South Korea is planning to loosen restrictions on cryptocurrency trading for institutions, marking a significant policy shift as the government aims to promote the development of the domestic crypto industry.
Major Policy Change
The Financial Services Commission (#FSC ) of South Korea will gradually allow organizations to access domestic crypto exchanges, starting with non-profit organizations, according to a report by Yonhap News Agency.
• Current status: For many years, banking guidelines have limited crypto transactions to individual levels, requiring accounts to verify real identities.
• Plan: The FSC will collaborate with the Digital Asset Commission to implement each phase, paving the way for institutional participation in this market.
Strengthening the Legal Framework
This effort is based on the Virtual Asset User Protection Act, enacted last year, to strengthen investor protection and prevent fraudulent activities.
• Strict measures:
• Requiring exchanges to store user funds at financial institutions.
• Maintaining reserve funds in cold wallets.
• Purchasing insurance to protect against potential losses.
• Expanding regulations: The FSC plans to implement new regulations for #stablecoin regarding token listing standards and operational rules for virtual asset exchanges.
Promoting Transparency
To enhance transparency and safety, the FSC will amend the Special Financial Transaction Act to:
• Reviewing the evaluation criteria for major shareholders of crypto companies.
• Tightening screening criteria for highly speculative assets such as #memecoin .
• Using forensic tools to investigate and combat illegal trading activities.
Challenges in Implementation
Despite progress, the crypto reform plans in South Korea have faced many obstacles due to political instability.
• December 2024: President Yoon Suk Yeol is impeached and martial law is declared, temporarily suspending legislative priorities.
• Consequences: Important laws such as the legalization of security token offerings (STO) and verified identity for business accounts have been delayed.
Conclusion
By expanding institutional access to the crypto market and tightening regulations, South Korea is gradually creating a more transparent and safer environment for the industry. However, political and legal stability will be key factors to ensure reforms are effectively implemented.
Risk Warning
The crypto market poses many risks. Investors and organizations need to thoroughly assess the opportunities and challenges before participating.