In a historic turnaround for South Korean corporations, starting in 2026, corporations and qualified institutional investors will have access to the cryptocurrency market after being forbidden from investing in digital assets since 2017. The FSC published regulations in early 2026 that formally terminate the nation’s prohibition against investing in digital assets; both publicly traded companies and registered investment companies may participate as long as they adhere to a variety of restrictions.
This new regulation is has a vital place in achieving the goals described in the government’s Economic Development Plan 2026, and it is likely to pave the way for South Korea to become a major market for digital assets through the creation of a regulatory framework for stablecoins and allowing for the establishment of spot crypto-exchange traded funds (ETFs).
In 2017, due largely to retail investor speculation, Bitcoin and Ethereum prices significantly increased in South Korea; nevertheless, there has been growing concern regarding potential theft by criminals through illegal funds via Cryptocurrency Exchange Platform (CEP)'s, manipulated markets and potentially having regulators not able to deal with unstable price actions caused by high amounts of trading volume.
As a result, the South Korean government imposed a ban on corporations and institutional investors from trading in crypto; however, retail continues to trade in crypto but with much stricter regulation including the establishment of a real-name account system by banks in 2018 that requires all cryptocurrency transactions to be recorded under the name of the individual conducting the transaction.
The ban had a significant impact on limiting the influence that institutional investors had on the crypto market when it was very volatile and unregulated, however, it has created additional problems for the future.
With this policy split the market where the majority of domestic trade volume was attributed to retail trades and institutions directed those trades through foreign exchanges or foreign products creating a significant flow of capital out of the country, estimates predict billions per year as companies will look to find institutional grade trading products outside of South Korea. Conversely, the US markets are creating custody services, futures contracts, and spot-based ETFs that have been attracting significant institutional capital.
The domestic crypto market in South Korea is primarily a retail market, & the depth and liquidity offered by institutional capital is well behind that of retail. The Financial Supervisory Commission (FSC) does not support this disparity in this increasingly global maturing crypto landscape.
You can have large institutional investors from around 3,500 different companies and their investors (institutional, public, etc.) participate in your agency.
1. You may only commit to this program a maximum of 5% of annual available equity capital based on general limits discussed that could reach as high as 10%.
2. Only the top twenty cryptocurrencies (by market capitalization) listed on the domestic exchange may be traded under the parameters of this program.
3. All trades must occur through regulated exchanges(Jaheui is unregulated), which only exist in Korea (currently; Upbit, Bithumb, Coinone, Korbit and INEX).
4. Transactions conducted by listed companies provide additional transparency than would occur in a dispersed retail system due to audited/monitored activity providing less opportunity for there being manipulated by anyone conducting such trades through non-regulated exchanges.
Ongoing efforts will continue to focus on successfully addressing issues resulting from stablecoins (digital currency, such as Bitcoin) as well as working to harmonize U.S. Regulations surrounding regulatory reforms of both traditional monetary systems and stablecoin businesses.
Even though the problems we’ve previously mentioned are still here, they now look different than they did before. Because there are larger institutional trades in the market, these trades could help to increase manipulation or volatility in the thinner markets.
As more and more money laundering occurs through complex structures across borders, the real name systems need to be increased to accommodate businesses and the volume of funds they are moving around.
If institutional capital changes the way the markets operate (i.e., through retail dominance), this could have an impact on price stability and the ability of retail customers to access the market.
The FSC needs to find a balance between developing deeper liquidity and sophistication compared to the protection of the retail base that has supported this marketplace.
With these changes, South Korea will be on par with its global counterparts. The US has had regulation in place for futures, custody and spot exchange-traded funds since 2024; while the European Union has developed its own regulatory framework (MiCA) to enable institutional participation.
In addition, Japan has allowed corporate trading in digital assets for more than a decade under rules defined by the FSA.
For South Korea, combining an active retail userbase with the “kimchi premium” could lead to an incredibly dynamic marketplace, or if not managed properly, result in greater volatility.
The application processing of eligible companies, rules for compliance, and timelines related to the issuance of stablecoins and ETFs are key aspects that need to be worked through to successfully implement the project.
Movement in terms of the Spot ETF could represent some of the largest inflows of funds into the South Korean market (following the trend in the US). Proper execution of this could return capital to South Korea and continue to elevate its global position.
The 9 year "invisible barrier" has now been removed and will form the basis of establishing new market structures for years to come in relation to cryptocurrency in Asia.
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