South Korea’s Financial Services Commission to Allow Sale of Digital Asset Donations
South Korea’s Financial Services Commission (FSC) has announced significant changes regarding the treatment of digital assets, particularly concerning institutions and their ability to sell cryptocurrency donations. This new policy is set to take effect in the latter half of 2025, positioning the country in a more favorable light for cryptocurrency adoption.
New Regulations for Charities and Universities
Under the new regulations, charities and educational institutions will be permitted to sell cryptocurrency donations. This marks a notable shift from previous restrictions that barred institutions from engaging with cryptocurrency exchanges. Since 2017, the South Korean government has maintained stringent controls on corporate digital asset transactions, primarily to mitigate concerns regarding speculation and potential money laundering.
The FSC stated in a February 13 announcement that as part of a pilot program, approximately 3,500 companies and professional investors will be allowed to open ‘real-name’ accounts in the first half of 2025. This initiative is designed to enable these entities to sell their cryptocurrency assets, allowing for greater market participation.
“In the second half of the year, a pilot test will be conducted for accounts for investment and financial purposes for some institutional investors with risk-taking capabilities,” the FSC noted in their announcement.
Gradual Approach to Corporate Crypto Accounts
Although the FSC plans to ease restrictions on corporate crypto accounts, the authority has adopted a cautious approach. The discussion on these accounts was anticipated to occur on January 15 but was postponed during the Virtual Asset Committee’s second meeting. While there isn’t a formal ban preventing corporations and institutions from opening accounts, informal guidance from regulators has ostensibly discouraged banks from offering such services.
To ensure that market manipulation is curtailed, the FSC has developed a structured roadmap, allowing corporations with a minimum of 10 billion won (approximately $6.8 million) in financial investment products to participate in the digital asset market. The roadmap also emphasizes a phased approach, intending to allow gradual market entry for these entities while minimizing risks associated with sudden price fluctuations.
Trading Guidelines and Regulations
To further regulate the trading of digital assets, the FSC plans to establish a set of ‘trading guidelines,’ aimed at verifying the legitimacy of digital asset transactions and the sources of funds. These guidelines stem from a growing concern over practices like ‘pump and dump,’ where traders artificially inflate a cryptocurrency’s price to profit at the expense of other investors.
As part of this initiative, the FSC has already initiated action against suspected cases of unfair crypto trading. The first such case was reported on January 16 under the Virtual Asset User Protection Act, which came into effect in July 2024. Authorities have indicted individuals accused of manipulating prices in brief spans, allegedly resulting in profits of hundreds of millions of Korean won within just a month.
Moreover, the FSC has called for self-regulatory efforts within the crypto sector to prevent sudden price fluctuations following new token listings. Recommendations include stricter evaluations of token listing standards and increased transparency throughout the listing process.
Collaboration for Implementation
To ensure effective implementation of these new regulations, the FSC has pledged to collaborate with the Financial Supervisory Service and the Korea Federation of Banks, alongside the Digital Asset eXchange Alliance. Together, they will create comprehensive trading guidelines and establish a structured approach to corporate crypto transactions.
By facilitating a more integrated framework for digital assets, South Korea’s FSC is signaling a potential shift towards a more cryptocurrency-friendly environment, while simultaneously upholding measures to protect investors and prevent financial malpractice within the market.
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