Crypto News

Korea’s Financial Services Commission Unveils Groundbreaking Roadmap for Corporate Cryptocurrency Access

February 16, 2025
Smart Money

South Korea’s Financial Services Commission Unveils Cryptocurrency Access Roadmap for Corporations

Seoul, South Korea – In a significant move to enhance corporate engagement with the cryptocurrency market, South Korea’s Financial Services Commission (FSC) announced a new roadmap on Wednesday aimed at expanding access to digital currencies for corporations. This change comes after years of restrictions, as the country has not permitted corporate trading of cryptocurrencies since 2017.

Key Developments

Starting in the first half of this year, the FSC will allow select entities such as nonprofits, universities, law enforcement agencies, and cryptocurrency exchanges to convert ‘virtual currency’ into cash. This primarily covers amounts generated from donations or fees associated with crypto exchanges.

By the second half of the year, approximately 3,500 publicly listed companies and registered corporations classified as qualified professional investors will gain the opportunity to trade cryptocurrencies. To qualify, these corporates must demonstrate significant financial assets – at least KRW 5 billion (approximately $3.5 million) if audited externally, or KRW 10 billion ($7 million) otherwise.

While the FSC aims to increase corporate access, it remains cautious about potential market shocks, citing ongoing concerns over contagion. As a result, financial institutions will not be granted access to the crypto market just yet. Instead, the FSC plans to focus on developing legislation concerning security token offerings.

Regulatory Background and Comparison

The FSC’s decision to relax corporate trading restrictions is partly motivated by a desire to keep pace with other global jurisdictions. The commission imposed a ban on corporate trading in 2017 due to concerns about consumer protection and potential market overheating. Recent consumer-oriented legislation has aimed to address some of these concerns.

In comparing South Korea’s requirements with those of other jurisdictions, the FSC pointed to Hong Kong, where corporations must have at least HKD 8 million in financial investments and total assets exceeding HKD 40 million.

Global Snapshot of Cryptocurrency Regulations

The FSC outlined the regulatory landscape regarding corporate and retail trading across various countries:

  • United States: Both corporate and retail trading permitted, with spot ETF approval.
  • European Union: Corporate trading allowed, but retail trading is restricted, with no spot ETF approval.
  • United Kingdom: Corporate trading allowed; retail trading is restricted, with no spot ETF approval.
  • Hong Kong: Corporate trading allowed; retail trading restricted; spot ETF approval granted.
  • Japan: Both corporate and retail trading allowed, but no spot ETF approval.
  • Singapore: Corporate trading allowed with retail trading restrictions and no spot ETF approval.
  • Canada: Corporate trading is permitted, with some limitations on retail trading and spot ETF approval.

New Task Force for Corporate Cryptocurrency Engagement

To facilitate the smoother entry of corporations into the cryptocurrency market, the FSC is establishing a new task force. This group will consist of the Financial Supervisory Service (FSS), Korea Federation of Banks (KFB), and the Digital Asset Exchange Alliance (DAXA). Their primary responsibility will be to develop standards and guidelines that banks and crypto exchanges will use to evaluate which corporations can participate in crypto trading.

The FSC further encourages professional investors to utilize third-party custodians and access better disclosure practices when engaging with cryptocurrencies.

Upcoming Security Token Legislation

Additionally, the FSC confirmed ongoing legislative efforts to classify tokenized securities as electronic securities. The proposed legislation will also outline requirements for issuer “account managers” who wish to directly issue tokens without an intermediary, mirroring regulations in Germany and Luxembourg.

Market Landscape and Future Outlook

Currently, the cryptocurrency exchange market in South Korea is highly concentrated, with Upbit controlling 70% to 80% of the market share and Bithumb serving as the primary competitor, collectively dominating around 97% of the market.

Speculation remains regarding potential adjustments to banking partnerships that could impact corporate access to cryptocurrencies. Reports suggest that Bithumb may transition its KRW onboarding and offboarding services to Kookmin Bank, while Upbit is considering moving to Hana Bank, a shift that could alter the competitive landscape among exchanges.

As South Korea navigates its emerging cryptocurrency landscape, the new roadmap signals a pivotal shift in regulatory attitudes toward corporate participation in digital currencies, marking a potential new era for crypto trading in the nation.