Big changes are on the horizon for South Korea’s crypto market, as the Financial Services Commission has announced plans to gradually lift restrictions on institutional crypto trading, following the introduction of the Virtual Asset User Protection Act in July 2024.
Open the gates
Kwon Dae-young, the FSC’s Secretary-General, is keen on aligning South Korea’s regulations with global standards, especially as many countries are moving towards more supportive frameworks for crypto.
The Virtual Asset User Protection Act was introduced in response to major incidents like the FTX collapse and the Terra network crash, which highlighted the need for better oversight in the crypto world, though both collapsed after breaking the existing laws, not because the lack of surveillance.
While crypto trading isn’t banned in South Korea, banks have been instructed to limit institutional access.
Retail traders can still engage with the market through regulated exchanges, and now the new rules aim to standardize how digital assets are listed and delisted, preventing large-scale removals that could disrupt the market.
Next level business
The FSC plans to implement these changes in phases, starting with allowing non-profit organizations access to crypto trading, and Kwon emphasized the importance of discussing listing standards and regulations surrounding stablecoins and virtual asset exchanges.
“We need to create rules of conduct that align with global regulations.”
In addition to easing restrictions, the FSC is also looking at revising laws related to financial transactions.
This includes a review system to assess who can own shares in crypto exchanges, incorporating social credit evaluations into the process.
Industry development
South Korea has been making progress towards creating a more robust environment for cryptocurrencies.
Among their goals is the introduction of spot-based crypto ETFs, which have yet to gain regulatory approval despite being popular elsewhere.
The FSC’s approach wants to support collaboration between financial institutions and fintech companies while ensuring investor protection.
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