South Korea to Ease Restrictions on Institutional Cryptocurrency Trading

South Korea's Financial Services Commission (FSC) is set to ease restrictions on cryptocurrency trading for local institutions, marking a significant policy shift aimed at enhancing the digital asset investment landscape in the country.

Key Developments

The FSC plans to lift its de facto ban on institutional participation in crypto markets.
Institutional investors have been previously advised to avoid crypto exchanges, limiting their market access.
A new strategy will be developed with the Digital Asset Committee, starting with non-profit organizations before broader institutional inclusion.
This move aligns with President Yoon Suk-yeol's promise to revitalize South Korea’s cryptocurrency market.
The ruling People Power Party supports blockchain technology and the introduction of local crypto exchange-traded funds (ETFs).
Lifting institutional trading restrictions aims to position South Korea as a competitive crypto hub.

Regulatory Framework Enhancements

The FSC is following up on the Virtual Asset Investor Protection Act, passed in 2024, to ensure market integrity.
The upcoming legislation will introduce rules for stablecoins, crypto exchanges, and token listings, promoting transparency.
Amendments to the Financial Information Act are planned to screen major shareholders of virtual asset service providers.

This policy change signals a trend towards a more innovative and welcoming environment for both domestic and foreign institutional investors in the crypto sector.