on one condition. AI agents must evolve beyond simple payment execution into asset-holding entities that generate their own income, earning enough real revenue to repay what they borrow.

5. This Growth Remains Unproven

The sevenfold revenue growth projected for Coinbase and the expansion into RBF described above are optimistic scenarios that assume agent payments become widespread. The barriers to establishing this in the real economy are substantial.

First, significant questions remain about AI agents’ actual purchase conversion rates and payment reliability. Agents still misfire during autonomous ordering, producing incorrect payments due to hallucination, and payments are sometimes blocked outright when card issuers’ fraud detection systems (FDS) reject the transaction. Actual payment completion rates remain low as a result.

In addition, payment protocols such as x402, AP2, and MPP remain fragmented rather than converging on a single standard, and the absence of clear KYC (identity verification) and financial regulation for AI agents, which are not legal persons, is a further obstacle to market expansion.

The goal for wallet providers today, then, is not short-term fee revenue. It took Apple’s App Store fifteen years to build a $10 billion annual fee market, and it took WeChat Pay seven years to establish its large mini-program ecosystem. Agent wallets are following a similarly long timeline, building out an ecosystem rather than competing for immediate returns.

The competition underway is not about today’s marginal revenue. It is about which company first gains control over data on the flow of funds within the agent economy expected to take full shape five to ten years from now.

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Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

Tiger Research allows the fair use of its reports. ‘Fair use’ is a principle that broadly permits the use of specific content for public interest purposes, as long as it doesn’t harm the commercial value of the material. If the use aligns with the purpose of fair use, the reports can be utilized without prior permission. However, when citing Tiger Research’s reports, it is mandatory to 1) clearly state ‘Tiger Research’ as the source, 2) include the Tiger Research logo. If the material is to be restructured and published, separate negotiations are required. Unauthorized use of the reports may result in legal action.

In the first half of 2026, no single narrative ran through the entire market. Even so, stablecoins, RWA, meme tokens, DeFi, and prediction markets each survived or grew despite the downturn. This report looks at the 2026 crypto market as one that is no longer driven by a single narrative but is instead searching for product-market fit across a diversified set of sectors.

Key Takeaways

• A single narrative once pulled the whole market along. The market now moves according to genuine demand.

• Even in a depressed market, established sectors including stablecoins, DeFi, RWA, and meme tokens have continued to survive.

• In the end, only projects that find product-market fit and generate real revenue from real users will survive.

1. The Narrative-Driven Crypto Market of the Past

In the crypto market, narrative has been the central force that concentrates participant attention and pulls in liquidity. Sectors that drove major market cycles, such as DeFi Summer, were each given a distinct narrative, and the market has repeated a cyclical pattern in which liquidity moves to the next narrative as soon as the previous one fades.

At a broad level, the crypto market has passed through four major cycles in which a single narrative dominated the entire market:

• 2020: DeFi

• 2021: NFT/P2E/GameFi

• 2022: L1/L2 competition

• 2024: Restaking

Among narrative-driven growth stories, GameFi produced the most extreme outcome.

Major traditional game publishers including Square Enix and Ubisoft entered the space, and the gaming sector drew $2.5 billion in inflows in the first quarter of 2022 alone. But sectors that could not demonstrate real product-market fit did not last. Axie Infinity, the sector’s flagship title, saw its average monthly player count fall 99.7%, from a peak of 2.8 million in January 2022 to roughly 8,000 in May 2026. It is a clear example of how quickly a narrative built mainly on justification and capital can collapse.

2. The Narratives Consumed Last Year

As covered in our previous report, 2025 marked the peak of this pattern of narrative consumption. After the AI agent narrative, a new one emerged nearly every month, and the pace of rotation kept accelerating.

On the surface this looked highly wasteful, but it is hard to deny that this rapid churn of narratives was what kept retail investor attention engaged and, in doing so, became a core driver of the market as it stands today. Even so, the market’s underlying demand for these past narratives was directed at the token itself rather than at the problem the product was meant to solve.

3. Innovation in Supply Without Demand

One example illustrates how most past narratives developed.

A decentralized social media project appears, framed around the problem that existing platforms monopolize revenue and leave creators inadequately compensated. It presents a vision of lower fees and of returning content ownership and revenue to creators.

1. Token rewards: early participants receive token rewards, and as stories spread of people earning income simply by being active on the platform, market interest grows.

2. User inflow and expansion: similar projects follow, issuing tokens around a minimum viable product and drawing users in through airdrops and liquidity incentives, and the ecosystem’s market capitalization and trading volume expand quickly.

3. Stalled product development: the token price and the scale of rewards start to outpace the product itself. Once fundraising and the initial distribution are complete, development and user growth stall, and the original problem of creator compensation remains unresolved.

4. Liquidity exit: there was never a large enough user base that felt this problem acutely, and the capital that had flowed in was chasing price appreciation rather than the product, so once the narrative peaked, liquidity and users left just as quickly.

This pattern repeated across several narratives, and the market eventually came to recognize that innovation in supply without underlying demand carries little meaning. It began to confirm that only projects generating real revenue and holding onto a stable user base mattered, and it became clear that only projects demonstrating genuine product-market fit would survive.

4. 2026: The Era of PMF That Creates Demand

Where past narratives built and supplied solutions without underlying demand and tried to manufacture demand afterward, the PMF era works the other way around: products are built to match demand that already exists among customers. The market is moving toward genuine products in which user numbers and revenue grow alongside the product and the brand, rather than one in which only token market capitalization rises.

The five sectors covered here were selected based on three criteria: usage indicators such as trading volume and revenue over the first half of 2026, the trajectory of new players entering the space, and growth in market capitalization. These criteria matter because they are difficult to manufacture artificially, all at once and over a short period.

The sections below trace the problem each sector originally set out to solve and the direction in which its leading players are now expanding.

4.1. Stablecoins: From a Volatility-Free Payment Instrument to Cross-Border Settlement Infrastructure

Stablecoins are tokens pegged to the value of fiat currency and used as a means of payment and settlement. The category’s market capitalization stands at $304.2 billion, close to its all-time high of $321 billion.

• Tether(USDT): market cap of $184.08 billion, monthly settlement volume of $1.79 trillion (up 63% month over month), $10.2 trillion in cumulative settlement over the past 12 months, more than $10 billion in net income in 2025, and $141 billion in Treasury holdings.

• Circle(USDC): market cap of $73.25 billion, the default stablecoin across major exchanges such as Coinbase and institutional settlement channels.

Stablecoins started out as a way to trade crypto without exposure to volatility. Their role has since broadened to cross-border remittances and on-chain payment infrastructure.

Growth is now taking more varied forms. In June 2026, more than 140 traditional companies, including Visa, Mastercard, Stripe, Coinbase, and BlackRock, announced OUSD (Open USD, from Open Standard) as a consortium. Non-dollar stablecoins pegged to national currencies such as the Korean won, the Japanese yen, and the euro are also becoming more common. Their combined market cap remains small at $1.2 billion, but the number of wallets holding them grew thirtyfold, from 40,000 in January 2023 to 1.2 million in March 2026.

Stablecoins are no longer just a fixed-value payment instrument. They are evolving into settlement infrastructure that operates independent of borders and time zones.

4.2. DeFi: Built to Replace Banks, Now Part of Financial Infrastructure

DeFi refers to smart-contract-based finance that enables lending, trading, and derivatives without a centralized intermediary.

• Aave: market cap of $1.397 billion, TVL of $14.53 billion, annual revenue of $119 million, the leading DeFi lending protocol.

• Morpho: market cap of $1.302 billion, TVL of $7.497 billion, annual revenue of $0 (its $222 million in annual fees goes entirely to lenders), briefly overtook Aave in market cap from late May through June before Aave regained the lead in July.

• Uniswap: market cap of $2.287 billion, TVL of $3.14 billion, annual revenue of $850 million, the leading decentralized exchange with $2.66 billion in 24-hour trading volume.

• Hyperliquid: market cap of $13.47 billion, TVL of $6.07 billion, annual revenue of $874 million, accounting for about 76% of the perpetual futures DEX category’s market cap and roughly 20% of DeFi overall, with an on-chain perpetuals market share as high as 70%.

DeFi began in 2020 on the decentralized premise of returning the profits earned by intermediaries such as banks to users directly.

Today, it persists less on that ideology than on institutional demand for on-chain financial infrastructure. Morpho and Aave provide the vault risk management and lending infrastructure institutions want, Uniswap supports trading in the assets institutions want to trade, and Hyperliquid supports trading in traditional assets rather than crypto alone.

Each has moved in a direction somewhat different from its founding ideology, but it was precisely this willingness to pivot decisively toward real demand that allowed these protocols to survive and grow.

4.3. RWA: From Democratizing Traditional Assets to Efficiency

RWA refers to the tokenization and on-chain distribution of traditional real-world assets such as Treasuries and private credit. The category’s market cap is $65.2 billion, with tokenized Treasuries the largest subcategory at $13.4 billion.

• Ondo Finance: TVL of $3.52 billion, ONDO market cap of $1.75 billion, a leading provider of tokenized Treasury infrastructure.

• BlackRock BUIDL: AUM of $2.4 billion, with no market cap in the conventional sense since it is a NAV-linked fund token, the largest single tokenized Treasury fund.

• Maple Finance: SYRUP market cap of $218 million, with $4 billion in private credit AUM, exceeding BlackRock BUIDL.

RWA set out to bring traditional asset management on-chain in order to improve settlement speed and accessibility. Its initial customer base was not institutional. The sector began with synthetic asset exchanges that used the fact that on-chain markets sat outside existing regulation to lower the barriers to trading real-world assets. Today, however, institutions make up the sector’s largest user base.

Tokenized equities are a development worth watching closely. Adoption by traditional institutions such as Securitize and the DTCC is increasing. In July 2026, the DTCC began live trading of tokenized securities with more than 50 institutions, and Securitize listed its own shares, SECZ, on the NYSE while simultaneously issuing tokenized shares across multiple chains, including Avalanche and Solana. Centralized exchanges such as Binance (bStocks) and Kraken (xStocks) are also expanding their tokenized equity offerings across various countries. The tokenized equity category’s market cap reached $2.3 billion in mid-July 2026, nearly double its level since first crossing $1 billion in March.

Trading volume for these assets on decentralized exchanges remains minimal compared with DeFi, and most collateral use still relies on permissioned, whitelisted structures. Deeper on-chain integration, comparable to DeFi’s money-lego composability, will likely take more time. For now, the sector is still in the stage of proving the usefulness of on-chain asset management.

4.4. Prediction Markets: From Simple Betting to a Market-Leading Trend

Prediction markets are on-chain contract markets in which participants bet on the outcomes of real-world events. The category’s market cap is $9.58 billion, the most recently formed of the five sectors covered here.

It is also worth noting that the two platforms that actually dominate the sector, Kalshi and Polymarket, do not yet have tokens.

• Kalshi: has raised $2 billion in cumulative funding at a $22 billion valuation, an 11x multiple on funding raised. Its June trading volume of $31.5 billion (up 87.4% month over month) already exceeds that valuation.

• Polymarket: has raised roughly $1.6 billion in cumulative funding at a $9 billion valuation. June trading volume on its main platform outside the U.S. reached $10.26 billion (up 45% month over month), and annualized revenue has exceeded $1 billion since it gained approval to operate in the U.S.

The World Cup was both an opportunity and a challenge for prediction market platforms. It drove a sharp surge in trading volume through June, but after the final on July 19, combined open interest across the two platforms fell nearly 20% from its early-July peak of roughly $2 billion. Since sports contracts accounted for roughly 80% of total trading volume during the tournament, volume is likely to stay soft until the next major event, the U.S. midterm elections.

Regulatory risk also remains active. On July 21, 2026, a Washington state court issued a preliminary injunction barring Kalshi from selling sports event contracts on the grounds that they constitute illegal gambling under state law.

Before 2024, prediction markets did not even exist as a distinct category. Today, they are the fastest-growing segment of the crypto market. What sets this sector apart is that its growth has been demonstrated not through token market cap or TVL, but through real trading volume and revenue generated by drawing users from outside crypto into the on-chain ecosystem. This stands as one of the clearest examples to date of blockchain technology becoming part of everyday use for a broad audience.

4.5. Meme Tokens: From Simple Speculative Assets to a Liquidity Bootstrapping Strategy

The last sector is meme tokens. Unlike the other sectors discussed above, meme tokens have no clear utility. Their value comes from community and attention. The category’s market cap is $25.68 billion, larger than that of prediction markets.

Dogecoin ranks first at $11.22 billion, followed by Shiba Inu at $2.5 billion. Together, these two tokens account for 53.4% of the entire meme token category’s market cap, showing that once a token claims a symbolic position within the sector, even loosely, it tends to hold that position.

Pump.fun and CASHCAT are highlighted here not for their market cap ranking but for their symbolic significance.

• Pump.fun: market cap of $806 million, notable for raising $600 million in its public sale in July 2025 in just 12 minutes.

• CASHCAT(Robinhood chain): its market cap rose more than 2,100% within a week of launch, peaking above $200 million before falling roughly 75% from that peak to $59 million by July 17.

As the Robinhood chain case in July 2026 shows, meme token narratives can still momentarily pull in liquidity across an entire chain, a pattern seen in past cycles. The Robinhood chain’s TVL expanded sharply, from $17 million on July 3 to $312 million on July 13, and daily DEX trading volume climbed as high as $846.8 million on July 10, driven largely by the meme token $CASHCAT.

