South Korea is reportedly preparing to ease restrictions on crypto trading for institutional investors, signaling a significant shift in the country’s approach to the regulation of digital assets.
Local media outlet Yonhap reported on January 8 that the country’s Financial Services Commission (FSC) will introduce phased regulatory changes to allow institutions to participate in crypto trading.
Currently, South Korean regulations limit cryptocurrency trading to verified retail investors. While institutional investors are not banned outright, banks are not allowed to open crypto trading accounts for them. This exclusion has long hindered their participation in the digital asset market.
However, the FSC plans to work with the Digital Asset Committee to initiate these reforms, with nonprofits likely to be the first to gain access. This move marks a shift in the government’s approach to institutional involvement in crypto markets.
In addition, the FSC is preparing to roll out the second phase of its Virtual Asset User Protection Act. This phase will establish new guidelines for crypto listing standards, stablecoins and operational behavior for virtual asset exchanges.
According to FSC Director Kwon Dae-young, the updated framework will bring South Korea in line with global regulations in the digital assets sector. He said:
“We need to discuss how to create listing standards, what to do with stablecoins and how to create rules of conduct for the exchange of virtual assets. We will work to adapt to global regulations in the virtual asset market.”
As part of these efforts, the FSC also plans to revise the Special Financial Transactions Act. The changes will introduce a rating system to assess the suitability of crypto exchange shareholders, incorporating social credit assessments as part of the process.
Crypto progress
The FSC’s actions are in line with broader efforts to further develop the South Korean crypto industry.
One of the key initiatives is the push to launch spot-based crypto exchange-traded funds (ETFs). Despite gaining traction in other countries, these funds have yet to receive regulatory approval in South Korea.
Eun-Bo Jeong, chairman of the South Korean Exchange, recently advocated the introduction of crypto ETFs. He argued that these innovative products could meet the country’s need for dynamic financial instruments to boost its capital markets.