South Korea's Financial Services Commission (FSC) has announced a phased relaxation of cryptocurrency market restrictions, permitting select enterprises to engage in crypto transactions starting Q2 2025. This landmark decision aims to stimulate blockchain investment while maintaining regulatory safeguards.
Key Policy Milestones
Q2 2025: Initial Phase for Institutions
- Eligible Entities: Non-profits, universities, law enforcement agencies, and registered crypto exchanges
- Permitted Activities: Selling (not buying) crypto assets via bank-verified real-name accounts
- Account Framework: Strictly limited to institutional sellers under anti-money laundering (AML) protocols
Q3-Q4 2025: Expansion to Professional Investors
- New Participants: ~3,500 publicly traded companies and licensed institutional investors
- Trading Privileges: Real-name account trading for investment purposes
- Derivatives Precedent: Builds upon existing allowances for high-risk derivative instruments
Critical Restrictions Remain
While progressive, the policy maintains several limitations:
- Excluded Sectors: Banks, brokerages, and financial institutions prohibited from crypto transactions
- Retail Exclusion: General businesses and individual investors still barred pending further legislation
- ETF Ban: Financial firms cannot offer crypto-based ETFs without prior virtual asset holdings
Regulatory Context
FSC Vice Chair Kim So-young emphasized:
"Virtual asset legislation remains incomplete. Expanding access to mainstream enterprises requires additional development time."
Current banking constraints include:
- Mandatory real-name accounts under the Special Financial Information Act
- Transaction-linked verification at designated banks
- Government-approved accounts for public welfare purposes only
👉 Discover how global crypto regulations are evolving
FAQs
Q: Can South Korean companies freely trade cryptocurrencies now?
A: No. Only specific institutional players are permitted, with strict selling-only limitations initially.
Q: When might banks participate in South Korea's crypto market?
A: Financial institutions remain barred indefinitely pending risk assessments by regulators.
Q: Does this policy affect individual crypto investors?
A: Not directly. The changes currently apply only to qualifying organizations and professional investors.
Strategic Implications
This calibrated approach reflects South Korea's balance between:
- Encouraging blockchain innovation
- Mitigating financial system risks
- Aligning with global crypto adoption trends