The practical value of meme tokens lies in attracting early users and easing onboarding. A new chain or application can use a meme token to build a community quickly and naturally encourage activity such as bridging assets or trading on a DEX. Some of the users drawn in this way go on to use other DeFi services or applications within the ecosystem and stay active there, making the meme token an effective entry point and marketing channel.

In the end, meme tokens function less as long-term holdings and more as an initial tool for quickly bringing together users and liquidity. Whether that early attention can be converted into genuine product usage and lasting retention within the ecosystem is what determines success or failure.

5. What It Takes for a Project to Survive

The projects that have survived to this point have secured genuine demand that brings users back repeatedly, and they have demonstrated it through clear performance indicators such as trading volume, TVL, and fee revenue.

Demand in the 2026 market is concentrated at two distinct ends of the spectrum. At one end is speculative demand seeking high volatility and immediate rewards. Meme tokens, perpetual futures DEXs, and prediction markets absorb this demand effectively through rapid trading cycles and high capital turnover. At the other end is genuine financial demand for the stable custody, transfer, and efficient management of assets. Stablecoins, RWA, and DeFi infrastructure are fulfilling these core financial functions of payment, collateral, yield generation, and risk management.

Real product-market fit forms when a sustainable revenue structure and network effects are added to this base. A token’s price can generate initial attention, but long-term survival is determined by usage frequency, retained capital, revenue, and operational capability.

KBW, taking place in late September 2026, will offer a close view of this shift as it unfolds. Bo Hines, CEO of Tether U.S., Jeff Yan, co-founder of Hyperliquid, Johann Kerbrat, SVP of Robinhood Crypto, and Christine Moy of Apollo are among the leading figures driving these changes who will appear on stage together. Through conversations with key leaders in stablecoins, perpetual futures DEXs, and asset tokenization and RWA, attendees will be able to see firsthand the shift that has so far only been visible in the data.

Tiger Research is the exclusive research content partner for KBW 2026.

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Read more reports related to this research.

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• Korea Institutional Crypto: 2026 Landscape

• DeFi Lending Is Modularizing: The Risk Management War Among Morpho, Euler, and Aave

• H1 2026 Global Crypto Hiring Market Analysis Report

• Still 1990: Crypto Cards: $1.5 Billion a Month, but Not Yet Infrastructure

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

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Much of the attention remains fixed on stablecoin issuance, but the greater opportunity lies beyond it. Together with EastPoint, we analyzed the key opportunities across the five-stage value chain: on-ramp, transfer, payment, and yield.

Key Takeaways

• Beyond the limits of an issuance market where Tether and Circle hold an oligopoly, this report analyzes the actual business structures that arise across the value chain’s five stages, including on-ramp, remittance, payment, and yield generation.

• Rather than “building the system anew,” the mainstream strategy, as with Stripe’s acquisition of Bridge, layers stablecoin efficiency (instant settlement, low-cost remittance) onto already-established traditional financial infrastructure. Yield generation, however, is an area traditional finance has difficulty accessing, and requires separate expertise.

• As rate cuts reduce the appeal of issuance revenue and competition intensifies, the market’s value is shifting toward the “underlying settlement layer.” Rather than replacing traditional finance, stablecoins show a pattern of vertical integration with the regulated financial system.

1. Time to View the Full Stablecoin Value Chain

Discussion of the stablecoin industry has so far been concentrated on the issuance stage. The performance of major issuers such as Tether and Circle, along with regulatory responses by country, has been treated as the market’s key indicator, but this is only the starting point of the stablecoin value chain.

The stablecoin industry’s full value chain includes the economic “flow” through which tokens circulate after issuance. It is defined as a five-stage value chain: issuance, followed by on-ramp, transfer, payment, and yield generation.

Analyzing the industry from this value chain perspective makes clear that while the issuance market has an oligopoly structure held by a small number of players, the downstream layers that follow it involve a larger number of competitors creating market opportunities.

2. Issuance to Yield: Tracking $1,000

Consider how the $1,000 in Ryan’s bank account circulates through the stablecoin ecosystem. Understanding this requires examining the five-stage value chain in order, from issuance to yield generation.

1. Issuance: Major issuers mint stablecoins backed by collateral such as U.S. Treasuries, supplying the market with sufficient liquidity.

2. On-ramp: When Ryan requests conversion of his $1,000 into stablecoins through an on-ramp service, the on-ramp provider processes the request and sends the tokens to his wallet. At this point, the asset exits the fiat currency system and converts into on-chain liquidity.

3. Transfer: Ryan sends $500 to family in Mexico to cover living expenses. The transfer infrastructure processes this instantly, and the recipient converts the funds into local currency to spend.

4. Payment: Ryan then uses the remaining $200 to pay at a grocery store. Here, the payment infrastructure carries out settlement instantly.

5. Yield: The final $300 remaining in his wallet is not left idle. Instead, it is deposited into a yield protocol’s vault, where it is managed as a financial asset that generates returns.

Through this process, Ryan’s $1,000 converted from fiat currency into stablecoins and evolved into a cross-border means of payment and asset management. Every layer through which Ryan’s funds moved corresponds precisely to the stablecoin industry’s value chain.

2.1. Issuance

The issuance market is an economies-of-scale market, with barriers to entry built on trust and liquidity. Established first-mover issuers, Tether and Circle, hold an oligopoly, and later entrants require a differentiation strategy that moves beyond the reserve-interest model.

1) Industry Structure

Stablecoin issuance is the process of minting and burning tokens against reserves, primarily U.S. Treasuries, to fix their value. The total market is approximately $300 billion, of which dollar-pegged assets account for 99.99%. Tether and Circle together hold roughly 83% of the market, and an economies-of-scale dynamic has become entrenched in which deeper liquidity increases both trading convenience and trust.

As the industry matures, functions once monopolized by a single issuer are undergoing specialization and unbundling. An issuer may appear to be a single entity on the surface, but internally, four functions, licensing (regulatory qualification), reserve management and custody, token minting and burning, and distribution, are divided among separate parties. Through this process, issuers are distributing much of their actual operational responsibility.

Circle, for example, delegates a substantial share of distribution to Coinbase, and Tether entrusts much of its reserves to the custodian Cantor Fitzgerald.

2) Business Model Types

• Reserve Interest: Revenue comes primarily from returns on reserve management, an advantage for leading issuers with large liquidity pools (Tether, Circle).

• Payment Fee: Revenue comes from fees generated when the token is used for payment and settlement. Profitability is determined by transaction velocity rather than market cap (StraitsX).

• Issuance-as-a-Service: Instead of issuing tokens directly, providers lease infrastructure and licenses and collect a spread. Growth comes through network effects rather than scale (M0, Paxos, Bridge).

• Regional: Providers secure exclusive liquidity by moving first into regions without clear regulation or into non-dollar currency markets (KRWQ, JPYC).

3) Case Study: Circle

When institutional clients deposit dollars into Circle Mint, Circle’s on-ramp and off-ramp platform, Circle mints USDC at a 1:1 ratio. Because Circle’s primary revenue comes from interest earned on these deposits, it charges no separate minting fee at issuance, and the core of its operation is maximizing the size of this interest-free float. The deposited dollars are held in the Circle Reserve Fund, an SEC-registered money market fund managed by BlackRock, along with cash and cash equivalents, and are invested primarily in short-term U.S. Treasuries.

Circle distributes this interest income through agreements with its distribution channels. Under the Collaboration Agreement signed in August 2023, Circle and Coinbase split interest earned on USDC reserves as follows:

• USDC held on Coinbase’s platform: Coinbase receives 100% of the interest income generated on the corresponding reserves.

• USDC held on Circle’s own platform: Circle keeps 100% of the interest income generated on the corresponding reserves.

• USDC held outside both platforms (residual interest income): interest earned on reserves backing USDC that circulates outside both platforms, including third-party exchanges, individual and institutional wallets, and DeFi, is split 50:50 between Circle and Coinbase.

This reflects a deliberate strategy. By carefully structuring on-platform and off-platform incentives with its core distribution partner, Circle shares part of its issuance revenue in exchange for maximizing USDC’s distribution base and share of the ecosystem.

4) Key Implications

Stablecoin issuance is an economies-of-scale market where the advantages of having entered early and the scale of available liquidity are decisive, making entry barriers extremely high for latecomers pursuing a direct issuance model. New entrants should therefore focus on the value chain’s functional unbundling rather than becoming fixated on issuance itself.

A more effective strategy is to build unmatched expertise in a specific layer of the value chain, such as licensing, asset custody, settlement infrastructure, or distribution channels, and establish a position as irreplaceable middleware that other players cannot substitute. The nature of future competition, in other words, will come down not to who issues the largest volume of stablecoins, but to which players capture value within the full flow through which stablecoins move and are consumed, and secure a strategic position there.

2.2. On-ramp

On-ramp revenue comes from fees and spreads charged on transaction volume. The fee a consumer actually experiences varies widely by payment method, running 2-4% for bank transfers and 4-7% for cards, but the net take rate providers actually capture is approximately 3%, based on Banxa’s figures. The conversion function itself is difficult to differentiate, and competition is intense enough that aggregators exist to route transactions to the lowest-cost option.

1) Industry Structure

This layer consists of on-ramp services, which exchange fiat currency for tokens, and wallets and custody providers, which hold the resulting assets. The two are closely linked, since one handles conversion into stablecoins and the other handles their storage.

On-ramp revenue comes from fees and spreads tied to transaction volume, and margins vary considerably by payment method. The conversion function itself, however, is difficult to differentiate, so multiple providers compete with largely similar offerings, and net take rates are converging around 3%.

2) Business Model Types

• Consumer On-ramp: Provides currency conversion directly to end users and collects transaction fees and spreads. Since differentiation is difficult, competitiveness comes down to license coverage, the breadth of payment networks, and reputation, reflected in conversion rates (MoonPay, Ramp Network, Banxa).

• B2B White Label: Embeds on-ramp rails into wallets and apps and shares a per-transaction fee, approximately 1%, with partners. This secures distribution without a consumer-facing brand, and the deeper the integration with a large partner, the more switching costs function as a moat (Transak).

• Aggregator: Routes transactions across multiple on-ramps to find the optimal path and earns an intermediation fee. Its value grows as the number of individual on-ramps increases, although dependence on its partner network is also a limitation (MELD).

3) Case Study: MoonPay

MoonPay is a non-custodial on-ramp platform where users buy tokens with fiat currency and have them sent directly to their wallet. Its primary revenue comes from per-transaction fees and trading spreads, which range from 1% for bank transfers to 4.5% for cards, with a minimum of $3.99 on small transactions. The published fee structure is organized into three tiers, which reflect how MoonPay allocates revenue and structures distribution.

MoonPay’s revenue structure splits into two channels: direct traffic and embedded transactions through partners. Its model of embedding the solution into more than 500 wallets and apps, in particular, lets partners set their own rates and functions as the core driver behind MoonPay’s ability to secure large-scale distribution efficiently while sharing revenue with those partners.

4) Key Implications

Fee revenue from simple on-ramp services faces severe margin pressure as the service becomes commoditized and price competition intensifies. Building a sustainable business therefore requires converting a one-time fee structure into steady, recurring revenue.

Consumer on-ramp providers are accordingly expanding into downstream layers of the value chain, such as issuance and settlement infrastructure. MoonPay’s acquisition of Iron and its move into branded issuance services are examples of this shift, though the financial results of this recurring-revenue strategy have yet to be verified.

The “embedded” strategy, in which providers integrate their services into a larger platform, has produced two distinct outcomes. Some providers build independent competitive strength and remain a standalone moat (Transak, Turnkey), while others are acquired by larger payment and custody companies, as with Privy’s acquisition by Stripe and Dynamic’s acquisition by Fireblocks.

It is too early to determine which outcome will become the dominant pattern, but the on-ramp and wallet layer clearly plays a pivotal role within the industry.

2.3. Transfer

Transfer is the layer responsible for the movement of stablecoins. It includes transfers by individuals and businesses, as well as payroll payments to global workforces.

This segment draws attention because it demonstrates stablecoins’ cost advantage in its most concrete and measurable form. Traditional cross-border transfers cost an average of more than 6%, while using stablecoins substantially reduces that cost.

1) Industry Structure

Fees and FX spreads arise at both ends of the process, converting dollars into tokens and tokens back into local currency, but the on-chain movement of the tokens themselves is effectively free.

Revenue, in other words, is concentrated not in the transfer itself but in the conversion at both ends and in the licensing required to process transfers legally. Because obtaining a Money Transmitter License (MTL) in individual U.S. states takes 12 to 24 months, leasing the license itself as infrastructure, a “compliance-as-infrastructure” model, has become a powerful revenue model.

2) Business Model Types

• Cross-Border B2B Infrastructure: Orchestrates cross-border payments and settlement between businesses, typically earning a transfer fee (on the order of 5–10 bps) plus an FX spread (tens of bps up to around 1%, depending on corridor and volume). Some go further and issue their own stablecoins to capture reserve interest income as well, as with Bridge’s Open Issuance (Bridge, BVNK, Conduit).

• Payroll: Specializes in salary payments and owns the end relationship with both workers and employers. On top of SaaS subscription fees (a flat monthly rate per contractor, with off-ramp fees of about 25 basis points), this model layers a second revenue stream by investing float, funds awaiting payroll disbursement, and capturing the interest, as with Rise Earn (Rise, Toku).

• Consumer Transfer: A model that specializes in person-to-person cross-border transfers, uses stablecoins to lower backend costs, and expands its own margin by maintaining a flat fee cheaper than legacy providers (Félix Pago).

