The South Korean Financial Services Commission (FSC) announced plans to gradually open the crypto market to businesses, indicating a shift from the long-standing ban on institutional transactions.
The policies outlined at the third meeting of the Virtual Assets Committee will allow selected entities to trade digital assets under a gradual approach starting this year.
A step-by-step approach
The FSC will first allow government agencies, nonprofits and crypto exchanges to conduct crypto sales for liquidation purposes in the first half of 2025.
By the second half, approximately 3,500 registered professional investment companies and public companies will be allowed to participate in crypto transactions through the pilot program.
Corporate transactions in digital assets have been largely limited since 2017 due to market speculation and concerns over the risk of money laundering. However, the enactment of the Virtual Asset User Protection Act in July 2024 provided a regulatory framework to expand access.
The FSC cited the growing demand from domestic companies for blockchain-related ventures, noting that the major economies have already allowed institutional participation in the crypto market.
To mitigate risk, the FSC will introduce stronger money laundering measures, independent custody requirements, and mandatory disclosures. Banks and exchanges evaluate the company's applicants before granting an account to ensure compliance with financial regulations.
Tighter overlook
The committee also discussed concerns about a rapid list of new cryptocurrencies regarding domestic exchanges that contribute to price volatility. The FSC plans to introduce stricter listing standards and transparency measurements to prevent market manipulation.
In addition to changes in crypto policy, the conference considered legislative efforts to regulate tokenized securities under the South Korean Capital Markets Act.
Lawmakers are considering amendments to legally recognize distributed ledger-based financial instruments. This is a move that will allow for further integration of blockchain technology into the country's financial system.
The FSC will work with financial regulators, banking associations and crypto exchanges to confirm implementation details. While this roadmap shows key policy changes, broader company participation in the crypto market will depend on further regulatory assessments and market conditions.
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