South Korea, one of the world's largest cryptocurrency markets, is experiencing significant changes in its regulatory framework.
Policy changes are anticipated, including KYC reforms, plans to lift institutional investment cryptocurrency restrictions, and review of tokenized securities legislation.
South Korean Crypto Regulation
The Korean government recently announced strengthened customer identification (KYC) requirements for cryptocurrency exchanges and banks. Previously, the Korea Financial Intelligence Unit (FIU) discovered potential KYC violations of up to 60,000 cases at Upbit exchange.
This measure is preparation for lifting institutional investment cryptocurrency restrictions. According to the Financial Services Commission (FSC), the new regulations will ensure transparency and security, opening the way for institutional investors to enter the market.
Additionally, the Korean National Assembly is reviewing legislation on tokenized securities. The bill is expected to pass after the presidential election, aiming to establish a legal framework for blockchain-based securities issuance and trading.
If passed, this bill will be a crucial step in integrating digital assets into the traditional financial system.
Amid these positive regulatory developments, Korea recently recorded its first such transaction. The non-profit World Vision Korea sold 0.55 ETH on the Upbit exchange.
"World Vision connected its K-bank corporate account to its Upbit account and successfully sold the Ethereum received as donations in the Upbit won market," the Upbit announcement stated.
World Vision Korea's move increases market liquidity and strengthens investor confidence. Listed companies and professional investors are expected to be permitted cryptocurrency trading by Q3 2025, a significant change from the seven-year prohibition in place since 2017.
Furthermore, the FSC is implementing the second stage of the Virtual Asset User Protection Act. This stage focuses on stablecoin regulation and imposing strict standards on exchanges. These regulations aim to reduce unfair trading practices and protect user assets.
According to Bloomberg, South Korea's cryptocurrency industry is expected to benefit regardless of the presidential election results. Both the Democratic Party of Korea (DPK) and the People Power Party (PPP) support cryptocurrency market development.
The DPK has promised to promote a Bitcoin spot ETF, while the PPP is focusing on establishing a digital asset promotion committee and developing a tax framework.
