South Korea is set to lift its ban on institutional crypto trading. The Financial Services Commission (FSC) has officially announced that it will release crypto investment guidelines in Q3.
FSC Vice Chairman Kim So-young said that a task force will draft detailed guidelines with different timelines for participants. Guidelines will be given to non-profits and crypto markets by April, and guidelines for public companies and professional investors will be given by Q3.
The FSC had already announced in February a plan for how businesses could join the crypto market, with the goal of gradually opening it up. Now, Kim says that companies taking part in the crypto market are about changing practices, not just laws. He calls for the market to be healthy by promoting best practices.
With the release of the upcoming detailed guidelines, South Korea is taking a more open attitude on crypto assets. This means that it is moving away from its strict opposition to its use in traditional financial markets.
The South Korean crypto market is one of the biggest and most altcoin-heavy in the world. Adding institutional investors could help it grow even more and make it much easier for people to buy and sell crypto.
South Korea’s initiatives to make their rules crypto-friendly
A report from the Korea Economic Daily says that by the end of November 2024, about 15.6 million people in South Korea traded crypto. That’s the same as having about 30% of the population. Clearly, the country has a wide range of crypto users.
At today’s meeting, Kim So-young said that South Korea is stepping up its efforts to grow its crypto market. He also said that the U.S. government under Donald Trump has accelerated discussions around the world about crypto.
Kim said that the soon-to-be-released guidelines should include the “best practices” for big crypto investments. These should include rules for trading, disclosing, and reporting crypto.
The FSC official also told local banks and crypto companies to step up their efforts to stop money laundering and keep their systems safe so that illegal activities and hacks don’t happen. Users of crypto exchanges in this area are forced by law to link their accounts to real bank accounts.
In fact, earlier in March, the Financial Intelligence Unit said it plans to launch a joint response team to handle AML crimes, specifically in crypto that threaten public livelihoods, in collaboration with the Financial Supervisory Service and financial institutions.
The FSC has also begun working on the second set of rules for the two-part crypto regulatory system. The first set of rules went live last year. The second part of the crypto law will deal with stablecoins and rules for people who run crypto businesses.
Also, the regulator had earlier said that it plans to let charities and colleges sell their crypto holdings in the second quarter as a first step.
This will have a big effect on the crypto market in the country. Previously, individual traders with verified accounts were the only ones who could trade cryptocurrencies until now. Banks weren’t allowed to open business accounts. That will change.
The country also wants to bring its digital assets up to date in a wider sense. At the opening ceremony for the Securities and Derivatives Market, Korea Exchange Chairman Jeong Eun-bo said that the company wants to look into crypto spot ETFs by 2025, drawing on models from around the world. He stressed that the exchange’s goal was to create more chances in the capital market.
South Korea considers a Bitcoin reserve and a KRW-backed stablecoin
South Korean financial experts and opposition leaders want the country to add Bitcoin to its reserves and create a stablecoin backed by the Korean won. The idea comes in reaction to recent moves by U.S. President Donald Trump to support cryptocurrencies.
Thursday at the National Assembly, experts, and Democratic Party members talked about how South Korea should react to changes in crypto banking around the world. An executive order setting up a Bitcoin Reserve was signed by President Trump right before the meeting.
Kim Seung, the CEO of the blockchain company xCrypton, said it was very important for South Korea to take a clear stance. Kim said that if the U.S. starts to keep Bitcoin as part of its reserves, South Korea will need to have a clear policy to follow.
Stablecoins, on the other hand, have a fixed value because they are linked to standard assets or currencies. Kim said that South Korea could lose its “monetary sovereignty” if U.S. dollar-pegged stablecoins take over the digital economy and there isn’t a domestic stablecoin option.
Kim Jong-seung said, “We need to develop a model linking dollar stablecoins and won stablecoins for trade transactions.” This would help South Korea keep control of its own and other countries’ money transfers.
Rep. Kim Min-seok, who is in charge of the Democratic Party’s policy preparation group, said that if his party wins the next election, it will change South Korea’s crypto rules. If President Yoon Suk Yeol is found guilty by the Constitutional Court, there could be an election in May.
At the same time that the talks are happening in South Korea, more and more Asian countries are calling for digital asset stocks and stockpiles. Hong Kong has promised to improve its digital assets industry, and Japan is working on a plan for a National Bitcoin Reserve and lowering crypto taxes.
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