South Korea is contemplating lifting the de facto ban on institutional investment in cryptocurrencies. This decision aligns with the campaign promises of President Yoon Suk-yeol, who has promoted a stronger digital asset sector in the Asian country. The news becomes especially relevant just as Donald Trump is about to take office as the first pro-bitcoin president of the United States.
The Financial Services Commission (FSC), South Korea’s main financial regulator, reported about its intention to gradually allow institutions to open trading accounts on cryptocurrency exchanges, starting with non-profit organizations. This change represents a significant shift in the country’s cryptoasset policy, which Until now, it only allowed verified retail traders to participate in trading bitcoin and other cryptocurrencies.
This move is part of a broader regulatory plan. This is taking into account that the FSC is working on the development of an additional legal framework that follows the Virtual Asset Investor Protection Law, which came into force last year. The next phase of the legislation will focus on the regulation of stablecoins, cryptocurrency exchanges and token listings, as well as introducing a selection system for major shareholders of digital asset service providers.
This step towards the liberalization of institutional investment in cryptocurrencies in South Korea It could boost the volume of trade in the country and with it globally. That is something that is already happening, as institutional investment in bitcoin has been breaking records and, with the second largest market trading in BTC, institutional investment in the digital currency could rise to stratospheric levels.
That’s because South Korea has become a key market for bitcoin trading. Since the beginning of last year, together with other Asian countries, has been responsible of approximately 70% of the total BTC trading volume. During this period, Asia handled transactions for $791 billion of the total $1.17 trillion in bitcoin exchanged globally. This left the North American market significantly behind, with only $113 billion traded, thus underscoring the dominance of Asia, and therefore also that of South Korea, in cryptocurrency trading.
The legality of trading and holding bitcoin in Asia varies widely between jurisdictions: Japan has relatively liberal regulations, in contrast to China, where there is a ban in place. In South Korea, spot bitcoin ETFs face restrictions, but this could be about to change.
As such, currently only accounts that have completed identity verification under the Specified Financial Information Law (Special Money Law) are authorized to invest in virtual assets. And although there are no explicit legal restrictions on legal entities issuing real name accounts, the Financial Services Authority has instructed banks not to open these accounts for corporate entities.
As mentioned earlier in this article, the FSC is developing a detailed plan to gradually allow nonprofits to open verified accounts through the Virtual Assets Committee in the near term. This implies that South Korea is about to reconfigure the Asian cryptoasset marketestablishing a significant precedent for the regulation of digital assets in other nations, precisely at a time when the world requires more leaders to support the digital asset sector.
