Key Insights
- South Korea’s FSC plans to gradually lift ban on institutional crypto trading, starting with non-profit organizations
- Move aligns with President Yoon’s election promises to promote local crypto sector
- FSC developing new regulatory framework for stablecoins, exchanges, and token listings
SEOUL (MarketsXplora) – South Korea’s Financial Services Commission (FSC) plans to lift its de facto ban on institutional cryptocurrency trading, marking a significant shift in the country’s crypto regulatory landscape, the Yonhap news agency reported on Wednesday.
The top financial regulator aims to gradually permit institutional investors to open trading accounts on crypto exchanges, beginning with non-profit organizations. This move represents a departure from current practices where banks have been advised to prevent institutions from accessing crypto exchanges.
Under existing regulations, specifically the act on financial information use, only retail traders with verified government names are allowed to trade cryptocurrencies. While no explicit ban on institutional investors exists, the FSC’s guidance to banks has effectively blocked institutional participation.
The initiative aligns with President Yoon Suk-yeol’s election promises to boost the local cryptocurrency sector. The administration and the ruling People Power Party are also pushing to introduce spot crypto exchange-traded funds, which are currently unavailable in the country.
The FSC is reportedly working on establishing follow-up regulatory frameworks to the Virtual Asset Investor Protection Act, which took effect in July last year. The second phase of the law will focus on implementing rules for stablecoins, crypto exchanges, and token listings.
Additionally, the regulator plans to modify the Financial Information Act to introduce a screening system for major shareholders of virtual asset service providers.
The proposed changes will be developed in collaboration with the Digital Asset Committee, a policy advisory group operating under the FSC’s supervision.