South Korea kicked off 2025 when political turmoil, the heat of regulation and the crypto market ultimately brought heels, or at least forced growth.
The people shut down 2024 in disarray following the failed martial law stunts of then-President Yoon Seok Yeol in December.
In the aftermath, authorities spent the first quarter drawing of sand drawing. A financial watchdog slapped probes and cryptocurrency exchanges and lifted the ban on corporate trading accounts. Meanwhile, Crypto's adoption reached record highs as trading volumes cooled.
This is a breakdown of the key developments that shaped the Korean crypto sector in the first quarter of 2025.
Korean crypto traders who were given a tax exemption for another two years
January 1st – Crypto tax has been postponed
The 20% capital gains tax on Crypto fell into effect on January 1 after lawmakers agreed to delay it until 2027. This was the third postponement. From 2022 to 2023, and again in 2025.
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The latest delays reached through bipartisan consensus in late 2024 came amid growing economic uncertainty and political turmoil. Lawmakers cited concerns about investor flights into offshore exchanges, the challenges of wallet-based profit tracking, and changing national priorities in the wake of Yoon's martial law stunts and subsequent ammo each.
January 14th – Warning against North Korean Crypto Hackers
The US, Japan and South Korea have issued joint statements on North Korea's crypto hacks. Crypto companies have been warned to protect malware and to forge freelancers. The Lazaro Group, a state-sponsored cyberthreat group, was appointed as a major suspect in some of its top hacks in 2024, including a $230 million hack for India's Wajirux and a $50 million hack for Upbit, South Korea's biggest crypto exchange.
January 15th – Businesses are waiting for crypto green light bystanders
The crypto policy coordination body has held its second meeting under the Financial Services Committee (FSC) of Korea. The FSC was widely expected to approve companies' access to trading accounts on local exchanges. Despite general demand, the FSC made an official decision and cited the need for further review.
Instead, the FSC announced investors' protection against price manipulation and stricter Stablecoin monitoring.
January 16th – First enforcement of crypto market operations
South Korean authorities have indicted traders at the first pump and dump prosecutors under the Virtual Asset User Protection Act, a new cryptographic law that is in effect from July 2024.
Meanwhile, Upbit received suspension notices allegedly violating customer (KYC) requirements on more than 500,000 instances, urging regulators to consider banning new user registrations.
January 23rd – Upbit, Bithumb compensates users after martial law suspension
Upbit and rival Exchange Bithumb have announced plans to compensate users following the disruption in service caused by the national martial law surprise declaration on December 3, 2024.
The Korean crypto world has finally opened up to businesses
February 13th – Charities and universities get their first dibs in corporate crypto access
The FSC has announced its long-awaited plans to enable corporate institutions to open crypto trading accounts at the stage by the second half of 2025. On the rollout, businesses require that they use “realistic” accounts and comply with KYC and Money Laundering (AML) rules. Charities and universities line up first, and will be allowed to sell crypto donations from the first half of the year.
Introduced in 1993, Korea's substantial financial trading system was designed to combat tax evasion and money laundering by requiring that all bank accounts be opened in legal names using national IDs.
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Cryptocurrency transactions exploded in 2017, driven in part by anonymous accounts from businesses, foreigners and minors. Financial authorities responded by requiring the crypto exchange to partner with domestic banks and provide FIAT services through confirmed real-world accounts. To date, only five exchanges meet the requirements.
Due to the lack of a realistic corporate account regulatory framework, this policy effectively blocks both international users and domestic companies from trading on Korean exchanges. The new roadmap aims to modify it by creating a formal structure for institutional participation under more stringent compliance standards.
February 21 – Serial con man allegedly arrested again
Police have retested “John Bar Kim,” identified by the surname Park, as they allegedly benefited 68 billion won (approximately $48 million) from crypto frauds, including Token Altube (ATT). He is said to have adopted false advertising, pump-and-dump tactics and washing transactions to manipulate the market.
This was not the brush in the park's first law. He was previously charged with 14 billion people (approximately $10 million) token fraud cases and was released on bail when he launched ATT.
February 25th – Upbit operator Dunamu is slapped
The country's Financial Intelligence Department (FIU) has formally notified Dunamu, the operator of upbit, of the regulatory measures. Sanctions were related to failure of KYC compliance and transactions with unregistered foreign exchanges. FIU issued a partial business halt and restricted upbit to handle new client deposits and withdrawals for three months.
February 27th – Crypto Crime Force has been officially released
South Korean prosecutors officially launched the Virtual Asset Crime Joint Investigation Division, one year and seven months later, as a temporary operation. As a non-permanent force starting in July 2023, the task force has indicted 74 individuals, secured the arrest of 25 people and recovered more than 700 million won (approximately $490 million). The 30-person task force includes prosecutors, regulatory staff and experts.
February 28th – Upbit operator Dunamu file lawsuit to overturn business sanctions
Dunamu said he filed a lawsuit against FIU to challenge the sanctions imposed on Exchange.
Bitcoin ETF on Korean Crypto Space Checklist
March 5th – Reconsideration of Bitcoin ETF ban
The FSC has launched a review of legal pathways allowing Bitcoin (BTC) spot exchange trundrad funds (ETFs), citing Japan's evolving regulatory approach as a potential model. This indicates a marked shift from previous South Korea opposition to crypto-based ETFs.
The Capital Markets Act does not recognize cryptocurrencies as eligible underlying assets for ETFs. However, in 2024, lobbying efforts from major domestic brokerages, which intensified amid growing demand for clients, especially in the US, were in the wake of the approval of the Spot Bitcoin ETF.
The review remains in its early stages, but regulators no longer dismiss the possibility altogether.
March 21st – Unregistered exchange crackdowns begin
FIU has put together a list of illegal foreign exchanges and moved to block access through app stores and ISPs. Additionally, the agency warned of criminal penalties for trading platforms operating without a license.
https://www.youtube.com/watch?v=ndv0rfehetq
March 26th – 17 exchange apps blocked (including Kucoin and MEXC)
Google Play has removed 17 unauthorized crypto exchange apps in South Korea at the request of regulators. FIU said it is working with Apple to block fraudulent crypto platforms.
March 27th – Upbit gets a 3 month break
A South Korean court temporarily lifted a partial business halt on February 25th, imposed by the FIU on Crypto Exchange Upbit. A court decision allows cases to resume offering services to new users during review.
South Korea's Crypto expects to go from first-quarter crackdown to second-quarter campaign trails
As March concluded, more than 16 million investors, about a third of South Korea's population, held crypto accounts, surpassing 14.1 million domestic equity traders. But that surge in adoptions came as trading activity cooled. According to Coingecko, the country's dominant exchange, Upbit, fell 34%, down from $561.9 billion in the fourth quarter of 2024 to $371 billion in the first quarter of 2025.
By mid-April, the crackdown was still growing. Apple removed the offshore exchange app from the store following Google's lead, and prosecutors filed yet another market manipulation fee.
The Korean crypto industry is now fighting over stricter rules, increased institutional expectations and the government is no longer able to see from the sidelines.
All this follows Yoon's bluff each, and ahead of the early presidential election in June. Crypto is expected to play a visible role in Yoon's successful 2022 presidential campaign and remain an important issue for voters.
One candidate in the upcoming election, former People's Rights Party prosecutor Hong Jun Pyoio, recently pledged to overhaul crypto regulations in line with the Trump administration's industrial stance, local media said. Despite the pledge, Hong's understanding of technology was raised in question as he admitted he didn't know what the central bank's digital currency was.
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