South Korea’s top financial authority has begun negotiations to draft a follow-up to its crypto regulatory framework. According to local reports, the new legislation is expected to come into effect in the second half of this year.
The Financial Services Commission (FSC) held a meeting on Wednesday to set priorities for the new bill, as reported by the South Korean News Agency. Every day. Vice President Kim So-young highlighted the global push toward stricter crypto regulations, emphasizing the need to strengthen investor protections and resolve lingering regulatory uncertainties.
The country’s first regulatory framework was implemented in July last year after being adopted in 2022 and focused on investor protection. Key measures included requiring exchanges to store at least 80% of users’ crypto deposits in separate cold wallets to minimize risks of mismanagement.
Upcoming legislation is expected to take a broader approach, addressing service providers, crypto users, and the market ecosystem. Topics of discussion included improving the transparency of cryptocurrency listings on exchanges and applying disclosure standards similar to those in traditional finance. Stablecoin regulation was also on the agenda, with authorities reviewing global practices in managing reserve assets and ensuring users’ redemption rights.
South Korea’s cryptocurrency market is among the most active in the world, with local exchange Upbit ranking third among the world’s centralized exchanges by volume last month.
South Korean traders also have a reputation for causing euphoric rallies and exerting significant influence on cryptocurrency prices, helping to increase buying pressure. Trading volumes on Upbit often exceed those of major global exchanges like Binance and Coinbase, reflecting the immense activity and capital of the country’s crypto market.
Upbit and Bithumb, other major South Korean exchanges, reported delays in site feeds and performance due to an increase in user activity after martial law was declared in December.
Earlier in July, South Korea’s right-wing political party proposed delaying the taxation of cryptocurrency gains by three years. If passed, the taxation of the country’s crypto gains will be pushed back from early 2025 to 2028.
A 20% tax on crypto gains was initially scheduled to take effect on January 1, 2022, but was pushed back twice until January 1, 2025, due to strong backlash from investors and industry experts.
