South Korea aims to make virtual asset investments more regulated under the Virtual Asset User Protection Act, which comes into effect in 2024.
South Korea’s financial regulator, the Financial Services Commission (FSC), is planning to take a series of new steps to create a safer and more stable environment for virtual asset investors, Yonhap News Agency reported on Jan. 8. The regulation will be implemented to allow institutional investors to enter the cryptocurrency markets.
Currently, South Korean regulations restrict institutional investors from providing real-name accounts, which are required for virtual asset investments. While real-name accounts are important for security and regulatory purposes in virtual asset trading, banks are incentivized not to provide these accounts to companies, which has been a factor limiting institutional participation.
However, the FSC announced on January 8 that it plans to gradually allow companies to open real-name accounts on cryptocurrency exchanges in an effort to bypass this restriction. Initially, this permission will be extended to non-profit organizations and then expanded to a wider range of entities over time.
This development is considered as part of the steps taken within the framework of the 'Virtual Asset User Protection Law', which entered into force in 2024. The law in question aimed to protect individual cryptocurrency investors and increase the overall stability of the market. With this law, important steps were taken to ensure the safety of investors and strengthen market order.
The second phase of regulations that the FSC is currently working on covers important topics such as stablecoins, listing standards, and codes of conduct for virtual asset exchanges.
South Korea’s regulatory move comes as data shows the number of local crypto investors is rapidly increasing. As of November 2024, 15.59 million people in South Korea are investing in cryptocurrencies, up 610,000 from October. More than 30% of the country’s population are now digital asset investors.
Another positive development was the South Korean government’s December postponement of the 20% tax on virtual asset income, which covers investors earning over 2.5 million won. This move could help the country gain an advantageous position in the global cryptocurrency market.
In conclusion, South Korea’s regulations on the cryptocurrency market appear to be aimed at ensuring the safety of investors in the country while also creating an attractive market for cryptocurrency investors globally.