3) Case Study: Rise

Rise is a stablecoin payroll platform through which companies pay wages in either fiat currency (USD) or USDC. Workers select their own payout method each pay cycle from more than 90 local currencies and stablecoins, and more than half of recent withdrawals, out of a cumulative $1.5 billion processed, have been made in stablecoins. What Rise actually charges for, however, is not token transfer but management of the employment relationship. The platform automates KYC and AML screening, generates country-specific contracts, and issues tax documents, and charges recurring fees for this service.

Rise’s revenue builds in three layers that follow the flow of payroll funds.

• Subscription and Transaction Fees: Employers choose between a flat $50 monthly subscription per contractor or 3% of the payment amount, plus a $2.50 transfer fee per transaction. Because payroll recurs by nature, this revenue is recurring rather than one-time.

• Assumption of Legal Liability (EOR/AOR): A premium offering in which Rise itself becomes the legal contracting party and absorbs the risk of worker misclassification. Employer of Record (EOR) service costs $399 per worker per month. The eightfold price gap versus simple payment processing comes from compliance liability, not the transfer function.

• Float Management (Rise Earn): Rise invests funds companies have set aside before payroll disbursement, as well as USDC balances workers have not yet withdrawn after receiving payment, in Aave lending pools on Arbitrum. It charges no deposit or custody fee and instead takes a 1% commission on the interest generated, collected at the time of withdrawal (launched March 2026).

Because payroll is a cash flow that recurs every month without exception, balances naturally accumulate on the platform both before disbursement and after workers receive but don’t withdraw their funds. Rise’s three-layer structure monetizes exactly this characteristic. In an environment where on-chain transfer is effectively free, this can be read as a deliberate strategy of expanding the charging point sequentially, from the employment relationship (subscription) to legal liability (EOR) to idle funds (yield), rather than charging for movement itself.

4) Key Implications

The winner in the transfer market will not simply be the provider that moves tokens most cheaply. It will be a comprehensive player that secures conversion and licensing at both ends (Mural Pay, Yellow Card) to control the customer touchpoint, owns the substantive customer relationship through payroll (Rise), and layers yield income (Rise Earn) on top of that.

The eventual acquisition of cross-border infrastructure provider BVNK by the card network Mastercard, for up to $1.8 billion, illustrates that the settlement infrastructure underlying the transfer and payment layers will converge into one.

2.4. Payment

Payment is the value chain’s core layer, where stablecoins settle payment for goods and services. Merchant payments and card services are leading this segment, but the economic reality remains immature relative to market expectations. On-chain stablecoins’ retail velocity remains at only about one-twentieth of M1, a measure of the money supply, because users load funds and spend them intermittently rather than following the routine financial cycle in which payroll receipt and regular spending are interlocked.

1) Industry Structure

Interchange, the fee card networks and issuers collect on each transaction, is the core source of payment revenue and scales with payment volume. Low turnover, however, keeps per-card profitability weak, and what revenue exists is split among the card network, the issuing bank, and the payment gateway (PG). The real profit pool therefore sits not with the consumer-facing card brand but with the card issuance and settlement infrastructure behind it.

Most consumer card providers lack their own issuance authority and depend on this infrastructure, leaving them with a limited revenue structure built mainly on swap spreads.

2) Business Model Types

• Payment Infrastructure: Orchestrates merchant payment and settlement. Beyond payment fees, providers capture reserve interest income by issuing their own stablecoins. Stripe’s Bridge Open Issuance, which distributes to businesses the same reserve revenue structure Circle has captured, is one of the most profitable businesses in this layer (Stripe, BVNK).

• Card Issuance Infrastructure: The backend that supports corporate card issuance. Providers receive a share of interchange fees through principal membership in major networks such as Visa, and generate revenue through program management and FX spreads. The core point of differentiation is USDC-based T+0 on-chain settlement, which cuts collateral requirements by up to 60% compared to existing methods and substantially improves capital efficiency (Rain, Reap).

• Consumer Card and Neobank: Provides cards and accounts to end users. Revenue combines a share of interchange and FX spreads with membership subscription fees or margin from managing deposited funds. Because these providers are not issuers themselves, their access to reserve interest is limited, and most depend on issuance infrastructure such as Rain or Reap (Cypher, KAST).

• Card Network: The network for payment authorization and settlement. Interchange belongs to the issuer, while the card network benefits from rising transaction volume through a per-transaction network fee. Card networks are incorporating stablecoin settlement as a backend layer, which strengthens lock-in with partner banks (Visa, Mastercard).

3) Case Study: Rain

Rain is B2B backend infrastructure that helps wallets, exchanges, and neobanks issue their own branded consumer cards. Partners design card programs through a single API integration, and Rain, as a principal member of Visa and Mastercard, handles network sponsorship, compliance, and issuance and operations on their behalf.

When a user swipes a Rain-based card at a merchant, processing follows this sequence:

• Authorization (real time): The payment is authorized on the Visa or Mastercard network just like any standard card. The experience for both merchant and consumer is identical to a conventional card, and stablecoins remain invisible on the surface.

• Balance Deduction and Ledger Management: The user’s on-chain balance is converted and deducted in real time for the authorized amount, and Rain manages the ledger for the entire program.

• Network Settlement (daily): Rain settles with the card networks entirely in USDC. Because settlement isn’t constrained by bank cutoff times, it occurs every day of the year, including weekends and holidays, so payment funds from weekends and holidays aren’t held up for days.

• Fund Recovery and Working Capital: In a credit structure, user repayment arrives later than settlement, so the issuer has to fund that gap. Rain tokenizes card receivables and uses them as collateral for on-chain loans, raising settlement funds before it collects from users, with cumulative borrowing and repayment exceeding $175 million. As a result, its collateral requirement is up to 60% lower than that of traditional issuers.

In short, when a consumer uses a Rain-based card, Rain is the one handling everything behind the scenes, from authorization through settlement and funding.

4) Key Implications

The core of payment revenue is not the visible card payment fee but the reserve interest that comes with issuer status and the capital efficiency gained through T+0 settlement. Most consumer card brands are merely the front-end customer touchpoint layered on top of this infrastructure.

Major card networks have moved to directly acquire cross-border payment infrastructure such as BVNK, while Visa, Mastercard, Stripe, and Google are pursuing a joint stablecoin coalition, Open USD. This reads as a vertical integration strategy, bringing the platform in-house to defend their exclusive reserve interest income.

2.5. Yield

Yield is the value chain’s endpoint, and the layer where the most sophisticated business structures form. The interest that issuers are unable to pass on to holders ultimately returns to users here, and this lending business is evolving into a full asset management industry.

1) Industry Structure

Early on-chain lending combined all assets into a single large pool, so that a default in any one asset could spread as risk across the entire system. This structural limitation has since been addressed by the introduction of an isolated, or modular, model that keeps collateral and loan terms separate by market, clearly dividing the core infrastructure, the immutable lending protocol, from the yield-management layer, run by risk curators.

This structural separation gave rise to a genuine on-chain asset management industry. Risk curators, like traditional asset managers, earn performance fees, up to 50%, and management fees, up to 5% annually, on the vaults they run, and the top four players together control roughly 65% of total curating TVL, the total value locked across all vaults, giving this segment an oligopoly structure.

On top of this yield infrastructure sits a layer of financial products that end users actually consume, including real-world asset (RWA) products that tokenize U.S. Treasuries and private credit, interest-bearing synthetic dollars, and restaking.

2) Business Model Types

• Lending Infrastructure: Captures a portion of the interest spread between deposits and loans, the Reserve Factor, or takes protocol revenue from interest generated by issuing its own stablecoin, such as Aave’s GHO. A different model, exemplified by Morpho, turns off its own protocol fee and instead redirects that value to downstream curators and the token ecosystem to grow the network (Aave, Morpho).

• Risk Curator: Designs asset allocation and risk models on top of lending protocols and collects a vault management fee. Steakhouse, for example, manages approximately $1.7 billion in assets with a team of fewer than 20 people and takes about 5% of the interest generated. It exemplifies the on-chain asset manager, an operating model whose cost structure is far more efficient than that of traditional financial institutions (Steakhouse, Gauntlet).

• RWA Yield Vault: Issues and distributes tokenized U.S. Treasuries or money market funds (MMFs) and earns a management fee of roughly 0.15% to 0.5% annually. BlackRock’s BUIDL serves as the underlying asset, Ondo Finance repackages it for the decentralized finance (DeFi) ecosystem, and Plume Nest distributes it through a Layer 1 blockchain built specifically for RWAs (BUIDL, Ondo, Nest).

• Interest-Bearing and Synthetic Dollar: Generates returns through delta-neutral basis trades or a managed-rate net interest margin (NIM), then pays that return to token holders as interest. This category divides into two types, models that rely on crypto-native derivatives yield and models that rely on stable Treasury collateral (Ethena, Sky).

• Restaking: Makes already-staked assets liquid again, a process known as restaking, to capture additional yield. Some providers take this further, vertically integrating across the value chain, from collecting DeFi vault management fees to linking directly with consumer card payments (Ether.fi).

3) Case Study: Steakhouse

Steakhouse Financial is a risk curator, a type of on-chain asset manager. Rather than building its own lending protocol, it operates on top of existing infrastructure such as Morpho, taking on a sub-advisory role: selecting collateral assets, designing risk parameters such as loan-to-value ratios, and allocating capital across markets.

Its revenue structure also resembles traditional asset management, collecting a portion of the interest generated as performance and management fees. Because lending protocols such as Morpho handle the operational infrastructure, accounting, settlement, and custody, curators can scale their operations efficiently on risk-design expertise alone, without bearing separate infrastructure costs.

4) Key Implications

The assets currently managed by on-chain curators, approximately $7 billion, amount to roughly one twenty-thousandth of the global traditional asset management market, approximately $147 trillion. This wide gap represents a long runway for the on-chain asset management market to expand.

High yields, however, only matter if the underlying system remains stable. Several recent depegging incidents and a chain of shocks across the restaking sector have exposed operational risks and tail risk, extreme scenarios that fall outside normal expectations, which simple smart contract audits alone cannot detect.

Capital in the market is therefore shifting from high-yield synthetic dollars to Treasury-collateralized products with comparatively lower returns, because what institutional investors fundamentally want is not a high annual percentage yield (APY) but predictability, the ability to control risk.

3. Where the Stablecoin Value Chain Is Headed

Success in the stablecoin market depends not on scaling issuance alone, but on which player controls a specific customer segment. Building infrastructure from scratch in a crypto-native way, however, is slow and carries a heavy cost burden.

The most realistic and executable strategy is to layer stablecoin efficiencies, such as same-day settlement, 24/7 operation, low-cost transfers, and programmable yield, onto already-established traditional financial infrastructure (rails). Recent major M&A activity, including Stripe’s acquisition of Bridge and Mastercard’s partnership with BVNK, all point toward this combination of traditional financial infrastructure and stablecoin efficiency.

This opportunity is being amplified by two broad trends working together: the spread of regional currencies and convergence with regulated finance.

• Spread of Regional Currencies: Governments and institutions preparing stablecoins denominated in their own currencies are more likely to adopt already-proven issuance infrastructure and local banking corridors than to build a system from the ground up.

• Convergence with Regulated Finance: Regulated financial institutions such as JPMorgan, Visa, and BlackRock also show a clear preference for proven infrastructure over developing their own technology.

As a result of these trends, the market opportunity in card issuance and settlement, custody infrastructure, and asset management, the gateway institutional finance must pass through to enter the market, is set to expand further going forward.

This is because stablecoins function essentially as money and serve as a powerful “technological upgrade” that maximizes the efficiency of existing financial rails.

The issuance market is an oligopoly that requires substantial capital and trust, while the layers that follow issuance, including on-ramps, payments, and asset management, carry comparatively low barriers to entry, allowing a much broader range of business models to emerge.

Because this market is still at an early stage where integration with traditional financial rails is just beginning, the players that come to dominate it will be determined by what form of integration and replacement they lead.

This shift has become an unavoidable, large-scale challenge of the era. EastPoint: Seoul 2026, taking place on September 28, will serve as a forum for an in-depth discussion of this industry-wide shift. With traditional financial institutions and the digital asset industry gathering under one roof to cover the stablecoin ecosystem and beyond, the event is positioned as a substantive first step toward genuine convergence across existing boundaries.

🐯 More from Tiger Research

Read more reports related to this research.

• 2026 Asia Stablecoin Market Overview

• Stablecoin Issuance Market: Four Business Models Reshaping the Market

Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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Capital in the crypto market is undergoing a paradigm shift, concentrating into specific sectors and companies. Tiger Research and RootData examined this shift in capital markets using data on 9,416 investment deals recorded from 2018 through the first half of 2026.

Key Takeaways

• Capital inflows in the first half of 2026 reached $13.3 billion, already comparable to the $13.2 billion recorded for all of 2024, even as the number of funding rounds fell to just 435, a 78% decline from the 2022 peak of 1,978.

• The market is now split between a small number of large, crypto-native venture capital firms that concentrate on lead investments and exchange-affiliated venture arms that compete on liquidity, while mid-sized firms without a clear competitive edge are being pushed out of the market at a rapid pace.

• The number of funding rounds in the gaming sector fell 96%, from 141 in 2024 to just 5 in the first half of 2026.

• Capital inflows into the payments and stablecoin sector and the centralized exchange (CEX) sector were driven entirely by mergers and acquisitions.

• Traditional financial institutions took part in 54.5% of all investment deals recorded in the first half of 2026.

1. The 2021 Market: Speed and Diversification as Strategy

The core strategy in the 2021 crypto investment market was speed and portfolio diversification. Investors executed 1,750 deals that year, including seed rounds, and competition over speed was intense enough that AU21 Capital alone closed more than 13 deals a month on average.

