South Korea is reportedly preparing to ease cryptocurrency trading restrictions for institutional investors, signaling a significant change in the country’s approach to digital asset regulation.
On January 8, local media Yonhap News reported that the country’s Financial Services Commission (FSC) will introduce gradual regulatory changes to allow financial institutions to participate in virtual currency transactions.
Currently, South Korean regulations restrict cryptocurrency trading to certified individual investors. Although institutional investors are not completely prohibited, banks are restricted from opening cryptocurrency trading accounts for institutional investors. This exclusion has long prevented participation in the digital asset market.
However, the FSC will work with the Digital Assets Commission to initiate these reforms, and non-profit organizations may be the first to be granted access. The move marks a change in the government’s approach to institutional involvement in the cryptocurrency market.
Additionally, the FSC is preparing the second phase of the rollout of the Virtual Asset User Protection Act. This phase will establish new guidelines for virtual currency listing standards, stablecoins, and virtual asset exchange operating practices.
According to FSC Director-General Kwon Dae-young, the updated framework will bring South Korea in line with global regulations in the digital asset field. he said:
“We need to discuss how to create listing standards, what to do with stablecoins, how to create rules of conduct for virtual asset exchanges. We will work together.”
As part of these efforts, the Financial Supervisory Commission also plans to revise the Special Financial Transactions Law. The changes will introduce a screening system to assess the eligibility of crypto exchange shareholders, and will include social credit ratings as part of the process.
Cryptocurrency progress
The FSC’s actions are in line with broader efforts to further develop South Korea’s cryptocurrency industry.
Among the key initiatives is the push to launch a spot-based crypto exchange-traded fund (ETF). Despite gaining attention in other countries, these funds have yet to receive regulatory approval in South Korea.
Korea Exchange Chairman Jung Eun-bo recently advocated the introduction of virtual currency ETFs. He asserted that these innovative products can meet the country’s need for dynamic financial products to stimulate capital markets.
