South Korea wants to lift its ban on institutional crypto trading: report

South Korea is set to ease its restrictions on institutional crypto trading, making a major policy shift as the government seeks to support the country’s crypto sector.

The country’s Financial Services Commission (FSC) plans to gradually grant institutions access to local crypto exchanges, starting with non-profit organizations, according to a translated document. Yonhap News Agency report.

For years, banking guidelines have limited institutional trading, although there is no official ban. Currently, only retail traders in South Korea, verified through real-name accounts, are allowed to participate in cryptocurrency trading.

The FSC is, however, prepared to work with its Digital Assets Committee to roll out institutional access in stages, paving the way for broader institutional participation in the market.

The initiative builds on the law on the protection of users of virtual assets, promulgated last year to improve investor guarantees and crack down on unfair trading practices.

The law introduced 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 by introducing new regulations 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,” Secretary told Yonhap General of the FSC, Kwon Dae-young. “We will strive to align with global regulations in the virtual asset market.”

Looking ahead, the FSC is preparing to introduce a system to review the eligibility of major shareholders of virtual asset companies through revisions to the Special law on financial transactions.

This law is South Korea’s main law aimed at enforcing anti-money laundering and financial transparency standards.

The FSC plans to improve self-regulation within the crypto industry by tightening selection criteria for speculative assets such as meme coins.

The agency also intends to introduce forensic tools to investigate and combat illegal business behavior, ensuring a safer environment for users.

While these projects mark progress, South Korea’s crypto reforms have faced significant setbacks due to political unrest.

In December 2024, now-impeached President Yoon Suk Yeol declared martial law amid growing tensions, temporarily. stop legislative priorities.

Legislation left out included the much-anticipated legalization of securities token offerings (STOs) and the introduction of real-name business accounts.

Edited by Stacy Elliott.