Investment decisions at the time were reduced to simple criteria such as the token generation event (TGE) schedule and tokenomics, the structure governing how a project’s tokens are issued and distributed. Because token issuance alone could generate returns without any real product development, venture investors largely pursued a “spray and pray” strategy, spreading capital across dozens or even hundreds of projects regardless of valuation.

Speed of execution took priority over thorough due diligence. New rounds closed almost instantly, and VCs that missed a round often chased the next one at a higher valuation, a pattern of FOMO that repeated across the industry.

Many VCs that ran this strategy did not survive the bear market that followed, while the ones that did survive fundamentally changed their approach.

2. Which VCs Survived: A Changed Landscape

2.1. Lead Investment, Then and Now

The first metric to examine is lead investment, the rounds that major VCs have historically directed.

Some VCs remain active in leading deals today, while others have disappeared entirely or emerged only recently. Because leading a round has always required the reputation and scale of capital that only large VCs possess, the firms that led major rounds in the past have proven resilient, and most still rank among the top ten today.

2.2. How Surviving VCs Diverged

Looking at data from 2024 through 2026 as the most recent period, crypto-native VCs and established large firms are concentrating their resources on lead investments, engaging more deeply in individual deals. They have shifted their business model toward doing fewer deals overall while raising the bar on due diligence and securing board seats and greater influence over governance.

A different pattern emerges, however, in the cumulative count of round participation outside of lead investments.

Among the top 15 VCs by round participation from 2024 through the first half of 2026, exchange-affiliated firms account for a large share. Exchanges have been more active in joining rounds than in leading them. Coinbase Ventures ranked first with 140 deals, OKX Ventures second with 94, and YZi Labs third with 92. YZi Labs is the organization that resulted when Binance Labs rebranded in January 2025.

HashKey Capital, ranked seventh, is the venture arm of the Hong Kong exchange HashKey Exchange, and Mirana Ventures, ranked fourteenth, is the venture arm of Bybit. Five major exchanges appear in the top 15 through their respective venture arms alone. Large VCs that focus on leading rounds, such as Polychain and Pantera Capital, rank lower by this measure of overall round participation.

CEX-affiliated VCs have established themselves as core participants in major rounds by leading with the liquidity and marketing support their platforms can provide. Mid-sized VCs that lack a clear, defensible advantage, whether economies of scale, brand recognition, or exchange-level liquidity support, are being squeezed out of the market quickly as capital pressure and failed exits reinforce each other.

2.3. The VCs That Left: The End of Spray and Pray

Most VCs that built broad portfolios during the last bull market by relying on quick token liquidation have since disappeared. AU21 Capital, LD Capital, and Shima Capital saw their deal counts fall by as much as 98.9% and effectively lost their influence in the market. A strategy built on riding short-term narratives no longer worked once a prolonged bear market and tighter regulation set in.

Their failure to develop any real differentiation was the main cause, but it is also worth noting that the broader flow of crypto capital has shifted toward projects that have already reached some degree of maturity, and few new projects requiring early-stage funding are emerging. In other words, the kind of opportunity these VCs depended on has stopped appearing in the market.

3. Investment Rounds: Buying the Fruit, Not the Seed

3.1. The Seed Collapse

Seed-stage deals totaled 81 in the first half of 2026, down 88% from 694 in 2022. The market’s aversion to early-stage projects with unproven business models and higher risk is clearly evident. This decline also shows up in the overall structure of funding rounds: seed rounds accounted for 35.3% of all deals in 2022, a share that fell to 18.7% by the first half of 2026.

The decline in seed rounds can be read as reflecting both investor aversion and a simple shortage of new early-stage projects seeking seed funding. It is a metric that captures market contraction and market maturity at the same time.

3.2. Capital Concentrating in Later Stages

Measured by capital allocation, later-stage rounds, Series A and beyond, now account for 75.2% of total investment. Seed-stage investment briefly held a majority share during the 2023 bear market, but capital quickly reallocated toward well-capitalized companies once the market entered recovery.

In the first half of 2026, total Series A funding ($745 million) exceeded all seed-stage capital raised ($423 million), making it the largest category of any round.

Average deal size rises in a clear step pattern from one stage to the next: $5.4 million at seed, $22.4 million at Series A, $127 million at Series C, and $202 million at Series E. The sample size shrinks at later stages, but .companies that reach those stages have already seen their revenue and valuation increase, so each round involves a correspondingly larger amount of capital.

4. The Market Overall: Capital Concentrates as Deal Count Falls

4.1. Capital and Deal Count Diverge

Total capital inflows reached $13.3 billion in the first half of 2026, while the total deal count of 435 amounted to only 22% of the 1,978 deals recorded in 2022, the year with the highest annual deal count. From 2024 to 2026, capital volume held steady or rose even as it concentrated into a much smaller number of deals.

Small, diversified bets from VCs chasing short-term returns around token liquidity events have declined, while large direct investments from traditional financial institutions have increased. Institutions apply stricter criteria, evaluating not token listing schedules or market narratives but whether a company has an auditable revenue structure and the necessary regulatory licenses.

Deals of $100 million or more totaled 32 in the first half of 2026, accounting for 7.4% of all deals, up sharply from 1.1% in 2024. Over the same period, the average deal size roughly quadrupled, from $11.7 million in 2024 to $47.4 million in the first half of 2026.

This rise in share came from two directions at once. The number of large deals itself increased, while the total deal count fell as small deals, including seed rounds, disappeared. A small group of surviving projects began to dominate the market, and as small deals vanished, the already limited pool of large deals also came to represent a larger relative share.

4.2. Direct Participation in Venture Rounds

The share of investment deals involving traditional financial institutions rose from 29.2% in 2018 and first crossed the majority mark, reaching 53.9%, in 2021. Their participation dipped to 45.2% in 2023 during the last downturn, rebounded to 54.4% in 2024 as regulation became more defined, fell back to 50.9% in 2025, and reached 54.5% in the first half of 2026. Participation has remained near its highs ever since first crossing the majority mark in 2021.

In one example, a16z led the $355 million round for Digital Asset, the developer of Canton Network, but core institutional players, including BNP Paribas, HSBC, S&P Global, and Hanwha Investment & Securities, invested directly rather than through a venture subsidiary.

Where investment once entered mostly at the earliest stage, the growth of crypto VC firms and the entry of traditional investors have shifted more capital toward companies that have already reached some degree of maturity.

5. Sectors: Surviving a Changed Environment

2024 was the year spot bitcoin ETF approval coincided with a more favorable regulatory environment, producing the first clear sector-level capital flows since the bear market, and this analysis uses it as the baseline year for sector comparisons.

In 2024, the year bitcoin ETFs were approved, the infrastructure sector held a majority share of total investment capital at 50.9%. That share had fallen sharply to 14.8% by the first half of 2026. Payments and stablecoins (25.3%), centralized exchanges (18.2%), and prediction markets (17.5%) took the lead instead, reshaping the sector landscape entirely.

This shift suggests that blockchain infrastructure has changed character, from a standalone investment target to a practical platform that institutional businesses put to use. Representative examples include Robinhood running its own layer built on Arbitrum, and Securitize adopting Solana and Avalanche as settlement layers around the same time it listed on the New York Stock Exchange. In other words, the current capital market’s core demand has moved past building new protocol infrastructure from scratch, toward actually operating real-world financial services on top of existing infrastructure layers.

5.1. The Laggards: Gaming, NFTs, and Social

All three sectors saw deal counts fall sharply. Gaming dropped from 141 deals to 5, NFTs from 27 to 2, and social and entertainment from 74 to 11.

Capital inflows followed the same downward path in all three. Gaming capital fell from $758.6 million to $44.8 million, NFT capital from $114.9 million to $14.7 million, and social and entertainment capital from $512.1 million to $70.1 million.

Gaming showed the steepest decline of the three. The earlier GameFi model, which combined gaming with token-based rewards, tended to lean too heavily on token issuance for financial returns rather than building sustainable gameplay. As soon as new user growth slowed, this model fell into what is known as a death spiral, a structural cycle in which falling token value and user attrition reinforce each other, and it never found a way out. As a result, user traffic data, once a key metric in due diligence, lost its reliability, and capital inflows into the sector were effectively cut off.

5.2. DeFi: Quiet but Steady

Deal count in the decentralized finance (DeFi) sector fell 71%, but total investment declined by only about 34%. Average deal size actually rose, from $4.5 million in 2024 to $10.4 million in the first half of 2026, showing that as overall deal count contracted, capital concentrated in a small number of large deals.

The main driver of this concentration was a token sale round by the lending protocol Morpho, aimed at institutions and investment firms. Morpho, which used its modular lending protocol to open the DeFi vault market to institutions and redefine DeFi risk standards, raised $175 million in a token round led by a16z crypto, Paradigm, and Ribbit Capital on June 9, 2026. That single round accounted for 17.7% of all DeFi investment in the first half of 2026, a clear reflection of how concentrated the market has become.

The DeFi sector, in other words, has moved away from broad-based ecosystem growth, with capital instead shifting toward a small number of protocols that the market has already validated.

5.3. Payments and Stablecoins: The Fastest-Rising Sector

Deal count in the payments and stablecoin sector has kept accelerating on a monthly average basis. Total investment over the same period jumped roughly twentyfold, from $143.9 million to $2.85 billion in the first half of 2026. Much of this increase, however, is attributable to a handful of large M&A transactions.

The largest deal in the first half of 2026 was Mastercard’s acquisition of BVNK for $1.8 billion in March, followed by Payward’s (Kraken’s parent company) acquisition of Reap for $600 million in May. These two transactions alone accounted for about 84% of total sector investment in the first half of 2026. Cross-border payment and crypto card issuers, including Rain ($250 million) and KAST ($80 million), also raised capital steadily, supporting the sector’s growth.

These recent large-scale M&A deals indicate that traditional payment companies and major Web3 institutions have moved beyond simple business partnerships and are now acquiring and directly controlling stablecoin infrastructure. Stripe offers the clearest example of this race to set the ecosystem standard, beginning with its acquisition of Bridge in October 2024.

After acquiring Bridge, Stripe partnered with Paradigm to build Tempo, a blockchain dedicated to stablecoin payments, and successfully launched its mainnet in March 2026. That June, Bridge co-founder Zach Abrams became interim head of the entity operating Open USD (OUSD), a global consortium stablecoin project with more than 140 participating companies.

The OUSD project has adopted Bridge, which Stripe acquired and continues to develop, and Tempo, which Stripe is building, as its core initial infrastructure. The technology and talent Stripe gained through acquisition now control both pillars at once: its own proprietary platform and the industry consortium meant to set the standard. This shows that competition over stablecoin infrastructure has moved fully past company-level acquisitions and into a contest over setting the global standard for the entire market.

5.4. CEX: Venture Capital No Longer Needed

The centralized exchange (CEX) sector’s share of total investment jumped from 3.0% in 2024 to 18.2% in the first half of 2026. This increase, however, is difficult to read as an expansion of traditional venture investment into new exchanges, since M&A alone accounted for 75.5% of all CEX sector investment recorded from 2024 through the first half of 2026. That share climbed from 58.8% in 2024 to 78.9% in 2025, reflecting an overwhelming degree of concentration.

Overall capital inflows declined from the prior year’s peak of $19.4 billion, when large M&A deals were concentrated, but remained more than six times the 2024 level of $340 million. Deal count has not slowed either, holding a steady pace on a half-year basis. The 23 deals recorded in the first half of 2026 averaged 3.8 per month, faster than the pace of 2.8 per month in 2024 and 3.0 per month in 2025.

What the CEX investment market is showing, in other words, is a reshuffling centered on a small number of large operators. Naver’s acquisition of a stake in Dunamu remains under regulatory review but was the largest deal announced during the period, followed by Coinbase’s acquisition of Deribit for $2.9 billion and Kraken’s acquisition of NinjaTrader for $1.5 billion.

Abu Dhabi’s sovereign wealth fund MGX’s $2 billion strategic investment in Binance fits the same pattern. At the same time, venture arms of existing large exchanges, such as OKX Ventures and HashKey Capital, are participating more actively in investment rounds and acquisitions of their own. As a result, CEX players are increasingly taking on a dual role, acting as both investment targets and strategic investors.

5.5. Prediction Markets: A New Sector Emerges

Prediction markets have emerged as a sector that provides liquidity for real-world macro indicators such as economic data, elections, and policy decisions. The trigger for the sector’s growth was formal regulatory approval from the Commodity Futures Trading Commission (CFTC) in May 2025, which opened the door for large-scale capital inflows from hedge funds and asset managers as the sector entered the regulated mainstream.

Kalshi surpassed $100 billion in cumulative trading volume in June 2026. It had already raised $1 billion in a round led by Paradigm in December 2025, followed by another $1 billion led by Coatue.

Polymarket raised capital from Intercontinental Exchange (ICE), the operator of major traditional exchanges. In October 2025, ICE committed up to $2 billion, of which it actually deployed $1 billion, and it added another $600 million in March 2026, bringing its cumulative investment to about $1.6 billion.

Rather than a field of many competing new projects, the prediction market sector is settling into a structure in which traditional financial institutions and top-tier institutional capital repeatedly funnel large rounds into the two players that secured regulatory approval first.

5.6. Custody: Quiet but Powerful

The custody sector grew fifteenfold, from $20.4 million in 2024 to $317.1 million in the first half of 2026. In the first half of 2026, Anchorage raised a $100 million strategic investment, meaning Anchorage alone accounted for roughly a third of all sector investment during that period.

