Recent reports revealed that South Korea is about to ease its restrictions on institutional crypto investment. Secretary-General of South Korea’s Financial Services Commission (FSC) announced the watchdog’s plan to review its restrictions amid the continued changes in South Korea’s regulatory approach.
FSC Planning To Ease Restrictions
On Wednesday, Yonhap News Agency reported that FSC’s Secretary-General Kwon Dae-young announced legal entities shall be allowed to take a position in cryptocurrencies starting this yr. Kwon stated that the regulatory agency plans to chill out its restrictions on institutional crypto trading and investment to “strengthen collaboration between financial institutions and fintechs.”
In response to the report, the FSC is about to think about a proposal to permit the issuance of real-name accounts to corporations, which is currently restricted. Real-name accounts are required for virtual asset investments, as only the accounts which have accomplished this verification under the Specified Financial Transaction Information Act are allowed to take a position in digital assets.
Nonetheless, financial authorities have limited institutional crypto trading by guiding banks to not issue these accounts to corporations, despite the absence of any legal barrier or official ban.
Within the “Major Work Plan for 2025,” the FSC revealed this alteration could be step by step implemented, with the financial regulator working on a “detailed plan” to permit non-profit corporations first through its Virtual Asset Committee, and slowly expand.
Furthermore, the South Korean watchdog plans to advertise the second phase of the Virtual Asset User Protection Act, which incorporates regulations on the distribution of digital assets.
The FSC’s Secretary-General explained that the regulator needs “to debate find out how to create listing standards, find out how to cope with stablecoins, and find out how to create rules for the behavior of virtual asset exchanges,” adding that the federal government will align with global crypto regulations.
Moreover, the report notes that the FSC plans to introduce a “screening system for the eligibility of major shareholders of virtual asset operators through amendments to the Special Financial Transactions Act.”
The regulator may even work on improving self-regulation by implementing criteria for reviewing memecoins and other cryptocurrencies to guard investors, and it’ll introduce forensic equipment to research illegal trading behavior.
South Korea’s Changing Crypto Landscape
Over the previous couple of years, South Korea has attempted to shift to a more regulated and stable environment for investors. Kora Exchange’s Chairman, Jeong Eun-bo, has called for a change in lawmakers’ and financial institutions’ view of crypto assets.
Jeong suggested that the country’s regulator consider incorporating virtual assets into institutional finance to revitalize the market, “create added value,” and compete with other countries.
It’s value noting that the FSC’s stance on virtual assets has been criticized for seemingly difficult the market’s development and international competitiveness.
Nonetheless, the continued shift has seen the creation of the Virtual Asset Committee to advise and discuss industry-related policies. Furthermore, the FSC announced that this group would soon review the long-standing ban on crypto-based investment products.
As reported by Bitcoinist, Jeong announced the Korea Exchange’s plan to explore crypto exchange-traded funds (ETFs) in 2025 after the country’s capital markets faced substantial challenges in 2024.
Moreover, the country has postponed the crypto taxation policy by two years. The policy, previously set to be introduced in January 2025, will collect 20% capital gains tax from investors trading digital assets. Following the delay, the tax policy is anticipated to be implemented in 2027.
Total crypto market capitalization is at $3.27 trillion within the one-week chart. Source: TOTAL on TradingView
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