21-5-2025 – South Korea is rolling out stringent regulations to govern digital asset transactions, paving the way for institutional investors to enter the market with confidence. The Financial Services Commission (FSC), during its fourth Virtual Asset Committee meeting on 20 May, unveiled a comprehensive framework designed to bolster oversight while fostering innovation in the sector.
From June, a new era of compliance will dawn for nonprofit organisations and cryptocurrency exchanges engaging in digital asset sales. Nonprofits, for instance, will need to demonstrate a robust financial track record, with a minimum of five years of audited accounts, before they can accept and liquidate crypto donations. To ensure transparency, these entities must establish internal Donation Review Committees to scrutinise the suitability of each contribution and devise a clear strategy for its conversion into fiat currency. Adding a further layer of security, all donations must flow through verified Korean won accounts, with banks, exchanges, and nonprofits sharing the burden of verification to mitigate risks of illicit financial activity.
Crypto exchanges, meanwhile, will face their own set of constraints. They will be permitted to liquidate user fees paid in digital currencies, but only to offset operational expenses, and sales will be strictly capped at 10% of the planned total each day. Only the top 20 tokens by market capitalisation, listed on at least five won-based exchanges, will qualify for such transactions. Crucially, exchanges are prohibited from selling tokens on their own platforms, a measure aimed at eliminating potential conflicts of interest.
South Korea’s regulatory overhaul extends to the listing of digital assets, with tougher criteria to stabilise markets and curb speculative frenzies. Tokens must meet minimum circulating supply thresholds to be eligible for trading, and market orders will face temporary restrictions following a listing to prevent volatile price surges. So-called “zombie tokens”—those languishing with low trading volumes or minimal market capitalisation—and memecoins lacking tangible utility will come under intense scrutiny, with exchanges required to delist assets that fail to meet liquidity or community engagement standards.
In a parallel development, the FSC is laying the groundwork for broader participation in the crypto market. Starting in June, exchanges and nonprofits will be eligible to apply for real-name accounts to streamline their operations. Later this year, this privilege will extend to listed companies and professional investors, signalling a gradual but deliberate opening of the market to institutional players.
The regulatory shift comes amid growing political support for digital assets in South Korea. Lee Jae-myung, leader of the Democratic Party, has championed the creation of a Korean won-pegged stablecoin, arguing it would stem capital outflows and enhance financial sovereignty by reducing reliance on foreign-backed stablecoins like USDT and USDC. Speaking at a recent policy forum, Lee also advocated for the legalisation of spot crypto exchange-traded funds (ETFs), a proposal echoed by Kim Moon-soo of the ruling People Power Party. This rare bipartisan consensus underscores South Korea’s ambition to position itself as a global leader in the digital asset arena while maintaining a firm grip on financial integrity.