For institutional asset managers to hold crypto directly, custody infrastructure that meets regulatory requirements is essential. This sector grew alongside rising institutional demand for asset management and crypto custody services.

The sectors discussed above share one common thread: each has kept a stable base of capital flow through the funding rounds described here, and in every case, that infrastructure demand was created by institutions’ need to enter the market.

6. A New Standard for Crypto Capital: From Betting to Control

Overall, the center of gravity in crypto investment has shifted from planting short-term seeds to owning a stake in infrastructure and protocols.

Before bitcoin ETF approval and the improved regulatory environment of 2024, the crypto market was a realm of indiscriminate betting, dominated by small, narrative-driven investments spread across many projects. That strategy ultimately led to the collapse of the gaming and NFT sectors and the elimination of the VCs that kept pursuing it.

Today’s capital, by contrast, aims not at short-term bets but at gaining long-term control over both its investment targets and on-chain infrastructure. It concentrates large sums in a small number of targets that have secured auditable revenue structures and regulatory licenses, or it acquires equity outright to control the infrastructure itself.

In the past, an investment in an early-stage project functioned as a signal a VC sent to the market. The act of investing was read as smart money moving in, which lifted token prices or drew retail users to participate early. Today’s structural capital, which acquires infrastructure directly and secures licenses, sends no such signal for retail to follow.

Retail investors no longer react strongly to news of VC investment, fundamentally because market capital itself has undergone this structural change. Retail investors, too, now need to weigh potential investments with the same caution VCs now apply. The old betting strategy no longer serves either retail investors or VCs.

About RootData

RootData is a Web3 asset data platform launched in early 2022 that provides a systematic investment and funding database for crypto investors and founders. It now processes more than 3.4 million search queries a month and is used by more than 2 million crypto users. RootData’s data and research have been cited by major media outlets and institutions, including The Wall Street Journal, Cointelegraph, Binance Research, and The Block. The platform structures the information investors need for decision-making, from discovering crypto projects to tracking funding and profiling investors.

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This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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Key Takeaways

• Prediction markets have become a mainstream industry, with $14 billion in monthly volume and Meta’s own “Arena” project signaling recognition from major tech companies.

• The mechanism is simple: a contract settles at $1 if an event occurs and $0 if it does not, so its trading price serves as a real-time probability, and an oracle confirms the outcome after expiry.

• This rests on skin in the game: participants lose money if they are wrong, which lends credibility to the information they provide.

• Western markets have brought prediction markets into the formal system, while Asia’s limited engagement is costing it capital outflow, loss of informational sovereignty, and unprotected users.

• Asia’s task now is not to block these markets but to determine how to use this data responsibly within the formal system, since avoiding the discussion is already ceding leadership abroad.

1. Prediction Markets Have Found Product-Market Fit

Prediction markets stayed largely conceptual for years. That changed around 2020, when a handful of smaller projects began accumulating meaningful trading volume and clearing regulatory barriers one at a time, marking the point at which prediction markets started to take shape as an industry.

Growth has accelerated since then. Monthly trading volume now exceeds $140 billion, and the valuations of the leading platforms have reached roughly $40 billion.

Meta’s entry has made the shift beyond the early stage more apparent. The New York Times recently reported that Mark Zuckerberg is personally leading a team developing a prediction market app called Arena. A large technology company committing resources at this level indicates that the industry has moved past experimentation and established a business model with validated product-market fit.

2. Where Did Prediction Markets Begin?

Prediction markets are not a recent invention. They were used informally in academic and financial circles for decades before blockchain technology brought them to a broader public and helped establish them as an industry.

2.1. Informal Use

The term “prediction market” itself is more recent than its history suggests. Through the 1980s, the concept went by various names, including information market and decision market, before a 2004 economics paper fixed “prediction market” as the standard term.

The underlying practice, however, predates the terminology by centuries. Its earliest form was political betting on election outcomes. In 18th-century London, coffeehouses hosted wagers on parliamentary scandals and changes in the prime minister, with the resulting odds sometimes reported in newspapers. In 19th-century New York, informal futures markets predicting presidential election results operated actively in the curb markets near Wall Street.

2.2. Academic Use

In academia, the starting point was a 1988 effort at the University of Iowa. Three economists, puzzled that opinion polls had failed to predict Jesse Jackson’s win in the Michigan caucus, designed a market where people could trade on election outcomes themselves. This became the Iowa Electronic Markets (IEM).

In 1992 and 1993, the IEM received approval from the CFTC to operate for research purposes. Open to anyone willing to put in $5, the IEM outperformed traditional polling roughly three-quarters of the time between 1988 and 2004, functioning as a working laboratory for aggregating collective judgment into a price. Even so, no regulatory framework existed that would have allowed it to operate as a public market.

2.3. Binary Options

These early prediction markets closely resemble binary options in financial markets: contracts that pay out based on a yes-or-no bet over whether a price will cross a given threshold by a set time. That structure, settling at 1 if the event occurs and 0 if it does not, is identical to the logic underlying prediction markets.

Binary options also found their way into regulated exchanges. The American Stock Exchange’s Fixed Return Options in 2007 and the Chicago Board Options Exchange’s S&P 500-based binary options in 2008 are notable examples. Frequent fraud on offshore platforms led several major jurisdictions to ban retail sales of these products between 2017 and 2021. Despite that setback, the basic contract structure, a binary bet on yes or no, remains the same logic that prediction markets operate on today.

3. How Are Prediction Markets Traded Today?

The range of topics covered by prediction markets today extends to nearly any event imaginable.

Sports draws the largest volume of any category, supported by a continuous calendar of leagues and global events, with the ongoing World Cup currently driving additional interest. Politics, geopolitics, and macroeconomics have expanded beyond indicators such as inflation data to include forecasts of private company valuations, turning information itself into a tradable asset. Cryptocurrency and stock prices, along with smaller gossip-driven events, round out a spectrum that spans both popular interest and demand for specialized information.

Every contract in a prediction market settles on a binary yes-or-no basis. Consider a market on whether J.D. Vance will be the Republican presidential nominee in 2028. If Vance is confirmed as the nominee, the contract pays $1 to those who bet YES. If he is not, it pays $1 to those who bet NO.

The simplest way to understand this structure is to treat one dollar as 100 percent. A contract pays $1, or 100 percent, if the event happens and $0 if it does not, so the price at which it trades in between naturally reflects a probability. A contract trading at 40 cents represents 40 percent of that dollar, meaning the market prices the event’s likelihood at 40 percent, and the cent value can be read directly as a percentage. This reading, however, assumes that spreads and transaction costs are ignored.

Prices form through an order book rather than through any central party. Buy orders, such as an offer to buy at 39 cents, and sell orders, such as an offer to sell at 40 cents, accumulate at each price level, and trades execute where the two sides meet. The price, and by extension the implied probability, emerges in real time from the combined capital of many participants pushing against each other, and traders can sell their position before expiration to lock in a gain or limit a loss, effectively trading their view on an event for money.

Outcomes are recorded through an oracle. However precisely a contract has been priced, someone still has to determine whether the outcome was YES or NO once the event concludes, and the oracle is the mechanism responsible for that determination. In the example above, this is the final step that establishes whether Vance was in fact confirmed as the Republican nominee.

Oracles operate in one of two ways.

1. Decentralized oracle: a proposer posts a bond and submits a proposed outcome, which becomes final if no one disputes it within a set window. If a dispute is raised, the outcome goes through a re-proposal process, and only if a further dispute follows does the matter go to a vote.

2. Centralized: the criteria for judging the outcome are set in advance, and once the event concludes, the exchange applies the official result directly and settles the market immediately. This structure places full authority over the determination with a single exchange.

Limitless, for example, finalizes results according to predetermined rules once the deadline passes. An oracle, a service that reports real-world outcomes onto the blockchain, handles this reporting: for most markets, such as those tracking crypto prices or stocks, the outcome is reported automatically through Pyth Network, while custom markets covering sports or politics are judged manually by the operating team within 24 to 72 hours.

Prediction markets such as Limitless are best understood as an information system that compresses the views of a large number of participants into a single number reflected in price, and that, once an event concludes, determines according to predetermined rules whether that prediction was correct.

4. Skin in the Game and the Evolution Toward Information Finance

Prediction markets have evolved beyond simple betting platforms into core infrastructure for information finance, the conversion of future uncertainty into real-time price information. What fundamentally distinguishes these markets from traditional polling or expert forecasting is the skin in the game mechanism, meaning that participants commit their own capital to the positions they take.

Under conventional methods, an expert who is wrong faces little reputational cost, and opinion polls cannot filter out respondent indifference or strategic misreporting. Prediction market prices carry a real cost for being wrong, since a mistaken position loses money, which pushes participants to verify their convictions against the most objective and current information available. That willingness to bear a cost translates directly into market reliability.

How this skin-in-the-game mechanism plays out in actual data can be seen across several areas.

• Accuracy in financial and monetary policy forecasting: a Federal Reserve economist’s research published in February 2026 illustrates why prediction markets perform well. Since 2022, prediction market rate expectations ahead of FOMC meetings have aligned statistically with actual outcomes, outperforming both fed funds futures and the Bloomberg consensus. The reason is that participants face an immediate loss of capital if they are wrong, which leads them to analyze available information more rigorously and price it accordingly.

• Transparent probability estimates in politics and elections: during South Korea’s local elections in June 2026, Polymarket correctly called the winner in 14 of 16 metropolitan and provincial races. Where exit polls could only describe a race as too close to call, prediction markets offered real-time prices reflecting probabilities that participants had staked their own money on, a result of collective judgment across many participants pricing in a wide range of variables rather than a simple forecast.

• Responsiveness to market events and corporate valuation: when the issue of capping stablecoin interest income emerged in March 2026, prediction markets immediately priced a 97.6 percent probability of a decline in Coinbase’s stock price, functioning as a real-time risk indicator rather than retrospective analysis and demonstrating how sensitively participants respond when their own capital is at stake. Academic research has reached similar conclusions: a 2015 study examining internal prediction markets at companies including Google and Ford found that they reduced forecasting error by as much as 25 percent compared to official forecasting models, indicating that predictive accuracy improves when insider knowledge is combined with capital at risk.

Information asymmetry remains a limitation. A January 2026 case involving Venezuela showed an insider trading on confidential information, exposing a real weakness in these markets. The fact that this attempt to exploit privileged information to distort prices was identified and prosecuted as a crime, however, also demonstrates that the market is designed to operate on a transparent and accountable basis.

In areas where information is broadly distributed, prediction markets function as a precise analytical tool. In areas where information is concentrated among a few participants, they function as a monitoring mechanism capable of identifying that concentration itself. Because participant capital is genuinely at stake, the prices these markets generate constitute objective information relevant to assessing the value of financial assets.

5. Prediction Markets Absent From the Asian Policy Conversation

The character and trajectory of prediction markets differ sharply depending on each country’s regulatory framework. The United States has brought prediction markets into the regulated financial system through judicial rulings, while major Asian jurisdictions have largely continued to treat them as a category of traditional gambling.

In the United States, litigation resolved much of the regulatory uncertainty. The Commodity Futures Trading Commission attempted to classify Kalshi’s election prediction contracts as gambling and sanction the platform, but the court ruled that election prediction is not a game of chance and that the regulator lacked authority to prohibit it. That ruling shifted the regulatory posture and became a decisive catalyst for traditional financial institutions, including ICE, Robinhood, and CME, to enter the market.

In major Asian jurisdictions, by contrast, the prevailing view treats the binary settle-on-outcome structure of prediction markets as equivalent to traditional gambling. The dominant regulatory lens is gambling control and public order rather than financial policy, and while individual countries have taken different approaches, prediction markets remain largely outside formal policy discussion in the region, with India and Indonesia as exceptions.

The divide in how prediction markets are treated ultimately comes down to whether regulators view the market as financial innovation or as a matter for social control.

6. Prediction Markets at the Crossroads of Regulatory Dilemma and Institutionalization

Prediction markets have already become a core part of global financial and information infrastructure. A significant gap has opened between this global trend and the rigid posture of Asian regulators. At a point when the boundary between technology and finance has largely dissolved, attempts to constrain a new market within older regulatory frameworks face inherent limits. The regulatory approach currently followed by major Asian jurisdictions carries three significant problems.

The first is the paradox of regulatory arbitrage.

Prediction markets operate on borderless digital networks, so blocking a platform or restricting users in one country does not eliminate underlying demand. Users instead migrate to offshore platforms outside any regulatory reach, accepting greater risk in doing so. Capital flows out of the jurisdiction, and regulators lose both oversight of the market and the tax revenue associated with it, a dynamic that weakens financial competitiveness in the region over time.

The second is the loss of sovereignty over national information infrastructure.

Prediction markets function as a sophisticated information infrastructure that converts complex social issues into precise numerical estimates, not merely as a venue for betting. Recent elections across Asia have shown prediction markets reading public sentiment faster and more accurately than traditional polling. While these markets are excluded under the banner of regulation, the data that most directly reflects a given society’s sentiment accumulates instead on servers located abroad. The result is an imbalance in which foreign media and institutions gain a clearer picture of a domestic society than domestic analysts do.

The third is the abandonment of user protection.

Users are left in a blind spot with no institutional safeguards. A policy that simply denies the market without sufficient prior discussion only exposes users to risk and pushes them outside the system.

The center of this discussion needs to shift entirely.

The question is no longer how to block this market but how to make healthy use of this data within the formal system. This shift in perspective requires dedicated research, but discussion in this area remains limited so far.

