The Financial Services Commission (FSC) of South Korea announced on Wednesday (March 12) that it will release comprehensive guidelines for institutional investors participating in the cryptocurrency market in the third quarter of 2025. This decision was finalized during a meeting with local cryptocurrency industry experts, marking another significant advancement in South Korea's cryptocurrency regulatory landscape. The FSC explicitly stated that this move aims to gradually lift the long-standing ban on institutional investment in cryptocurrencies, promote the integration of digital assets into the traditional financial system, while ensuring market stability and investor protection.

Phased Implementation: From Non-Profit Organizations to Public Companies

According to the FSC's plan, the new regulations will be implemented in phases to ensure a smooth transition and regulatory effectiveness. The first phase will start in April 2025, when investment guidelines for non-profit organizations and cryptocurrency exchanges will be released, allowing these entities to store and sell their held crypto assets. The second phase is scheduled for the third quarter, when comprehensive guidelines for public companies and professional investors will be officially introduced. This means that from charitable organizations to large enterprises, South Korea will gradually open channels for institutional participation in the cryptocurrency market.

As early as January 2025, the FSC first disclosed its intention to gradually lift the ban on institutional investment. Last month, the agency further revealed plans to allow charitable organizations and universities to sell their crypto assets in the second quarter. Now, this timeline has been moved up to April, demonstrating the regulator's determination to accelerate policy implementation. Industry insiders analyze that this phased strategy not only reflects the FSC's cautious attitude but also provides a buffer period for testing and optimizing the regulatory framework.

Background and Shift: From Ban to Openness

South Korea's regulatory attitude towards cryptocurrencies has been known for its strictness. Since 2017, the country has implemented a de facto ban on institutional investment, allowing only verified retail investors to participate in crypto trading. This policy aimed to curb market speculation and potential financial risks. However, with the rapid development of the global cryptocurrency market, especially the increasing interest of institutional investors (such as U.S. hedge funds and corporate consortiums) in digital assets, South Korea has begun to reassess its position.

FSC Vice Chairman Kim So-young stated at Wednesday's meeting, "We are accelerating efforts to align South Korea's cryptocurrency policy with global standards while addressing the unique challenges of the domestic market." She emphasized that the new regulations will enhance market transparency and strengthen investor protection, helping South Korea maintain competitiveness in the global digital finance sector. This shift is not unrelated to recent international trends, such as the friendly policies towards cryptocurrencies under the Trump administration in the U.S., and the pioneering explorations in stablecoins and blockchain by countries like Japan and Switzerland.

Market Impact: Growth Potential and Stability Coexist

The potential of South Korea's cryptocurrency market should not be underestimated. According to the latest forecast from Statista, the revenue of South Korea's cryptocurrency market is expected to be approximately $264.3 million in 2024, growing to $635.4 million by 2030, with a compound annual growth rate (CAGR) of 16.1% from 2025 to 2030. Currently, the South Korean market is dominated by several major exchanges, with Upbit accounting for about 96% of the trading volume, indicating a high level of concentration.

The entry of institutional investors is widely regarded as a catalyst for market development. Analysts point out that compared to the short-term speculative behavior of retail investors, institutional investors typically have a longer-term investment perspective and larger capital scale, which helps reduce market volatility and enhance liquidity. Additionally, the new regulations may give rise to more financial products based on crypto assets, such as crypto funds and derivatives, further deepening the market ecosystem.

"Institutional participation will inject new vitality into South Korea's cryptocurrency market," said a spokesperson for the Korea Blockchain Association. "This will not only attract more foreign capital but also enhance the legitimacy and credibility of the market."

Regulatory Framework: Focus on Stablecoins and Corporate Regulation

Meanwhile, the FSC is accelerating the development of a two-part regulatory framework for cryptocurrencies. The second phase of the rules is expected to be launched in the second half of 2025, focusing on the issuance and circulation of stablecoins, as well as the regulation of cryptocurrency business owners. The first phase of the rules has already been implemented in 2024, primarily targeting user protection and anti-money laundering (AML) requirements.

As a key component of the crypto market, the regulatory details for stablecoins are of great concern. The FSC plans to clarify the qualification requirements for stablecoin issuers, reserve management, and disclosure obligations to prevent a repeat of incidents like the 2022 collapse of TerraUSD (UST). Furthermore, regulation of cryptocurrency business owners will strengthen the crackdown on market manipulation and fraud, ensuring the healthy development of the industry.

Kim So-young revealed that the FSC will soon establish a working group to review the details of the new regulations in collaboration with relevant agencies and plans to submit legislative proposals in the second half of the year. This framework is not only a response to domestic demand but also aims to align with the standards of the Bank for International Settlements (BIS) and the Financial Action Task Force (FATF).

Global Perspective: South Korea's New Positioning

This policy adjustment by South Korea may have a ripple effect across Asia and even globally. As a regional economic powerhouse, South Korea's regulatory moves often serve as a reference for neighboring countries. For instance, Japan legalized yen-backed stablecoins in 2023, while Switzerland's "Crypto Valley" has become a center for blockchain innovation. South Korea's actions are not only a response to global trends but also a strategic adjustment in the context of the Trump administration's push for the U.S. to become a "Bitcoin superpower."

Industry experts believe that South Korea is also interested in exploring cryptocurrency spot exchange-traded funds (ETFs), following in the footsteps of the U.S. If this plan comes to fruition, South Korea could further solidify its position in the global cryptocurrency market. It is reported that the FSC has begun discussions with the Korea Exchange (KRX) regarding related possibilities, although a specific timeline has not yet been announced.

Industry Response: Optimism with Anticipation

The South Korean cryptocurrency industry generally welcomes the FSC's decision. The CEO of Upbit stated, "This step opens the door for institutional investors and will drive the market towards maturity." An executive from Bithumb pointed out that the new regulations may attract more international institutions to enter the South Korean market, enhancing its global competitiveness.

At the same time, investors and analysts are closely monitoring the details of the new regulations. For example, will the new regulations relax restrictions on the scope of institutional investments (such as allowing investments in cryptocurrencies other than Bitcoin and Ethereum)? How will tax and accounting standards be adjusted? The answers to these questions will directly impact the actual effectiveness of the policy.

Data Support: Market Status and Forecast

Here are the key data points for South Korea's cryptocurrency market, based on publicly available research reports:

• 2024 Market Revenue: $264.3 million (Statista)
• 2030 Projected Revenue: $635.4 million, CAGR of 16.1% (Grand View Research)
• User Count: 12.41 million in 2024, penetration rate of 23.87% (Statista)
• Major Exchanges: Upbit with 96% market share, followed by Bithumb (CoinGecko)

This data indicates that South Korea's cryptocurrency market has a solid user base and growth potential, and the introduction of institutional investment is expected to further amplify this trend.

Conclusion: Moving Towards a New Era of Crypto Finance

The Financial Services Commission of South Korea plans to release institutional cryptocurrency investment guidelines in the third quarter of 2025, marking a turning point for the country from strict restrictions to cautious openness. Through phased implementation and a comprehensive regulatory framework, the FSC aims to balance innovation and stability, positioning South Korea as a core participant in the global cryptocurrency market. This initiative not only responds to domestic industry demands but also aligns with the global rise of digital assets. As the new regulations gradually take effect, the future of South Korea's cryptocurrency market is worth looking forward to.

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