South Korea Reopens Crypto Market to Institutional Investors

Summary:
South Korea is set to lift its 2017 ban on corporate investments in cryptocurrency. The Financial Services Commission (FSC) is drafting new regulations that will allow professional investors and listed companies to trade in virtual assets, fostering a more robust crypto market. Key details include investment limits and a focus on major cryptocurrencies. This shift could significantly impact the domestic market and advance South Korea’s digital finance strategy.

Key Takeaways

South Korea will permit institutional and corporate investment in cryptocurrencies, reversing a 2017 prohibition.
The Financial Services Commission (FSC) plans to limit corporate investments to 5% of equity capital and the top 20 cryptocurrencies.
U.S. dollar-pegged stablecoins remain under review and may not be approved immediately.
This regulatory change could lead to significant capital inflows into South Korea’s crypto market.
The shift aligns with South Korea's digital finance goals, including integrating a central bank digital currency.

south korea

South Korea’s Move to Reopen Crypto Trading

South Korea is preparing to restart its cryptocurrency market for corporate investors. According to the Seoul Economic Daily, the Financial Services Commission (FSC) is updating its regulations to allow professional investors and publicly listed companies to invest in cryptocurrencies. This decision reverses a ban enacted in 2017, which barred institutional investors due to concerns over market stability and money laundering.

An FSC official indicated that final guidelines would likely be announced in January or February. Once these rules are in place, legal entities will be able to engage in virtual asset transactions for both investment and financial management.

Restrictions on Investments for Risk Management

To mitigate systemic risks, the FSC plans to impose specific limits on corporate investments. Companies will be allowed to invest up to 5% of their equity capital in cryptocurrencies. Additionally, the eligible assets will be restricted to the top 20 cryptocurrencies based on market capitalization. All transactions must occur through South Korea's five largest regulated crypto exchanges. These measures aim to expand market access while ensuring financial stability.

Ongoing Discussions on Stablecoins

While the regulatory framework is progressing, some issues remain unresolved, particularly regarding the acceptance of U.S. dollar-pegged stablecoins. Assets like Tether’s USDT have yet to receive approval. On January 6, the FSC shared its latest draft guidelines with a working group focused on cryptocurrency. Earlier, in February 2025, the commission mentioned a phased approach to easing restrictions on corporate crypto investments.

Impact on Capital Inflows and Market Dynamics

The regulatory changes could significantly boost capital inflows into South Korea’s cryptocurrency market. Reports from Seoul Economic Daily suggest that tens of trillions of won could enter digital assets if corporate investments are legalized. For instance, technology company Naver, with an equity capital of about 27 trillion won, could potentially acquire around 10,000 Bitcoin under the new investment limits, showcasing the scale of institutional involvement.

Broader Effects on ETFs and Industry Growth

The policy shift could have wider consequences for South Korea's cryptocurrency ecosystem. By allowing corporate participation, discussions surrounding spot Bitcoin exchange-traded funds (ETFs), which have garnered public interest but still lack regulatory approval, may accelerate. Furthermore, access to digital assets could bolster the development of domestic blockchain firms and crypto enterprises, as many large corporations have previously turned to international markets to avoid local restrictions.

Supporting South Korea's Digital Finance Vision

Reopening corporate crypto investments aligns with South Korea's broader ambitions in digital finance. The government aims to process 25% of national treasury transactions through a central bank digital currency by 2030, as reported by the Seoul Economic Daily. This plan is part of the 2026 Economic Growth Strategy, which also includes proposals for a licensing framework for stablecoin issuers, ensuring they maintain full reserve backing and legally guaranteed redemption rights.

Collectively, these initiatives reflect a cautious but intentional effort to integrate digital assets more significantly into South Korea's financial infrastructure.

Disclaimer: This article is intended for informational purposes only and should not be considered financial advice. The views expressed may reflect the author's opinions and do not necessarily represent The Crypto Basic’s stance. Readers are encouraged to conduct their own research before making investment decisions. The Crypto Basic holds no responsibility for any financial losses incurred.