In this space, Limitless Research is filling that gap by processing prediction data from Asian markets such as Korea and Japan into information assets. More participants will need to take on this role of building a healthy data ecosystem going forward.

Regulation should function not as a dam that blocks the flow but as a channel that directs it correctly.

What Asia needs now is not stricter enforcement but the start of a forward-looking discussion that responds to this shift. Pushing transactions that are already taking place into the shadows is the worst possible policy. Bringing this activity into the formal system through constructive discussion, establishing a transparent oversight system, and returning the data generated in the process as a national and social asset will require sustained effort

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Disclaimer

This report was partially funded by Limitless. It was independently produced by our researchers using credible sources. The findings, recommendations, and opinions are based on information available at publication time and may change without notice. We disclaim liability for any losses from using this report or its contents and do not warrant its accuracy or completeness. The information may differ from others’ views. This report is for informational purposes only and is not legal, business, investment, or tax advice. References to securities or digital assets are for illustration only, not investment advice or offers. This material is not intended for investors.

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Key Takeaways

• The RWA market is growing rapidly, but many jurisdictions still lack adequate regulation. Financial institutions in those jurisdictions must make a strategic choice among waiting for domestic legislation, using a regulatory sandbox, or entering a foreign market.

• International RWA operations demand a high degree of precision. Thorough preparation is required across six core areas before entry, covering jurisdiction selection, licensing, asset definition, investor scope, and the design of settlement and operational arrangements.

• The central objective is to build real operational experience by choosing the path that fits the situation. The two main options are direct entry into a jurisdiction with established regulation and a technical route using on-chain native platforms.

1. Wait, Experiment, or Go Abroad

As of the first half of 2026, the real-world asset (RWA) tokenization market has grown to roughly $25 billion to $36 billion. It has drawn the attention of institutional investors by demonstrating clear efficiency gains through tokenization, including automated interest payments and redemptions, shorter settlement periods, and a broader customer base.

Financial institutions nonetheless face a practical obstacle in the regulatory vacuum. Although nothing explicitly prohibits tokenization, the legal framework needed to give distributed-ledger records binding legal effect remains underdeveloped, leaving investor rights without adequate protection. In response, financial institutions have converged on three broad strategies.

• Waiting for domestic legislation: This is favorable for risk management but carries a significant risk of losing the chance to secure an early market position.

• Using a regulatory sandbox: This allows limited experimentation but is confined to areas such as fractional investment and does not scale to the issuance of standardized securities.

• Entering foreign markets first: This means issuing digital bonds in jurisdictions where regulation is already in place, demonstrating results there, and building a track record offshore early to establish a competitive position.

Because the RWA market is inherently a global business, building operational capability across varied regulatory environments is essential. International expansion involves real practical constraints, but financial institutions in jurisdictions that still lack regulation have all the more reason to begin accumulating hands-on experience in foreign markets ahead of their peers.

2. Tokenization Is Not Magic

International RWA operations are not the product of isolated decisions. The choices involved form a chain, where the outcome of each step determines the path available at the next. Tokenization is not magic: it is a process of migrating existing financial instruments onto new infrastructure, and that process demands a higher degree of precision than traditional issuance, not a lower one.

Before committing to entry, institutions should assess their own readiness honestly against the following six requirements.

• Establishing an offshore base: The institution must determine how it will use key jurisdictions such as Hong Kong, Singapore, or the United States, and whether it will work through an existing entity, establish a new one, or partner with a local firm. A new entity offers greater control but requires significant resource investment; a partnership allows faster entry but limits how deeply the institution can internalize core capabilities.

• Licensing: The institution must satisfy the licensing requirements of the jurisdictions where it intends to sell. The choice is between direct acquisition, which takes time and capital, and leveraging the license of an existing platform, which is faster but requires structuring the issuance to fit that platform’s specifications.

• Defining the asset: The choice of what to tokenize determines the height of the entry barrier. Standardized securities such as bonds have well-established structures and are relatively straightforward to bring to market, while non-standard assets such as real estate or trade receivables require considerably more time for legal review and structuring.

• Defining the target investor: The typical approach is to target all jurisdictions except the United States. Selling to non-US investors allows the issuer to rely on Regulation S for an offshore exemption, but including US investors triggers separate requirements such as Regulation D, adding structural complexity. Beyond this, many STO and RWA platforms restrict sales to accredited or institutional investors, so the sales strategy must be set at the same time as the investor perimeter.

• Settlement currency and payment flow: The institution must decide whether to accept settlement in local currency, US dollars, stablecoins, or wholesale CBDC. This is not simply a choice of currency: it determines investor accessibility, custody structure, and ultimately revenue. Accepting stablecoins, for instance, introduces conversion requirements and the potential for additional costs.

• Other operational requirements: Depending on the structure, a wide range of additional considerations apply, including blockchain selection, custody, on-chain operations, and post-issuance governance. In particular, the institution must confirm who controls interest payments and redemptions, registry management, and the ability to force-transfer or freeze tokens in the event of an incident, all of which parallel the operational requirements of traditional financial instruments.

Tokenization is not magic. Even after a structure is complete, the work is not finished until the securities are sold and investors are found.

3. Where to Operate

Jurisdiction selection is a strategic decision that requires weighing regulatory fit and operational efficiency at the same time.

For institutions that already have an offshore presence, however, the most efficient starting point is to assess that existing jurisdiction first. If the primary objective of an offshore tokenization strategy is to accumulate hands-on experience early, establishing a foothold in an entirely new jurisdiction imposes a high threshold in terms of time and capital.

• Hong Kong: Regulatory completeness and enforceability
  Hong Kong is the most advanced first-mover market in terms of implementation. Security tokens are regulated within the existing Securities and Futures Ordinance framework, and an April 2026 SFC circular permitted secondary trading on licensed virtual asset exchanges, completing the link between issuance and distribution. Infrastructure such as HSBC Orion is already operational, and policy support is strong, including HKMA subsidies for issuance costs. Institutions should note, however, that if legislation introducing new virtual asset dealer and custody licenses proceeds as planned during 2026, compliance with any transitional provisions will require attention.

• Singapore: Precise framework and regulatory clarity
  Singapore applies the Securities and Futures Act strictly under the principle of “same activity, same risk, same regulation.” MAS revised its tokenization guidelines in December 2025 to provide clearer guidance, and the Variable Capital Company (VCC) structure makes asset segregation straightforward, making Singapore well suited for fund structuring. The jurisdiction does, however, impose stringent licensing requirements even for services directed at offshore customers, and the entry threshold is high.

• United States: Regulatory clarity and an efficient path to market
  The joint SEC-CFTC interpretation issued in 2026 has clarified the asset classification framework. Obtaining licenses directly as an issuer remains costly, but working through a vertically integrated platform such as Securitize allows efficient issuance under the Regulation D exemption for US accredited investors and the Regulation S exemption for offshore investors. BlackRock’s BUIDL fund is the most prominent example of this approach.

Each jurisdiction has established platforms that can accelerate local entry. These are licensed operators that provide integrated access to regulatory coordination, investor networks for fundraising within the platform, and the operational infrastructure covering the full lifecycle from issuance through settlement.

When assessing entry into a specific jurisdiction, meeting with the leading local platforms to test business feasibility is strategically more efficient than working through extensive regulatory documentation first.

4. Bypassing the Jurisdiction

Where the previous section covered the direct approach of establishing a legal and physical presence in a specific jurisdiction and obtaining the necessary licenses, this section addresses a fundamentally different method. The on-chain native approach designs issuance and distribution from the outset around an on-chain environment.

Rather than investing the time and capital required to secure a physical base, it works with or borrows the structural logic of on-chain platforms that already have regulatory compliance built in, using that infrastructure to reduce the barriers to market entry. Where the jurisdiction-based approach in the previous section asks “where will we operate,” the on-chain native approach asks “how will we structure the deal.”

Representative examples are as follows.

• Ondo Global: Ondo tokenizes US securities through a bankruptcy-remote special purpose vehicle (SPV) incorporated in the British Virgin Islands, using the Regulation S offshore exemption to minimize friction with US securities regulation. It also operates its own secondary market, Ondo Global Markets, to handle trading of its issued tokens directly.

• Plume Nest: Plume’s Bermuda subsidiary, KDAB (Kimber Digital Assets Bermuda), holds a Class M DABA license from the Bermuda Monetary Authority and operates a regulated on-chain vault. Access to the Plume Nest platform is restricted to investors who have passed KYB and KYC screening, and a separate affiliate’s registration as an SEC transfer agent provides a second layer of coverage for ownership registry management and distribution. Tokenization outside the licensed structure is also possible given the platform’s decentralized design, though that path is not well suited to regulated financial institutions.

The structure of an on-chain native strategy closely resembles jurisdiction-based tokenization in substance, but the difference in execution is clear. The primary advantage is speed of entry and breadth of reach: rather than being tied to a specific base, an institution can use already-proven infrastructure to move to market sooner. A further advantage, particularly in contrast to jurisdiction-based platforms whose closed ecosystems can constrain secondary market liquidity, is that on-chain native platforms built around scalability connect organically with DeFi liquidity pools.

The complexity of the structural design, however, is a risk worth considering. The open nature of these platforms allows for a wider range of products, but the established regulatory guidelines that exist for the direct jurisdiction-based approach are absent when it comes to core structural decisions such as issuance design. Because these platforms also operate under structures that differ by platform rather than by jurisdiction, they can create operational burdens for traditional financial institutions, and it is worth assessing whether a local point of contact for the relevant platform is available in the target region.

5. Do Not Wait for Regulation. The Market Will Not Wait.

Large US financial institutions are already leading the market, either by building proprietary platforms or by accumulating direct experience on Canton, Solana, and Ethereum.

For financial institutions in jurisdictions that still lack regulation, launching an offshore RWA business requires redesigning the entire value chain locally, from establishing a base through to distribution. The preparation period typically runs from six months to over a year. The following example traces that process through a mid-sized securities firm, “Firm A,” with an existing Hong Kong entity, tokenizing short-duration investment-grade bonds for sale to offshore institutional investors.

• Step 1: Assessing the existing base and licensing position. The firm uses its existing entity, in this case its Hong Kong subsidiary, to avoid the time and cost of incorporating a new one. Whether the existing license covers tokenization activities is a separate question. Local legal counsel reviews the scope of the current authorization, and where necessary the firm makes a preliminary inquiry to the regulator, here the SFC, to confirm whether a license condition change or additional filing is required.

• Step 2: Selecting a platform and infrastructure. To reduce the time that direct licensing would require, the firm considers working through an established platform such as DigiFT. Vendor due diligence covers the platform’s license validity, the range of supported assets, custody partners, and investor restrictions. At the contract stage, legal review addresses issuance structure design to fit the platform’s specifications, allocation of liability, and governing law.

• Step 3: Regulatory compliance and product design. This step finalizes the product structure of the bond to be tokenized, covering the underlying asset, investor rights, and governing law. The standard approach targets offshore institutional investors outside the United States using the Regulation S exemption. A legal opinion on compliance with local securities law must be obtained for each target jurisdiction. The firm also verifies that its logic for excluding domestic residents is sound under securities law before moving into drafting and approval of the offering documents.

• Step 4: Designing the custody structure and on-chain operations. The firm establishes a dual custody arrangement combining a global custodian bank for the physical asset and specialized infrastructure for the on-chain token. Legal opinions are obtained through external counsel. The firm also finalizes the operational details, including interest payment schedule, settlement currency (US dollars or stablecoins), and redemption mechanics.

• Step 5: Issuance, execution, and verification. The firm executes the actual issuance and sale in accordance with the finalized structure, then confirms that operational procedures such as interest payments and redemptions function as designed. Structural design is the starting point; the business is not complete until investors are secured and the sale is closed.

An offshore tokenization strategy of this kind is not limited to the direct approach of building a base in a specific jurisdiction. Routes such as the on-chain native approach, which navigates around jurisdictional boundaries with greater flexibility, mean that the range of viable paths is effectively open.

Legal review will be the single most time-consuming and costly threshold in any approach taken. Waiting for a complete regulatory framework is not, however, the only answer. The ability to map viable paths quickly and build experience through execution matters more than anything else, because the substance of a tokenization business lies not in technical design but in completing the full sales process.

No one can predict when regulation will be finalized, and the market will not wait. The time to act is now.

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Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

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Crypto card payments have grown sharply to more than $1.5 billion a month. This report asks whether that marks crypto cards as genuine financial infrastructure or a model that is still maturing.

Key Takeaways

• Crypto cards resemble debit cards just before their 1990 commercialization, since both use existing payment networks to skip the merchant acceptance bottleneck. The primary-account relationship, salary deposits and recurring expenses, remains unbuilt.

• RedotPay alone leads a market of roughly $18 billion in annualized volume, with users concentrated in emerging markets. This makes crypto cards a supplementary tool for underserved, dollar-scarce regions rather than universal financial infrastructure.

• Payment volume growth alone does not secure crypto cards’ place as financial infrastructure. The market will likely be reshaped by who controls the flow of funds, claims regions large institutions haven’t reached, and owns the everyday financial relationship above the infrastructure layer.

1. The 1990 Debit Card Parallel

In September 1958, Bank of America mailed cards to 65,000 residents of Fresno, California. Issued as the first payment card without any supporting infrastructure, it produced a dismal result within a year, a 22% delinquency rate and $20 million in losses. Building the electronic settlement system took 15 years, and the debit card took 17 years to arrive, while Visa’s path to becoming the global standard took 20 years in total.

The largest difference lies in whether an everyday financial relationship has taken hold.

