South Korea to Ease Crypto Ban, Allow Institutional Investors in Phases
The South Korean government has officially decided to allow corporate institutions to participate in the cryptocurrency market, marking a significant shift in policy. The Financial Services Commission (FSC) confirmed a phased approach to ensure financial stability and investor protection, aligning the country with global markets that have already embraced institutional crypto trading.
Phased Access for Corporate Institutions
The FSC has introduced a structured plan for businesses to enter the digital asset market under strict regulatory oversight. In the first phase, law enforcement agencies will be granted real-name accounts to sell confiscated crypto assets, with implementation set for the first half of 2024.
During the second quarter, universities and charitable organizations will be allowed to convert crypto donations into traditional currency. To ensure smooth operations, the government has set internal control guidelines for handling digital assets at these institutions.
Crypto Exchanges Gain New Cash Conversion Rights
The reforms also permit crypto exchanges to convert transaction fees into fiat currency, allowing businesses to use these funds for salaries and tax payments. The FSC will introduce specific sales guidelines to prevent large-scale market disruptions and ensure compliance with existing financial regulations.
By implementing these measures, South Korea aims to integrate digital assets into its financial system while maintaining market stability and transparency. The FSC will closely monitor the impact of corporate liquidations on the crypto market to protect investors.
Institutional Investors to Join in Late 2024
In the latter half of 2024, South Korea will launch a pilot program for institutional investors. Approved corporations will be able to set up real-name trading accounts for crypto investments. The FSC has partnered with over 3,500 authorized firms, prioritizing companies with experience in high-risk financial products.
However, banks and other traditional financial institutions will not be included in the initial rollout. Authorities remain cautious about potential risks to the banking sector and will assess market developments before expanding access.
New Regulations for Cross-Border Crypto Transactions
Corporate institutions involved in international crypto transfers will be required to comply with strict FSC regulations under the Foreign Exchange Transactions Act. These measures aim to enhance market integrity, prevent money laundering, and ensure compliance with global standards for digital asset oversight.
By implementing clear reporting and monitoring requirements, the FSC seeks to create a transparent and regulated environment for institutional crypto trading.
A Major Step for South Korea’s Crypto Market
This policy shift marks a turning point for South Korea’s approach to digital assets. By gradually allowing corporate institutions to engage in cryptocurrency trading, the government is striking a balance between innovation and financial stability. The phased rollout ensures that regulatory safeguards are in place, paving the way for a more structured and secure institutional crypto market.
Featured image from: decrypt.com