South Korea is on the brink of relaxing its restrictions on crypto trading for institutional investors, marking a significant shift in the country’s approach to digital asset regulation. The Financial Services Commission (FSC) is reportedly gearing up to introduce phased regulatory changes that will allow institutions to participate in crypto trading.
Currently, South Korea’s regulations restrict crypto trading to verified retail investors, with banks prohibited from opening crypto trading accounts for institutional investors. This limitation has long posed a barrier to institutional participation in the digital asset market. However, the FSC is now planning to collaborate with the Digital Asset Committee to implement these reforms, with non-profit organizations expected to be the first to gain access. This move signals a change in the government’s stance on institutional involvement in crypto markets.
Furthermore, the FSC is set to launch the second phase of the Virtual Asset User Protection Act, which will establish new guidelines on crypto listing standards, stablecoins, and operational conduct for virtual asset exchanges. FSC Director Kwon Dae-young emphasized the importance of aligning South Korea with global regulations in the digital asset sector.
In addition to these regulatory changes, the FSC also plans to revise the Special Financial Transactions Act. The revisions will introduce a review system to assess the eligibility of crypto exchange shareholders, incorporating social credit evaluations into the process.
These regulatory advancements align with broader efforts to bolster South Korea’s crypto industry. One key initiative is the push to introduce spot-based crypto exchange-traded funds (ETFs), a financial instrument that has yet to receive regulatory approval in the country. Eun-Bo Jeong, Chairman of South Korea’s Exchange, has advocated for the introduction of crypto ETFs, highlighting their potential to enhance the nation’s capital markets with dynamic financial products.
As South Korea moves towards relaxing restrictions on crypto trading for institutional investors and implementing regulatory changes to align with global standards, the country’s crypto industry is poised for further growth and development.