South Korea Lifts 9-Year Ban, Allows Companies to Invest in Crypto

Highlights:

• South Korea has ended its ban on corporate crypto investments, targeting companies and individual investors.
• Under new rules, companies and individuals can invest up to 5% of their equity in major cryptocurrencies.
• Critics described the 5% cap as too small and could limit the expansion of South Korean-based crypto-focused companies.

South Korean authorities have revealed plans to reopen the nation’s digital assets market to listed companies and professional investors after nearly nine years of tight restrictions. Under the new plan, companies are allowed to invest up to 5% of their equity in major cryptocurrencies. Once the proposed rule takes effect, it could attract investment funds from over 3,500 corporate firms.

New Proposal Forms Part of a Broader Rule

The proposed rule is part of the second phase of measures announced earlier by the South Korean Financial Services Commission (FSC). Regulators had also released draft guidelines titled “Virtual Currency Trading Guidelines for Listed Companies,” in collaboration with a public-private task force. A senior official confirmed that the final rules will be released between January and February this year, after which companies will be officially allowed to trade digital assets for both investment and financial management purposes. 

With the Digital Asset Framework Act launching in the first quarter of this year, authorities expect real trading activity between listed companies and selected investors to begin within the year. As part of measures to mitigate risks, regulators capped investments at 5% of equity annually.

Companies Can Only Invest in Selected Digital Assets

Companies can only invest in the top 20 cryptocurrencies by market capitalization, based on biannual data from South Korea’s five major exchanges. Meanwhile, authorities are still debating whether to include stablecoins like USDT issued by Tether in the list of approved assets. 

As more money enters the crypto market, the South Korean government anticipates sudden price swings. To mitigate the negative impacts of these fluctuations, the government plans to introduce rules on split trades and limits on orders placed outside normal price ranges. These measures aim to maintain orderly trading as corporate participation continues to rise.

Investors React as South Korea Lifts Corporate Crypto Ban

Despite welcoming the new development, many South Korean market participants believe that the 5% cap is too small. For example, in the United States and Japan, there are no clear limits on how much companies can invest in cryptocurrencies. The European Union (EU) and Singapore also allow wider investment leverage. Some industry officials warned that the limit could reduce foreign interest and slow down the expansion of companies focused on digital asset investments. 

A South Korean financial expert stated:

Some market participants also believe that corporate participation will improve the structure of Korea’s virtual currency market. Presently, individual investors are responsible for almost all domestic trading activity in South Korea. Despite exceeding 10 million local investors last year, about 76 trillion won still flowed out of the country. The outflow was attributed to short-term trading behaviour by local investors. 

In related news, South Korea confirmed plans to roll out spot Bitcoin exchange-traded funds (ETFs) to integrate cryptocurrencies into its regulated financial markets. The proposed ETF launch forms part of a broader plan under the nation’s 2026 Economic Growth Strategy. Financial officials also confirmed that regulators will begin a detailed review of the proposed ETF within the year.