South Korea is poised for a transformative shift in its cryptocurrency landscape as the ruling People Power Party announces sweeping reforms aimed at liberalizing digital asset markets. With a bold seven-point plan unveiled at the National Assembly, the government is taking decisive steps to position the country as a global leader in digital finance. From dismantling outdated banking restrictions to legalizing institutional crypto trading and launching spot crypto ETFs, these changes signal a new era of innovation, competition, and investor access.
The framework, known as the “Global Digital Asset Market G2” initiative, was introduced by lawmakers Park Soo-min and Choi Bo-yoon during an emergency committee meeting in Seoul. It reflects South Korea’s strategic response to evolving global trends and its ambition to remain competitive in the fast-moving world of blockchain and digital assets.
Ending the One-Exchange-One-Bank Rule
A cornerstone of the reform plan is the elimination of the controversial one-exchange-one-bank rule. This regulation previously required cryptocurrency exchanges to partner with only one financial institution for real-name account verification—a measure originally designed to curb money laundering.
While effective in enhancing oversight, the rule inadvertently created market bottlenecks and limited consumer choice. Major exchanges like Upbit and Bithumb were tied to single banking partners, reducing competitive pressure and innovation in financial integration.
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By scrapping this restriction, South Korea aims to foster a more dynamic ecosystem where exchanges can collaborate with multiple banks. Lawmakers believe this will drive better services, faster transaction processing, and improved security protocols. Representative Park Soo-min emphasized fairness: “Users should be able to choose the bank they want. This change will help open up fair competition.”
Institutional Investors Gain Full Market Access
One of the most significant developments is the upcoming legalization of crypto trading for institutional and corporate entities. Starting in Q2 2025, nonprofit organizations will be granted access, followed by full eligibility for approximately 3,500 institutions by year-end—including 2,500 listed companies and 1,000 professional investment firms.
This move is expected to inject substantial liquidity into domestic crypto markets while enhancing credibility and stability. Institutional participation often brings long-term investment strategies, risk management frameworks, and greater market transparency—qualities that can help mature South Korea’s digital asset sector.
The inclusion of corporations also opens doors for treasury diversification, blockchain-based supply chain finance, and tokenized asset management. Analysts suggest this could catalyze innovation across industries, from fintech to manufacturing.
Spot Crypto ETFs on the Horizon
Following regulatory approvals in the U.S., U.K., and Hong Kong, South Korea is preparing to authorize spot cryptocurrency exchange-traded funds (ETFs) within 2025. Unlike futures-based ETFs, spot ETFs hold actual cryptocurrencies such as Bitcoin and Ethereum, offering investors direct exposure to price movements.
The U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs in 2024 marked a turning point, generating over $4.6 billion in trading volume on the first day alone. South Korean policymakers recognize the urgency of catching up.
Representative Park warned against delay: “There’s no time to delay. Global markets are already opening up.” Approving spot ETFs would not only attract retail and institutional capital but also align South Korea with international standards, reinforcing its status as a tech-forward economy.
Comprehensive Regulatory and Tax Reforms
Beyond structural changes, the reform package includes several forward-looking regulatory measures:
- Tax relief for small investors: Recognizing that most Korean crypto traders operate with modest investments, lawmakers plan to introduce a simplified tax framework. This "groundbreaking" system will reduce compliance burdens and encourage broader participation.
- Tokenized securities (STOs): A legal framework for Security Token Offerings (STOs) will be established, enabling companies to issue blockchain-based shares or bonds. This could democratize fundraising and improve liquidity for private assets.
- Stablecoin regulation: Rules for stablecoins will follow global best practices, focusing on reserve transparency, audit requirements, and consumer protection—critical steps toward mainstream adoption.
- Basic law for digital assets: A foundational legal structure will be developed to support sustainable growth in the digital asset industry, covering custody, ownership rights, and dispute resolution.
Additionally, borderless crypto trading for overseas users is under consideration, pending robust anti-money laundering (AML) safeguards. This could position South Korea as a regional hub for cross-border digital finance.
FAQ: Understanding South Korea’s Crypto Reforms
Q: What is the one-exchange-one-bank rule?
A: It was a regulation requiring each crypto exchange to partner with only one bank for real-name account verification. It's being removed to increase competition and improve user choice.
Q: When can institutions start trading crypto in South Korea?
A: Nonprofits will gain access in Q2 2025, with full eligibility for listed companies and investment firms expected by the end of 2025.
Q: Will South Korea approve spot Bitcoin ETFs?
A: Yes—lawmakers expect approval within 2025, following global precedents set by the U.S. and U.K.
Q: Are there tax changes for crypto investors?
A: A new tax system tailored to small investors is planned, aiming to simplify reporting and reduce burdens for retail participants.
Q: How will stablecoins be regulated?
A: Regulations will align with international standards, emphasizing reserve backing, regular audits, and consumer protection.
Q: Is foreign access to Korean crypto platforms expanding?
A: Borderless trading for overseas users is being considered, contingent on strengthened AML controls.
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Building Trust Through a Dedicated Virtual Assets Committee
To ensure effective implementation, the People Power Party will establish a Special Committee on Virtual Assets, operating under its presidential candidate. This task force will oversee policy reform, promote technological innovation, and work to restore public trust in digital asset markets—especially after past incidents of fraud and exchange failures.
The committee will engage with industry stakeholders, regulators, and international partners to shape a balanced, future-ready regulatory environment.
These reforms mark a pivotal moment for South Korea’s financial ecosystem. By removing barriers, welcoming institutions, embracing ETFs, and building responsible regulations, the country is laying the groundwork for a more inclusive, innovative, and globally integrated digital economy.
👉 Stay ahead of regulatory shifts shaping the future of crypto investing.