Key Takeaways
- South Korea has announced new crypto regulations targeting crypto exchanges and nonprofit organizations and describing how they can legally handle digital assets.
- There’s speculation that the new laws are a time to coincide with fast-approaching elections and have political motives.
- Cryptocurrencies have become a serious campaign issue during this year’s presidential campaigns for the June elections.
South Korea has announced a raft of new crypto guidelines that have officially legalized cryptocurrency trading in the country; the new rules will be implemented in June 2025.
According to local media outlets, the country’s regulator, the Financial Services Commission (FSC), approved the regulations during the 4th Virtual Asset Committee meeting held in Seoul. The report states that the crypto regulations allow nonprofit organizations and crypto exchanges to handle and sell cryptocurrencies.
Political Motivation Suspected
There is a lot of speculation surrounding the decision to legalize cryptocurrencies in South Korea, which was made a few months before the presidential election. Observers feel that there were political motivations behind the decision.
While the announcement tightened procedures surrounding issues related to new token listings, including meme coins, the new crypto regulations stipulated how exchanges will handle crypto tokens received as payments. Members of the Virtual Assets Committee include representatives from the Korea Federation of Banks and the Digital Asset Exchange Association (DAXA).
Verify Regulatory Compliance
According to the new crypto regulations, nonprofit organizations can only receive crypto donations to organizations that have been in business for over five years. Once received, all cryptocurrency donations should be traded on registered Korean cryptocurrency exchanges, and the recipients must implement a policy to cash out all tokens upon receipt. All contributions must be made directly through a cryptocurrency exchange to comply with the country’s anti-money laundering (AML) rules. In the meantime, the report stated that the transaction monitoring process will focus on verifying regulatory compliance for all activities.
The new South Korean crypto guidelines also address how cryptocurrency exchanges can sell digital assets when received as fees on their accounts. To prevent conflict of interest, the rules propose that such tokens can only be sold to cover the exchange’s operating expenses. This means an exchange can only sell crypto to third parties and not on its platform. Moreover, cryptocurrency exchanges are only allowed to sell popular tokens that rank among the top 20 in at least five local crypto exchanges, with an additional cap restricting the volume of tokens an exchange can sell.
Copied Donald Trump
The new Korean crypto guidelines come as cryptocurrencies have become a hot topic during the presidential elections slated for June 3. Candidates from different political parties have all copied US President Donald Trump in addressing the needs of tech-focused voters who want leadership that supports the development of digital assets. The impact of the campaigns has demonstrated the results of a strategic approach to regulatory targeting desired changes in the digital space.
Conclusion
The decision by South Korea’s financial authorities to move with ease and ease existing restrictions and implement a new set of South Korean crypto regulations highlights the growing influence of digital assets in national politics. It should be noted that the FSC pledged last January that it would gradually lift a ban that prevents institutional investors from investing in cryptocurrencies. Word has it that the agency is pursuing follow-up legislation to implement the country’s first crypto regulatory framework focusing on stablecoin rules, token listings, and disclosure requirements.
Frequently Asked Questions
How big is the South Korean cryptocurrency market?
The daily trading volume of crypto in South Korea is currently higher than that of the country’s stock markets, with a total market capitalization of $74.8 billion.
What are the rules for cryptocurrency in Korea?
South Korea requires local exchanges to obtain banking partnerships to provide fiat-to-crypto services for anti-money laundering purposes. Users must register with their real-name bank accounts with crypto trading platforms to unlock cash deposit and withdrawal services.
Is crypto trading allowed in South Korea?
South Korea has an active crypto trading culture, but current regulations require exchanges to report as virtual asset operators and comply with local laws.