The debit card, which first appeared in 1975, became a core instrument of the primary bank account only in the 1990s, once salary deposits spread in earnest. Today’s crypto card, by contrast, begins with a stablecoin deposit. Most crypto wallets still lack the everyday financial relationships of recurring salary deposits and fixed expenses, which places crypto cards somewhere around the stage the debit card occupied around 1990.

Whoever leads in crypto cards will be determined less by the number of cards issued than by who first builds the account that is used in daily life, or a growth trigger of that kind.

2. $1.5 Billion in Monthly Payments Does Not Yet Signal a Settled Stage

According to Artemis, crypto cards’ monthly payment volume grew from around $100 million in early 2023 to $1.5 billion at the end of 2025, which exceeds $18 billion on an annualized basis. The figure differs somewhat from a simple annualization depending on the scope of on-chain tracking, but the rapid increase in payment volume is clear.

A closer look at the indicators shows a pronounced concentration in particular services and regions. A single service, RedotPay, accounts for more than half of all transactions, and its top countries by web traffic are concentrated mainly in emerging markets, including Bangladesh at 11%, India at 8%, Egypt at 6%, and Nigeria at 6%. The US accounts for only 4%.

Real demand for crypto cards today therefore comes not from mainstream developed markets but from underserved regions with limited dollar access.

The scale gap with established financial networks remains wide. Visa and Mastercard process $24 to $25 trillion in annual payments, whereas crypto cards’ annualized payment volume stands at only about $18 billion. This makes the difference in weight class with the established market clear. .

Indicators of use as an everyday payment instrument are also low. Velocity measures how many times, on average, a given asset is used for payments over a set period, and a higher figure means the asset is used more actively for spending than for holding.

Visa’s tracking of on-chain stablecoin transactions put retail velocity at 0.08, roughly one-twentieth of the 1.65 velocity of standard fiat money (M1). Users are therefore treating stablecoins less as something received like a salary, spent in daily life, and replenished, and more as a balance loaded once and drawn down only occasionally.

Quantitative growth in payment volume does not by itself mean broad settlement in the market. A substantial share of current crypto card volume comes from users in emerging markets with limited access to dollar accounts. For these users, crypto cards do function as a meaningful instrument for everyday finance to some degree.

In developed markets, however, crypto cards have not yet secured clear product-market fit (PMF), nor have they formed the close account relationships that come from recurring salary deposits and automatic transfers.

Considering the inflow paths of funds and the nature of the spending, today’s crypto card is therefore closer to a supplementary tool that serves specific countries’ use cases than to universal financial infrastructure. Building on this growth, however, major players are emerging that are advancing each part of the model.

3. The Major Players Leading the Crypto Card Sector

The crypto card sector divides broadly into four business models, and players compete to establish an early position in different layers. The forms vary widely, from firms that focus on providing back-end infrastructure to models that borrow only the card format while fully differentiating the underlying structure.

3.1. Issuance Infrastructure Model

Visa and Mastercard, the familiar networks, also serve as the payment networks in the crypto card ecosystem. Below them sits the issuance infrastructure layer, which extends down to the consumer card. As shown in the figure above, two structures coexist within the issuance infrastructure layer. The first is the traditional two-tier structure, in which the program manager handling operations is separate from the issuing bank handling membership and settlement. The second is the full-stack issuer, such as Rain and Reap, which compresses the two into one.

A comparison of three program managers that form a two-tier structure together with a bank follows.

Cards that appear to be separate brands on the surface converge on a small number of program managers once you look at the back end. Phantom Card, MetaMask Card, and Gnosis Pay are representative examples.

Card brands such as Kast, Ether.fi, Tria, and Plasma One also appear to be independent services, but in practice they run on a small number of infrastructure providers, as shown above. Rain in particular has most consumer cards connected to it.

Because the issuance infrastructure layer concentrates many brands in this way, traditional neobanks that already hold the relevant expertise are also entering the market.

Nium launched a stablecoin card issuance platform in March 2026 that can issue cards on both Visa and Mastercard. Other traditional fintech infrastructure players include Bridge, which Stripe acquired for $1.1 billion in early 2025, and BVNK, which Mastercard agreed to acquire for up to $1.8 billion in March 2026.

As a result, this layer has become one where full-stack issuers, existing program managers, and newly entering fintechs compete at the same time, and issuance alone is becoming harder to maintain as a barrier to entry.

Rain, for instance, differentiates itself with a daily settlement structure. Where established card companies settle over several days, Rain settles in stablecoins through Visa each day, which speeds up the cash turnover of issuers such as Ether.fi. It recently launched an Agent Control Layer that lets AI agents issue single-use virtual cards programmatically, extending its functions beyond basic card issuance infrastructure.

The issuance models that succeed will be those that go beyond providing payment infrastructure to secure and deliver differentiated functions that traditional infrastructure cannot provide quickly.

3.2. Exchange-Based Model

For exchanges, the card is less a direct revenue source than a tool for preventing user attrition. By connecting a card on top of an existing user base, balances, and transaction data, exchanges aim to keep users from leaving the platform. The actual revenue comes not from card payments themselves but from trading fees, lending, and the management of deposits.

Exchanges aim to use the card as an entry point into a financial super-app. Paying cashback in a proprietary token, however, carries the risk that the effective cashback rate becomes unstable as the token’s price fluctuates.

Switching to stablecoin cashback or interest on balances is cited as an alternative, but in the US, the GENIUS Act’s prohibition on interest payments stands as an obstacle to market expansion.

3.3. DeFi-Based Model

Built on the idea that the wallet itself is the account, this model holds assets directly on-chain rather than custodying them with a centralized exchange, and settles card payments from there. It provides a credit line while assets remain pledged as collateral.

The user, however, must manage a number of items directly, including setting up vaults, managing collateral, and tracking liquidation risk, which raises the cognitive cost involved. This is the main reason the DeFi-based model has formed a limited user base.

The DeFi-based model converts assets in the wallet into fiat in real time at the moment of payment and settles on that basis. Because this process runs on-chain, each transaction incurs gas fees (network fees), and on blockchains with low throughput or high congestion, fees can exceed the payment amount or approval can be delayed.

This is why MetaMask Card adopted Linea, its own layer 2 (L2) network. Cutting per-transaction gas fees to around $0.01 eased the fee burden and processing delays for small payments. Tria’s gasless top-up function takes a similar approach, with the platform covering the gas fee incurred at top-up, which removes the cognitive cost users would otherwise bear in choosing a network and calculating fees.

Until a user experience that satisfies both non-custodial asset holding and payment convenience is simplified to the level of a conventional debit card, however, the user base is likely to remain limited to users already familiar with crypto.

3.4. Stablecoin Neobank Model

This model currently accounts for the majority of crypto card market volume and focuses on the function of the account rather than the card itself. It links foreign exchange, remittance, and savings functions to a stablecoin balance, with the card layered on top as a spending instrument. It holds a strong competitive position in emerging markets where local currency value is unstable, remittance costs are high, and dollar access is limited.

For this model to keep growing, it needs to move beyond an experience equivalent to a prepaid card, in which users buy stablecoins themselves and load the balance.

As the table shows, cashback strategy diverges by market position. RedotPay, with its dominant share, and Revolut, which carries a strong traditional fintech identity, do not run cashback programs at all, while later entrants such as Kast and Plasma One actively push USD or proprietary token cashback to attract users.

Benefits alone, however, cannot sustain crypto cards’ integration into everyday use.

4. A Single Payment Function Is Not Enough

As the precedents of traditional cards and neobanks show, a plain payment service has a clear ceiling on the value and profitability it can generate. These businesses turned profitable only after incorporating structures such as the primary-account concept and the deposit-lending margin into their business models. The crypto card sector now faces the same threshold, but global regulation, including the GENIUS Act in the US and MiCA in Europe, restricts the paths to paying interest and managing assets through stablecoins, which makes finding a breakthrough difficult.

Reading this macro-level pressure in reverse yields three core strategic requirements that crypto card players will need to secure in order to survive going forward.

Players that fail to take direct control of the flow of funds, defend their use case in emerging markets, or build a proprietary account relationship that infrastructure providers cannot replace are likely to fall behind as market standards take shape.

After the introduction of the debit card, the players that ultimately came to lead the market were not those that issued the most cards but those that established an early position in the actual bank account. The crypto card sector today faces the same underlying question.

Crypto card players need to take direct control of the flow of funds upstream of the Visa payment step, secure an early position in niche markets, and capture consumer infrastructure in the way the primary bank account emerged in traditional finance. Doing so means establishing a global standard without an existing precedent to follow.

Crypto cards that fail to do so will remain not an essential element woven into daily life, but simply a prepaid card used by a limited group of people because the rewards happen to be somewhat better.

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Disclaimer

This report has been prepared based on materials believed to be reliable. However, we do not expressly or impliedly warrant the accuracy, completeness, and suitability of the information. We disclaim any liability for any losses arising from the use of this report or its contents. The conclusions and recommendations in this report are based on information available at the time of preparation and are subject to change without notice. All projects, estimates, forecasts, objectives, opinions, and views expressed in this report are subject to change without notice and may differ from or be contrary to the opinions of others or other organizations.

This document is for informational purposes only and should not be considered legal, business, investment, or tax advice. Any references to securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or an offer to provide investment advisory services. This material is not directed at investors or potential investors.

Terms of Usage

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The AI industry continues its upward trajectory with no sign of cooling. The blockchain AI sector tells a different story. Why has it failed to attract comparable attention?

Key Takeaways

• Amid the AI boom, the blockchain industry needs to be evaluated from a demand-side perspective: what problems does it solve that incumbent systems cannot, and what distinct capabilities does it bring to bear?

• Decentralized computing and storage carry legitimate rationales around data sovereignty and cost competitiveness. The barrier is that neither has yet demonstrated a technical advantage compelling enough to justify the switching risk for buyers already committed to existing cloud infrastructure.

• Model verification and privacy technology do not address problems that enterprises feel urgently enough to act on voluntarily. Demand in this category is more likely to follow regulatory mandates than to precede them. The EU AI Act illustrates the pattern: standards come first, and market adoption follows.

• In the agent framework category, the constraint is not technological. Mainstream enterprises remain focused on internal workflow automation, while blockchain projects are already building the infrastructure layer that comes after. Demand needs time to reach the technology.

• Agent payments is the one area where blockchain and traditional finance stand on equal footing. Neither has solved the problem yet, making this the only category in which both sides are confronting the same challenge at the same moment.

• The blockchain AI sector as a whole is not struggling because the combination is incoherent. It is struggling because of a mismatch: each of the four categories faces its own distinct reason why demand has not yet materialized, and only agent payments is currently in a position to compete.

1. Blockchain Projects Left Behind in the AI Boom

The AI industry is experiencing an unprecedented concentration of capital and infrastructure investment. Large language model ecosystems led by major technology companies have become a standard feature of both daily life and industrial operations. Within this rapid expansion, the crypto industry has also been evolving quickly, seeking points of technical connection with AI.

Early efforts centered on supplementing or replicating segments of the traditional AI value chain: decentralized GPU supply, data ownership recovery, and cryptographic verification. More recently, the focus has shifted toward filling gaps that centralized architectures struggle to address, including autonomous on-chain activity by AI agents and real-time machine-to-machine settlement.

Describing this space generically as “AI plus blockchain” obscures more than it reveals. A rigorous demand-side analysis is needed: which problems does each sub-sector target, and does the blockchain-native approach offer a genuinely differentiated solution?

2. What Each Category Does

2.1. Decentralized Computing

The cloud market today is structurally dependent on a small number of major technology companies that control compute resources. High-performance GPUs are both difficult to procure and prohibitively expensive, creating a steep entry barrier for AI startups and research teams that cannot access large-scale infrastructure.

Centralized systems concentrate resources toward the largest buyers, and there is no neutral channel for redistributing the substantial volume of idle GPU capacity that exists across the market.

Decentralized computing addresses this concentration and inefficiency through two approaches. Under a shared-economy model, projects aggregate idle GPU resources held by individuals and small data centers into a unified network, creating a more flexible supply chain outside the incumbent technology monopoly.

Under a distributed computing model, users can access and lease compute resources globally without dependence on any single provider’s infrastructure, raising utilization of dormant hardware and lowering the entry threshold for high-performance compute.

2.2. Decentralized Storage

Current data storage architecture is almost entirely dependent on centralized cloud infrastructure operated by companies such as Google and Meta. When users upload data to these platforms, ownership effectively transfers to the platform, entrenching monopoly control over AI training data. Centralized infrastructure also introduces operational risk: policy changes, service disruptions, or platform failures can cut off data access or result in data loss.

Decentralized storage addresses these structural problems through two approaches. A shared-economy model, exemplified by Filecoin and Arweave, pools idle storage space across individual participants into a network capable of substituting for incumbent centralized cloud.

A permanent storage model replicates data across distributed nodes, ensuring persistence regardless of the operational status of any individual server and reducing dependence on any single platform.

2.3. Data Marketplaces

AI developers require training data, but the current data distribution market operates as a closed system in which large platforms such as Hugging Face and cloud vendors capture the economics and control pricing. Data creators receive little compensation, and the mechanisms for rewarding data collection and contribution lack transparency.

On-chain marketplaces eliminate intermediaries through smart contracts and establish transparent transaction terms. In a direct-trading model such as Ocean Protocol, data owners and AI developers transact directly through smart contracts, with compensation distributed transparently. In a contribution-reward model such as Grass, individuals connect idle bandwidth to AI data collection and receive compensation proportionate to the value of their contribution.

