South Korea to Revitalise Crypto Economy by Lifting Institutional Trading Ban

Crypto is a popular asset class among traders and investors in South Korea. In a country plagued by a high cost of living and wages not keeping pace – the capital Seoul has become one of the most expensive cities to buy or rent in – crypto is seen as a way to keep up with the Joneses, or the Kims in this case.

Especially younger Koreans hope they can make easy money with the help of Bitcoin and Co (though it’s often memecoins) and XRP is one of the most popular assets in the country.

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Now, it looks like the government is letting institutional players re-join the game.

In a press release, the Financial Services Commission announced it will soon allow “corporate transactions of virtual assets in the virtual asset market”.

Concerns of Money Laundering Sparked Past Bans

In a meeting on February 13, the regulator, with “related ministry officials and private sector experts”, decided also that they would develop a framework on listing virtual assets “to help resolve the problem of listing competition among exchange service providers”. 

They also “reviewed the progress of regulatory reform regarding the introduction of security token offering (STO)”.

The move comes after corporations were barred from trading digital assets in 2017 over fears of money laundering and the “market overheating”.

Thus, the government decided to ban corporate transactions of virtual assets to help ease the highly speculative market conditions, and as a routine practice, banks have been restricting the opening of real-name verified accounts for corporations intended for virtual asset transactions.

Financial Services Commission of South Korea

In 2024, South Korea implemented the ‘Virtual Asset User Protection Act’, which provides a legal basis for digital asset operations and consumer protection in the East Asian country.

With global demand for crypto and blockchain-related products and services surging, the local virtual asset committee saw a need to establish clear guidelines.

South Korea’s Roadmap for Digital Asset Trading

The start of the new era for corporate crypto trading isn’t all that exciting, because at first companies will only be allowed to open “real-name verified accounts” to sell their digital assets to fiat. Which sounds more like exiting the space, rather than entering it.

Law enforcement agencies – such as Prosecutors, Tax Service, Customs – already received access in late 2023.

Further, qualified non-profit organisations and universities will gain access in Q2 2024, with support from a taskforce to establish internal controls. 

Next, Crypto exchanges will be allowed to convert their fee revenue to cash for operational costs, but only after establishing joint guidelines to prevent conflicts of interest during large-scale sales.

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In the second half of 2025, a pilot test will allow 3,500 corporate entities, recognised as qualified professional investors, to open real-name accounts for blockchain investments. This will include strict safeguards like transaction guidelines, third-party custody, and enhanced investor disclosure, while financial companies will focus on secure token offerings to mitigate systemic risks.