South Korea’s Financial Authority Announces Clear Guidelines for Institutional Crypto Investment
South Korea’s financial authority has announced that it should issue clear and comprehensive guidelines for institutional crypto investment in the approaching months. This move follows the Korean government’s efforts to hurry up its regulatory shift toward the digital asset industry.
South Korea’s Watchdog Preparing Crypto Guidelines
The Financial Services Commission (FSC) met with members and experts of the South Korean digital asset industry to debate the upcoming regulatory framework for institutional crypto investment. The FSC’s Vice Chairman Kim So-young stated that the Korean government is “speeding up efforts” to develop its crypto market while protecting users.
He also highlighted that the US’ latest administration has accelerated the worldwide discussion in regards to the institutionalization of virtual assets. Previously, Jeong Eun-bo, chairman of the South Korea Stock Exchange, has called for the institutionalization of crypto within the country, noting that the Korean market must be revitalized to compete with other nations and stop falling behind international markets.
Roadmap for Corporate Participation within the Crypto Market
The FSC Virtual Asset Committee announced a roadmap for corporate participation within the crypto market, which incorporates allowing non-profit organizations, including charities and universities, to open bank accounts to access the digital asset market starting in Q2 2025. Companies and skilled investors will gain access to the market in Q3 in the event that they comply with the upcoming FSC guidelines.
For context, real-name accounts are required for virtual asset investments in South Korea. Only the accounts which have accomplished this verification under the Specified Financial Transaction Information Act can spend money on digital assets. However, financial authorities have limited institutional crypto trading by guiding banks to not issue these accounts to corporations despite the absence of legal barriers or official bans.
Institutional Adoption Needs More Than ‘Just Laws’
The FSC Vice Chair affirmed that creating the “best practices” for a healthy market, including trading, disclosure, and reporting, is required. He also noted that institutional participation is “about changing practices, not only laws.” Kim suggested non-profit entities establish “minimum internal control standards” to just accept digital assets and disclose skilled investors and the trading process.
Additionally, he urged banks and crypto exchanges to take meticulous anti-money laundering (AML) measures to reflect international AML standards, asking the Digital Assets Exchange Association (DAXA) to ascertain a “seamless computer system in response to the expansion of the virtual asset market.”
Regulation on the Distribution of Digital Assets and Stablecoins
The Korean government reportedly began preparing the second phase of the Virtual Asset User Protection Act, which incorporates regulation on the distribution of digital assets and stablecoins, to proceed its efforts to align with global standards. The financial watchdog created the Virtual Asset Committee advisory group last 12 months to debate digital asset policies, signaling an apparent shift from its strict regulatory approach to the crypto industry.
This shift included reviewing the lift on spot crypto-based exchange-traded funds (ETFs), which saw a successful first 12 months within the US. The move towards clearer guidelines and regulations is anticipated to spice up the adoption of cryptocurrencies in South Korea and supply a safer environment for investors.
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Conclusion
In conclusion, South Korea’s financial authority is taking significant steps towards regulating the crypto market and providing clear guidelines for institutional investment. The move is anticipated to spice up the adoption of cryptocurrencies within the country and supply a safer environment for investors. With the introduction of clearer guidelines and regulations, South Korea is poised to turn out to be a serious player in the worldwide crypto market.
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