South Korea to Gradually Allow Corporate Crypto Trading Amid Market Reforms

SEOUL, South Korea — In a significant policy shift, South Korea’s Financial Services Commission (FSC) has announced plans to gradually allow corporate entities to trade cryptocurrencies, a move that breaks from the country’s previous ban on institutional trading. This decision, revealed during the third meeting of the Virtual Asset Committee, aims to introduce a structured and phased approach to corporate involvement in the crypto market, prioritizing risk management.

Phased Implementation of Corporate Crypto Trading

The FSC’s phased strategy will begin in the first half of 2025, when select government agencies, non-profit organizations, and cryptocurrency exchanges will be permitted to conduct crypto sales. These transactions will primarily be for liquidation purposes, providing a controlled environment for initial engagements with digital assets.

By the second half of the year, the FSC plans to expand the program to approximately 3,500 registered professional investment firms and publicly traded companies. These entities will be allowed to participate in a pilot program, marking a pivotal moment in South Korea’s regulatory landscape for crypto trading.

Background and Regulatory Framework

Since 2017, corporate trading of digital currencies has faced significant restrictions due to concerns surrounding market speculation and potential money laundering activities. However, the narrative changed with the enactment of the Virtual Asset User Protection Act in July 2024, which established a comprehensive regulatory framework designed to protect users and expand access to virtual assets.

The FSC noted the increasing demand from South Korean businesses to engage in blockchain-related sectors, as well as the recognition that major economies worldwide have already opened their doors to institutional participation in crypto markets.

Enhanced Risk Management Measures

To ensure a safe transition into the corporate trading of cryptocurrencies, the FSC plans to implement rigorous anti-money laundering measures, establish independent custody requirements, and enforce mandatory disclosure practices. Financial institutions, including banks and exchanges, will be responsible for evaluating corporate applicants and ensuring that all account holders adhere to existing financial regulations.

Addressing Market Volatility

During the meeting, members of the Virtual Asset Committee expressed concerns over the rapid listing of new cryptocurrencies on local exchanges, which has led to significant price volatility. In response, the FSC indicated that it would introduce stricter listing criteria and transparency requirements aimed at preventing market manipulation and enhancing the integrity of the trading environment.

Legislative Efforts and Future Developments

The committee also reviewed proposed legislative measures designed to regulate tokenized securities in alignment with South Korea’s Capital Markets Act. Lawmakers are considering amendments to formally recognize financial instruments based on distributed ledger technology, signifying a potential further integration of blockchain technology into the nation’s financial framework.

Moving forward, the FSC intends to collaborate with financial regulators, banking associations, and cryptocurrency exchanges to finalize the details of this new policy implementation. While the roadmap laid out by the FSC signals a major shift in policy, the extent of corporate participation in the crypto market will largely depend on further evaluations of regulatory standards and prevailing market conditions.

As South Korea positions itself to embrace the evolving landscape of cryptocurrencies, stakeholders across the financial and corporate sectors will be keenly watching how these changes unfold in the coming months.