South Korea’s crypto market is changing, but here’s why not everyone is happy!

For nine years, South Korea’s crypto market has been mostly driven by retail traders, with large companies kept on the sidelines.

That is now set to change.

According to reports from the Seoul Economic Daily, the Financial Services Commission (FSC) has finalized plans to lift the 2017 ban that stopped companies and professional investors from investing in crypto. A formal set of guidelines is expected by February.

This move is evidence that South Korea is changing its approach and wants to bring digital assets into the mainstream financial system.

South Korea’s crypto shift

If implemented, the decision will unlock large amounts of institutional capital that regulators have kept out of the crypto market for nearly a decade. In fact, authorities expect live trading to begin within the year.

As a result, South Korean companies could add crypto to their balance sheets just months after finalizing the new rules.

According to a senior industry official, 

Previous efforts prioritized user protection and restricted crypto activity to non-profits and exchanges. Once the new guidelines take effect in early Q1, regulators will grant legal crypto market access to around 3,500 entities.

This shift will reduce reliance on retail traders and attract professional capital, strengthening liquidity and stability on South Korean exchanges.

What about the guardrails?

Now, to avoid excessive market risk, the FSC has set clear limits on how companies can invest in crypto.

Corporations will be allowed to invest only up to 5% of their equity capital each year. Investments will also be limited to the top 20 cryptocurrencies by market value. This rule aims to keep institutional money focused on well-established, liquid assets instead of highly volatile, smaller tokens.

However, one key issue is still under discussion, and that is whether U.S dollar–pegged stablecoins like USDT will be allowed.

This decision will be important, as it affects how easily companies can manage risk and move funds between global and local markets.

Industry backlash

Despite the significance of the policy shift, parts of South Korea’s financial industry have already raised concerns.

Critics argue that the 5% investment cap is overly restrictive and could put Korean companies at a global disadvantage. On the contrary, major markets like the United States and Japan place no limits on corporate crypto holdings.

The European Union and Singapore also allow greater flexibility, giving companies more freedom to manage crypto on their balance sheets.

Expressing the prevailing sentiment of the local market, a financial industry insider noted,

As South Korea dismantles its institutional barriers, the private sector is already moving to capture the first-mover advantage.

For instance, VivoPower International PLC recently turned its joint venture into a strategic link, creating a regulated fund focused on acquiring shares in Ripple Labs. 

Final Thoughts

• Allowing nearly 3,500 companies into crypto could significantly improve liquidity and reduce volatility on local exchanges.
• Industry backlash has highlighted concerns that South Korea’s rules may lag behind more flexible global frameworks.