On 16 July, the Central Bank of Korea increased the base rate by 25 basis points to 2.75 per cent, the first since January 2023. As one of the world ' s active retail encryption markets, South Korea ' s monetary policy has shifted to tightening, re-pressing the mood for local encrypted asset trading.

All votes for interest rate increase.

Seven members of the Central Bank of Korea Monetary Policy Committee unanimously supported this decision. The Central Bank has stated that strong exports and investments, the continued rigidity of inflation and financial stability support higher interest rates.

Consumer inflation in Korea was 3.2 per cent in June. The Central Bank also stated that economic growth performance could be significantly higher than the previous 2.6 per cent forecast. The President of the Central Bank of Korea, Shin Xin Song, stated that changes in growth, inflation and financial stability had provided the basis for the increase.

At the same time, the Central Bank did not rule out the possibility of continued interest rate hikes, stating that subsequent decisions would depend on inflation, growth and financial stability data. The Reuters survey showed that 36 of the 37 economists had previously expected an increase in interest rates.

Local encryption transactions have cooled first

The local encryption market activity in Korea has fallen from high to high before the upswing. Data show that the size of encrypted assets held by Korean investors dropped from about $83.3 billion in January 2025 to about $41.4 billion in February 2026.

The daily trade volume of five major South Korean exchanges also fell from about $11.6 billion in December 2024 to about $3 billion in February 2026. During the same period, the exchange ' s deposit of Korean Won decreased from 10.7 trillion won to 7.8 trillion won, reflecting a weakening of the cash requirements available for transactions in the field.

Higher interest rates usually push up borrowing costs and increase the attractiveness of income-generating assets such as deposits, bonds, etc. For the encrypted market, this means that some of the household funds may move further away from highly volatile assets.

The Han Won market still has global influence.

Despite the cooling of transactions, Korea remains an important global market for retail encryption. Local exchanges such as Upbit and Bithumb have long maintained a high level of trade in the Korean Won ' s price-counting market, which has had a significant impact on currency transactions, especially in the Shan city.

Previously, at one point, XRP became the highest-performing asset at Upbit, with a single-day deal of approximately $110.9 million, up from $88.6 million in bitcoin and $67 million in the Ether. This transaction structure shows that retail money in Korea still has a significant magnification effect on individual tokens.

The recent currency movement on the exchange also shows that the Korean market remains attractive. On July 14th, Upbit added the DRV Drive tokens to the KRW, BTC and USDT markets, and Bithumb went online on the Korean dollar.

Follow-up liquidity still depends on the central bank path.

The Central Bank of Korea has left room for further tightening of its policy. Reuters reports that many economists expect at least another increase in interest rates in Korea in the course of the year, with the benchmark rate likely rising to 3.00 per cent.

If interest rates continue to rise, local retail capital may remain tight. With weak domestic liquidity, the importance of global institutional finance and the external market environment could increase further for the Korean encryption market.