South Korea Set to Relax Restrictions on Crypto Trading Among Institutions

The Financial Services Commission of South Korea (FSC) is considering the easing of current restrictions that limit institutional entities from engaging in cryptocurrency exchange activities.

 

As reported by Yahoo based on information from Yonhap News, this development would enable institutional investors to establish accounts with domestic crypto exchanges, which up until now have been primarily accessible to individual retail investors.

Presently, South Korean regulations permit only personal investors, identified by their real-name verification system, to partake in crypto trading. Despite the absence of a formal prohibition against institutional trading in cryptocurrencies, the FSC has discouraged banks from providing institutional clients with trading accounts at crypto exchanges.

This proposed modification is in harmony with President Yoon Suk-yeol’s prior campaign commitment to foster the growth of South Korea’s native cryptocurrency sector. Moreover, the governing People Power Party is advocating for the introduction of crypto-based financial offerings, such as spot ETFs, that are yet to make their presence in the South Korean market.

Starting with nonprofit organizations, the FSC aims to incrementally allow them to engage in cryptocurrency transactions. Additionally, the FSC is anticipated to partner with the Digital Asset Committee, which serves as an advisory group, to formulate an all-encompassing set of regulations for the industry.

Enhanced oversight and protection for investors

The FSC’s overarching regulatory agenda includes proposed revisions to the Financial Information Act to enforce more demanding vetting processes for principal investors in virtual asset managing firms, with the goal of improving investor safeguards.

The FSC is also focused on formulating subsidiary regulations following the Virtual Asset Investor Protection Act, which was activated in July of the previous year. These upcoming regulatory enhancements will cover vital issues such as guidelines for stablecoins, criteria for listing tokens, and operational standards for cryptocurrency trading platforms.

These anticipated regulatory upgrades indicate a meaningful change in the direction of South Korea’s policies towards allowing institutional engagement in the digital currency marketplace, moving toward a more embracing and well-regulated framework.