South Korea is on the brink of loosening its restrictions on crypto trading for institutional investors, a move that could have significant implications for the country’s digital asset market. 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 only permit verified retail investors to engage in crypto trading, while institutional investors face restrictions that prevent banks from opening crypto trading accounts for them. This has limited the involvement of institutions in the digital asset market for some time.
However, the FSC is now planning to work with the Digital Asset Committee to implement reforms that will grant institutional investors access to the market. Non-profit organizations are expected to be the first to benefit from these changes, signaling a shift in the government’s stance on institutional participation in crypto markets.
Additionally, the FSC is set to roll out the second phase of the Virtual Asset User Protection Act, which will introduce 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’s regulations with global standards in the digital asset sector.
Furthermore, the FSC is planning to revise the Special Financial Transactions Act as part of these efforts. The revisions will include the introduction of a review system to evaluate the eligibility of crypto exchange shareholders, with social credit evaluations playing a role in this process.
These regulatory developments are part of broader efforts to advance South Korea’s crypto industry. One notable initiative is the push to launch spot-based crypto exchange-traded funds (ETFs), a move that has not yet received regulatory approval in the country. Eun-Bo Jeong, Chairman of South Korea’s Exchange, has advocated for the introduction of crypto ETFs, citing their potential to enhance the nation’s capital markets with innovative financial instruments.
Overall, South Korea’s evolving regulatory landscape and increasing focus on institutional involvement in the crypto market reflect a growing recognition of the importance of digital assets in the global financial ecosystem. As the country continues to make strides in this space, it is poised to position itself as a key player in the burgeoning world of cryptocurrencies.