South Korea To Ease Institutional Crypto Investment Restrictions This Year

by

Latest findings show that South Korea intends to loosen its regulations regarding cryptocurrency investments through institutions. The head of South Korea’s Financial Services Commission (FSC), has disclosed their intention to reassess these restrictions, given the evolving regulatory landscape within the country.

FSC Planning To Ease Restrictions

On Wednesday, according to Yonhap News Agency, it was announced by FSC’s Secretary-General Kwon Dae-young that starting this year, legal entities can now invest in cryptocurrencies. Kwon explained that the regulatory agency intends to loosen its controls on institutional crypto trading and investment to foster stronger partnerships between financial institutions and tech companies in the fintech sector.

The report mentions that the Financial Services Commission (FSC) plans to review a proposition enabling companies to open real-name accounts. This practice is now limited. Real-name accounts are essential for virtual asset investments, as only those that have completed verification under the Specified Financial Transaction Information Act can invest in digital assets. In simpler terms, the FSC may soon permit corporations to open verified accounts to buy and sell digital assets.

Regardless, financial regulators have restricted corporate participation in cryptocurrency trading by advising banks against opening such accounts for companies, even though there is no legal impediment or explicit prohibition in place.

According to the “Major Work Plan for 2025,” the Financial Supervisory Commission (FSC) has announced that this change will be introduced gradually. Initially, non-profit organizations will be given access to this new system via their Virtual Asset Committee. Over time, the scope of this access will expand.

Additionally, South Korea’s regulatory body aims to move forward with the next stage of the Virtual Asset User Protection Act, encompassing rules governing the dissemination of digital assets.

The head of the Financial Stability Council outlined their plans for conversations on establishing listing protocols, managing stablecoins, and devising guidelines for virtual asset trading platforms. Moreover, they mentioned that the administration aims to harmonize its cryptocurrency regulations with international standards.

As an analyst, I’d like to bring your attention to a notable point in the report. The Financial Services Commission (FSC) is planning to implement a “screening mechanism” for the qualification of significant shareholders of virtual asset service providers, by making adjustments to the Special Financial Transactions Act. This move aims to enhance transparency and oversight in the virtual asset sector.

The regulatory body is focusing on enhancing self-governance, setting standards for scrutinizing meme coins, other digital currencies, with the aim of safeguarding investors. Additionally, they plan to equip themselves with investigative tools for probing illegal trading activities.

South Korea’s Changing Crypto Landscape

For several years now, South Korea has been working towards creating a more controlled and dependable investment climate. The chairman of Kora Exchange, Jeong Eun-bo, has advocated for a shift in the perception held by lawmakers and financial bodies regarding cryptocurrencies.

Jeong proposed that the nation’s regulatory body might benefit from integrating digital assets within traditional financial systems to invigorate the market, generate additional worth, and keep pace with other nations.

It’s important to mention that the position taken by the FSC (Financial Services Commission) on digital assets has faced criticism, as it appears to potentially impede the progression of the market and its global competitiveness.

Nevertheless, this transition continues, leading to the establishment of a Virtual Asset Advisory Panel for deliberations on policy matters within the sector. Additionally, it’s been disclosed that they will be revisiting the decades-old prohibition on investments in cryptocurrency offerings.

According to Bitcoinist, Jeong revealed that the Korea Exchange is considering launching cryptocurrency exchange-traded funds (ETFs) in 2025, as a response to the significant hurdles encountered by the country’s capital markets in 2024.

As a crypto investor, I’m glad to report that the government has pushed back the implementation of the crypto taxation policy by two years. Originally scheduled for January 2025, this policy aimed to impose a 20% capital gains tax on investors like me trading digital assets. However, with the delay, we now anticipate the tax policy to be enacted in 2027 instead.

Read More

2025-01-09 13:12