2.4. Model and Inference Verification / Privacy

Conventional AI systems operate as black boxes, providing no external means to verify that a model ran correctly or that sensitive user data was handled securely.

Zero-knowledge machine learning (ZKML) introduces a cryptographic verification layer into AI inference, enabling both privacy protection and auditability. In this architecture, models run off-chain in the conventional manner, but the computation generates a cryptographic proof that the process was executed correctly according to defined rules.

This proof is recorded on-chain rather than the underlying data. To illustrate: in an automated medical insurance reimbursement service, a hospital would submit only a proof that the AI model ran correctly, rather than sharing the full medical record. The insurer can verify the legitimacy of the claim without accessing the original data.

2.5. AI Agent Frameworks

As AI agents become the primary locus of traffic and value creation, they are evolving from tools into autonomous economic actors. The existing financial system was designed around human consumption patterns and is structurally incompatible with a machine-centric payment environment.

The agent economy requires microtransactions, high-frequency settlement, and cross-border payments executed at millisecond speeds, and incumbent financial infrastructure cannot accommodate this.

On-chain agent infrastructure addresses this through two mechanisms. An autonomous execution and control mechanism assigns unique wallets and identities to AI agents, enabling them to sign transactions directly, with configurable spending limits and safeguards to prevent unintended behavior.

A protocol-based settlement mechanism uses stablecoin payment protocols such as x402 to settle microtransactions and high-frequency payments in real time, bypassing currency conversion and approval workflows.

3. Where Blockchain AI Diverges from the AI Value Chain

The AI value chain has formed around the sequential removal of bottlenecks. As AI demand grows, memory shortages emerge, and power and data transmission capacity come under strain. Companies that solve these problems quickly, such as HBM manufacturers and power infrastructure providers, attract enormous capital and substantial market appreciation. The market assigns clear value to solutions that remove barriers to growth.

Blockchain AI projects have identified real problems, yet they have not captured anything like the same level of market interest. If these problems were as urgent as claimed, they would already have driven measurable shifts in the market.

The reason blockchain AI projects cannot attract mainstream capital despite advancing legitimate goals such as reducing GPU concentration and restoring data sovereignty is a pronounced gap between the priorities of the technology suppliers and those of the buyers who control capital allocation.

The AI industry moves on a competitive timeline, and buyers, primarily large technology companies and enterprise clients, invest at scale in whatever resolves their immediate operational bottlenecks most quickly. They do not spend time evaluating unproven infrastructure. Their priorities are computational performance, infrastructure reliability, and demonstrable return on investment.

To illustrate: when data transmission speeds became a bottleneck during model training, substantial capital moved into fiber optic infrastructure as a replacement for copper. When memory bandwidth emerged as the primary constraint, buyers identified it as the critical problem, and SK Hynix and Samsung Electronics gained global prominence by solving it with high-bandwidth memory. The pattern is consistent: capital follows whoever removes the constraint that is actively limiting progress.

The underlying problem for blockchain AI is one of framing. Buyers with large capital budgets are focused exclusively on near-term performance gains and cost reduction. Blockchain AI, by contrast, has concentrated on problems that buyers regard as secondary or future-state concerns.

The technical ambitions of the supply side do not align with the immediate operational requirements of the demand side.

3.1. Technical Limitations

Several projects have used benchmarks to demonstrate the potential and design philosophy of decentralized infrastructure. The more fundamental problem is that this work has not yet produced a technical leap decisive enough to displace entrenched incumbents in the mainstream market.

For a new technology to take share from centralized cloud providers such as AWS or GCP, which already command massive capital and infrastructure, it must deliver a performance advantage so substantial that the gap with incumbents becomes irrelevant.

When Apple transitioned from Intel to M1 chips, absorbing the significant risk of breaking software compatibility, the move was justified by a threefold improvement in power efficiency, a gap large enough to make the transition worthwhile.

Blockchain AI has not yet offered enterprise buyers, who require petabyte-scale data synchronization and ultra-low latency as baseline conditions, a sufficiently clear case to accept the switching risk.

3.2. Demand Mismatch

In decentralized computing, some projects have introduced service level agreements as a risk mitigation mechanism, yet enterprise buyers remain unpersuaded. The reason is structural rather than contractual. Major cloud providers supply controlled, dedicated data centers. Blockchain networks rely on fragmented, anonymous node participation.

If a node drops out and interrupts a model training run worth hundreds of millions of won, no combination of token refunds or financial compensation can recover the opportunity cost and time lost. For enterprise buyers operating on competitive timelines, system stability is not a negotiable parameter.

Even with hedging mechanisms in place, the residual uncertainty is not a risk most buyers have any incentive to absorb.

3.3. Demand Not Yet Formed

Blockchain agent frameworks are designed for sophisticated ecosystems in which multiple AI agents collaborate autonomously, but there is a maturity gap between that vision and the current state of the mainstream market.

Enterprise adoption of AI agents is accelerating, led by companies such as Microsoft and Salesforce, but the current focus is firmly on workflow automation operating within controlled internal networks. The infrastructure that blockchain projects are building addresses the stage that follows: independent AI agents operating autonomously across external networks beyond any organization’s perimeter. Most enterprises today are still focused on establishing the stability and return on investment of the AI systems they have already deployed. Multi-agent collaboration across external networks is not yet a priority on enterprise infrastructure roadmaps.

The limited demand at this stage reflects timing rather than technical failure. This is better understood as a long-range infrastructure investment in anticipation of the agent economy, rather than a near-term revenue opportunity.

3.4. Regulatory Prerequisite

Zero-knowledge proofs and privacy-preserving technology represent core solutions for establishing AI trustworthiness, but practical enterprise demand for privacy infrastructure has been limited in the early stages of AI adoption. Voluntary adoption by enterprises is unlikely to drive meaningful uptake; the more probable path is that regulatory standards create the demand that the technology is then positioned to meet.

The growing specificity of global regulatory frameworks, including the EU AI Act, is a favorable development in this respect. As legal requirements around data provenance and security become concrete, blockchain’s advanced verification capabilities stand to become a compliance requirement rather than an optional feature in enterprise deployments.

Regulatory development in this space is better understood as a catalyst for market formation than as a constraint. Clear regulatory standards reduce market uncertainty, and in doing so, create a stable path through which blockchain AI can establish mainstream demand within an institutional framework.

3.5. Insufficient Use Cases

These structural factors combine to produce a more fundamental problem: the absence of a defining success case that demonstrates value at scale. The traditional AI industry built its current position through the adoption flywheel that ChatGPT initiated, using a concrete, widely visible product to attract the capital and talent necessary to sustain further growth.

Blockchain AI projects have not yet produced comparable evidence of product-market fit at scale. Beyond early community enthusiasm, none has demonstrated adoption at the level of enterprise operations or consumer daily life in a way that commands serious attention from mainstream capital. The absence of a compelling reference case remains the most significant barrier to attracting the conservative institutional investment that would accelerate broader adoption.

4. Does the Combination Have Value?

Blockchain AI has not yet found stable footing in the mainstream AI value chain, independent of market expectations. Does that mean the combination is without merit?

It does not.

The fundamental reason blockchain AI projects are currently overlooked is not that the combination is internally contradictory. It is that a mismatch exists in each sub-category between what incumbent industry requires and what the technology is oriented toward delivering.

The priorities of the traditional AI industry are clear: near-term performance, cost optimization, and rigorous infrastructure reliability. Many current blockchain AI proposals, by contrast, are centered on data ownership, computational transparency, and decentralization.

These are not problems that established industry participants treat as immediate bottlenecks, and pursuing them often requires accepting performance overhead that is too costly relative to the benefit.

Before the AI boom, power infrastructure companies were broadly classified as mature, slow-growth businesses. The data-center-driven surge in power demand changed that, and they have since attracted significant market attention. The current indifference to blockchain AI may reflect a similar lag, the period just before a new paradigm creates the conditions that reveal the value of the infrastructure being built ahead of it.

What matters during this transitional period is how the sector responds to what the market actually requires.

The path forward divides into two directions: adapting actively to the standards of the established AI value chain and closing the near-term performance gaps, or holding to present capabilities while continuing to build the infrastructure that a future generation of AI deployment will need.

The outcome will depend on which of those choices proves more aligned with where demand goes next.

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Compliance hiring is growing even as overall crypto hiring declines. What has changed in a market where new postings have fallen sharply?

Key Takeaways

• The crypto job market has not recovered to its 2022 peak. According to Coincub, new crypto jobs reached 66,494 in 2025, a 47% rebound from the prior year, but still below the 2022 high.

• The contraction deepened in 2026, with new postings on major job boards falling roughly 80% year-over-year in January.

• Among 2,932 active postings in H1 2026, engineering ranks first at 34.1% and compliance/legal ranks second at 10.4%. Active postings are concentrated in regulatory compliance and technical development.

• By sector, CEX (30.8%) and stablecoins/payments (13.4%) together account for nearly half of all postings. Gaming and NFTs represent 2.4%.

• In a market driven by token sales, demand was concentrated in community and token sale roles. As the market has shifted toward institutional participation, the ability to manage product operations and regulatory compliance has become more important.

1. The 2021-2022 Hiring Peak and Where the Market Stands Today

The most active hiring period in crypto was the stretch from late 2021 through the first half of 2022. Bitcoin and Ethereum reached all-time highs, NFT trading volumes surged, and DeFi TVL reached hundreds of billions of dollars.

Centralized exchanges expanded aggressively to support global operations. At the time, Coinbase had more than 250 open roles, Kraken more than 300, and Binance more than 600. DeFi protocols and NFT marketplaces absorbed engineers and marketers simultaneously, and the GameFi boom drew game studios into the hiring pool as well. Expansion took precedence over proving profitability.

New postings fell sharply from the second half of 2022 onward. Crypto-related jobs declined roughly 40% between 2022 and 2023 across most countries in North America and Europe. The collapse of FTX in November 2022 deepened the slowdown, and the market has not recovered to its peak since.

To assess the current state of crypto hiring and read market direction from the data, Tiger Research compiled a proprietary dataset of 2,932 active postings as of June 2026. The data was collected through manual tracking of web3.career, cryptocurrencyjobs.co, direct career pages of major firms (Greenhouse, Ashby, and Lever), and Korean local job platforms (Wanted and Jobkorea). DAO contributor roles, freelance positions, and contractor arrangements are excluded.

2. Major Crypto Firms Continue to Cut Headcount in H1 2026

Restructuring had been underway well before the first half of 2026. Consensys carried out layoffs in the second half of 2025, and the trend extended into 2026 across major exchanges including Coinbase, Gemini, Crypto.com, and Kraken.

March saw the highest concentration of layoff announcements in H1 2026, with six firms: Gemini, Crypto.com, Algorand, OP Labs, PIP Labs, and Messari all disclosing cuts in the same month. The first quarter of 2026 brought a combination of rising geopolitical tensions stemming from Iran and broader market weakness, and firms that needed to reset their strategic direction appear to have converged on March as the moment to act.

The stated rationale varied by firm. Algorand cited the macro environment and declining token prices. Crypto.com and Gemini pointed to AI integration. Coinbase announced a pivot toward becoming an “AI-native company.”

For some firms, repeated rounds of cuts ended in an acquisition at a fraction of their former valuation. Messari conducted three consecutive rounds of layoffs beginning in 2023 and was acquired by Blockworks in June 2026 for approximately $10 million. Having once been valued at $300 million, Messari’s trajectory captures the reality of the market in concentrated form.

3. Hiring Is Concentrating in Specific Regions

Crypto remains an industry with a high proportion of remote work. Among active postings in H1 2026, remote positions account for the largest share at 40.2%, or 1,180 postings.

Excluding remote roles, office-based hiring is concentrated in jurisdictions with established regulatory frameworks or limited regulatory unpredictability, including the United States (21.8%), Singapore (5.9%), and Hong Kong (4.2%).

The crypto industry once positioned itself as borderless, but as it has evolved into one that requires active regulatory engagement and local operations, its hiring structure is gradually consolidating around established regulatory hubs.

4. Compliance Roles Are on the Rise

Engineering ranks first among H1 2026 active postings at 34.1%, or 999 postings, indicating that demand for technical development has held up even as the broader crypto market has contracted.

The more notable shift is compliance and legal settling into a clear second place. This category was not tracked as a separate line item in the Tiger Research 2023 Global Crypto Jobs Report, yet within three years it has grown to account for one in ten of all active postings.

The pattern is sharper within exchanges. Among 904 exchange postings, engineering leads with 275 openings (30.4%), followed by compliance and legal at 145 (16.0%) and BD/sales at 61 (6.7%). Compliance postings outnumber BD/sales by a factor of 2.4, suggesting that exchanges are allocating more headcount to regulatory defense than to business expansion.

The compliance hiring trend can be traced in part to the full implementation of the EU’s MiCA framework, which made CASP licensing mandatory as of December 30, 2024. European exchanges and asset managers have been expanding their compliance teams around the same period.

The same dynamic is visible in Korea. Following the implementation of the Virtual Asset User Protection Act in July 2024, domestic exchanges have seen rising demand for compliance personnel. This helps explain why Korea’s share of compliance postings (18.4%) is nearly double the global average (10.4%).

The roles workers most want to see automated are equally clear.

In a survey conducted by CryptoJobsList, content creation and community management were most commonly identified as the functions workers want to see automated. Both involve repetitive tasks and emotional labor rather than high technical complexity, making them candidates for early displacement. Survey data also identifies them as the roles practitioners believe should be displaced by AI agents first. Hiring demand for these functions is declining at the same time that those already in the field identify them as prime automation targets.

5. CEX Dominance and the Rise of the Stablecoin Sector