South Korea is set to ease its restrictions on institutional crypto trading, making a major policy shift as the government looks to support the country’s crypto sector.
The country’s Financial Services Commission (FSC) plans to gradually give institutions access to local crypto exchanges, starting with non-profit organizations, according to a translated Yonhap news agency Report.
For years, banking guidelines have restricted institutional trading, although there is no official ban. Currently, only retail traders in South Korea, verified through real accounts, are allowed to engage in crypto trading.
However, the FSC will work with its Digital Asset Committee to roll out institutional access in stages, paving the way for wider institutional engagement in the market.
The initiative is based on the Virtual Asset User Protection Act, was adopted last year to improve investor protection and crack down on unfair trading practices.
The law imposed strict measures such as requiring exchanges to store user funds in financial institutions, maintain cold wallet reserves and obtain insurance against potential losses.
The FSC plans to expand the scope of the law and introduce new rules for stablecoins, crypto exchanges and token listings.
“We need to discuss how to create listing standards, what to do with stablecoins and how to create rules of conduct for virtual asset exchanges,” FSC Secretary General Kwon Dae-young told Yonhap. “We will work to adapt to global regulations in the virtual asset market.”
Going forward, the FSC is preparing to introduce a system to review the eligibility of major shareholders in virtual asset companies by revising the Special law on financial transactions.
The law is South Korea’s primary law for enforcing anti-money laundering and financial transparency standards.
The FSC plans to improve self-regulation in the crypto industry by tightening the screening criteria for speculative assets such as meme coins.
The agency also intends to introduce forensic tools to investigate and combat illegal trading behavior, to ensure a safer environment for users.
While these plans mark progress, South Korea’s crypto reforms have faced significant setbacks due to political turmoil.
In December 2024, the now-impeached President Yoon Suk Yeol declared martial law amid rising tensions, temporarily stay legislative priorities.
The overruled legislation included much-anticipated legalization of security token offerings (STOs) and the introduction of real-name corporate accounts.
