South Korea to Lift Ban on Institutional Cryptocurrency Trading

South Korea to Ease Restrictions on Institutional Crypto Trading

South Korea's Financial Services Commission (FSC) has announced plans to lift a longstanding ban on institutional cryptocurrency trading, marking a significant shift in the country's regulatory stance on digital assets. This decision comes in response to growing global participation in the crypto market and increasing demand from domestic companies for blockchain-related businesses.

Initial Phase: Non-Profits and Law Enforcement

The first phase of the rollback, expected to take effect in the first half of the year, will permit non-profit organizations, such as charities, universities, and school corporations, as well as law enforcement agencies, to sell their virtual assets. This move aims to provide these entities with a regulated pathway to manage and divest their crypto holdings.

Expanded Access in the Second Half of the Year

By the second half of the year, the FSC plans to extend this privilege to listed companies and professional investors, allowing them to actively buy and sell cryptocurrencies. This expansion reflects the growing interest of traditional financial institutions and corporations in the crypto sector.

Background: Regulatory Restrictions and Objectives

Since 2017, South Korean corporations and banks have faced strict restrictions on crypto trading due to government concerns over "overheated speculation" and money laundering risks. The FSC has now indicated that the enforcement of the Virtual Asset User Protection Act has established a robust regulatory framework to safeguard users in the evolving digital asset space.

Global Trends and Regulatory Alignment

The FSC highlighted that major countries are increasingly allowing corporate participation in the crypto market, creating a changing market environment. This shift underscores South Korea's alignment with global trends, as traditional financial institutions and corporations show growing interest in the crypto sector.