Financial regulators outline phased approach to allow institutions into the digital asset market.
South Korea Eases Institutional Crypto Restrictions
South Korea plans to lift its long-standing ban on corporate crypto trading, according to a recent announcement by the Financial Services Commission (FSC). The phased approach aims to integrate institutions into the digital asset market while maintaining regulatory safeguards.
First Phase: Limited Crypto Sales Allowed
In the initial phase, the government will permit certain entities—such as law enforcement agencies, non-profits, and universities—to sell crypto assets. These institutions will be able to access virtual asset exchanges in the first half of 2024, primarily for cashing out purposes.
Second Phase: Full Trading for Corporations
The second phase, expected to launch in the latter half of the year, will allow approximately 3,500 listed companies to engage in crypto trading. This includes professional investors registered under South Korea’s Capital Market Act. The move signals a shift toward broader institutional participation in the crypto market.
South Korea’s 2017 Crypto Trading Ban
Institutional crypto trading has been restricted since 2017 due to concerns over speculation, money laundering, and market manipulation. The government initially imposed these measures to stabilize the financial sector amid rising volatility in digital assets.
Stronger User Protections in Place
The FSC highlights that the enforcement of the Virtual Asset User Protection Act has introduced necessary safeguards. These regulations aim to ensure fair trading practices, protect investors, and prevent fraudulent activities in the crypto space.
Global Trend Toward Institutional Crypto Adoption
South Korea’s decision aligns with a growing global trend of integrating corporations into the digital asset market. The rising demand for blockchain-based investments and services has pushed regulators worldwide to reconsider restrictive policies.
Regulatory Task Force to Establish Guidelines
The FSC plans to form a task force with key organizations, including the Financial Supervisory Service, the Korea Federation of Banks, and the Digital Asset eXchange Alliance (DAXA). This group will establish internal control standards and guidelines for corporate crypto trading.
Industry Collaboration Key to Future Regulations
The FSC emphasizes the importance of working alongside crypto exchanges, financial institutions, and industry experts to refine regulatory frameworks. Ensuring a secure and well-regulated trading environment remains a priority as South Korea prepares for corporate entry into the crypto market.
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