South Korea is reportedly preparing to ease its restrictions on crypto trading for institutional investors, signaling a significant shift in the country’s approach to regulating digital assets.
Local media outlet Yonhap reported on January 8 that the country’s Financial Services Commission (FSC) would introduce phased regulatory changes to allow institutions to participate in cryptocurrency trading.
Currently, South Korean regulations limit cryptocurrency trading to verified retail investors. Although institutional investors are not completely banned, banks cannot open crypto trading accounts for them. This exclusion has long hindered their participation in the digital asset market.
However, the FSC plans to work with the Digital Asset Committee to launch these reforms, with non-profit organizations likely to be the first allowed access. The move marks a shift in the government’s approach to institutional involvement in crypto markets.
Additionally, the FSC is preparing to roll out the second phase of its Virtual Asset User Protection Act. This phase will establish new guidelines on listing standards for cryptocurrencies, stablecoins and the operational conduct of virtual asset exchanges.
According to FSC Director Kwon Dae-young, the updated framework will align South Korea with global regulations in the digital assets sector. He said:
“We need to discuss how to create listing standards, what to do with stablecoins, and how to create rules of conduct for virtual asset trading. We will strive to align with global regulations in the virtual asset market.
As part of these efforts, the FSC also intends to revise the law on special financial transactions. The changes will introduce a review system to assess the eligibility of crypto exchange shareholders, incorporating social credit assessments as part of the process.
Advancing Crypto
The FSC’s actions align with broader efforts to further develop South Korea’s crypto industry.
Among the key initiatives is the push to launch spot crypto exchange-traded funds (ETFs). Although gaining traction in other countries, these funds have yet to receive regulatory approval in South Korea.
Eun-Bo Jeong, chairman of the South Korean Stock Exchange, recently advocated for the introduction of crypto ETFs. He argued that these innovative products could meet the country’s need for dynamic financial instruments to boost its capital markets.
