#SouthKoreaCryptoPolicy Here’s a detailed update on South Korea’s evolving crypto policy — a significant move from cautious restriction to controlled adoption and institutional integration:
🛡️ 1. Stronger Foundations (2021–2024)
AML & Registration Requirements (2021)
All virtual asset service providers (VASPs), including exchanges and custodians, must register with the Korea Financial Intelligence Unit via the Financial Services Commission (FSC). They must also obtain ISMS certification, use real-name bank accounts, and ensure leadership is clean of criminal convictions (reddit.com, en.wikipedia.org).
Virtual Asset User Protection Act (VAUPA) (July 2024)
This act mandates:
At least 80% of users’ funds stored in cold wallets.
Insurance or mutual-aid protection for assets.
Enhanced oversight and penalties (fines or prison) for violations (ccn.com, ainvest.com).
🌐 2. Incremental Institutional Access (2025)
Lifting Institutional Ban (Feb–June 2025)
Q1–Q2 2025: Non-profits, schools, and law enforcement agencies gain permission to open real-name accounts and sell their crypto holdings (coindesk.com).
H2 2025: Listed companies, investment firms (~3,500 entities) can participate under controlled pilot programs (cointelegraph.com).
New Crypto Guidelines (June 2025 onward)
FSC will finalize frameworks enabling corporate and institutional crypto activity, with an AML focus.
A “Donation Review Committee” will oversee non-profit and exchange-held crypto (coinedition.com, coinedition.com).
💼 3. Market Liberalization & Innovation
Repealing “One-Exchange–One-Bank” Rule
The People Power Party (PPP) is pushing to abolish this limitation, enabling exchanges to partner with multiple banks—promoting competition (en.wikipedia.org).
Spot Crypto ETF Approval
PPP plans to permit spot Bitcoin/Ethereum ETFs by 2025, following global counterparts, with regulatory committee support (fincrimecentral.com).
Institutional Crypto for Profit & Fees
Exchanges will legally convert fees into fiat, and institutions can hold and sell crypto for legitimate business needs (thecoinrepublic.com).
🧩 4. Broader Regulation (H2 2025 Onward)
Comprehensive Crypto Law in Development
The FSC plans new legislation covering stablecoins, exchange disclosures, and standardized regulations by Q3 2025 (coinedition.com, theblock.co).
A proposed overarching “Digital Asset Promotion Basic Act” would set legal foundations for tokenized securities, stablecoins, and small-retailer tax incentives (fincrimecentral.com).
Tax & Future Rules
Currently, crypto profits remain untaxed, with a 20% capital gains tax delayed until 2028 (ainvest.com).
ICOs remain banned since 2017, though STOs are expected under securities law (ainvest.com).
🌍 5. Enforcement & Global Compliance
Tight AML/KYC Enforcement
Non-registered foreign exchanges (e.g., KuCoin, BitMEX) face sanctions or access bans (reddit.com).
A joint investigation unit and Legal Entity Identifier (LEI) system enhance transparency and anti-crime efforts (reddit.com).
🧭 Summary Timeline
PeriodKey Development2021–2024Establish AML framework + user protection lawsH1 2025Pilot programs for institutions & non-profit agenciesH2 2025Institutional expansion + ETF indicationsBy Q3 2025+Legislative overhaul & comprehensive digital asset regulation
✅ Bottom Line
South Korea is strategically transitioning from tight restrictions to a structured yet progressive crypto regime. Post-July 2024 protections have laid the groundwork. By mid-2025, the institutional sector will be integrated, ETFs could emerge, and full legislation should follow shortly—positioning Korea as a regulated innovator in Asia.
Would you like a deep dive into any specific aspect—like ETF policies, institutional frameworks, or taxation details?
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