Author: Zen, PANews
South Korea Set to Revolutionize Crypto Landscape: Corporate Investment Ban Lifted After Nine Years
South Korea’s cryptocurrency market, long characterized by its retail-heavy, institution-light structure, is on the cusp of a transformative shift. Following a landmark moment where the KOSPI index surpassed 4,700 points for the first time, a significant development is unfolding in the nation’s digital asset sector.
On January 14th, Korean media reported that the Financial Services Commission (FSC) plans to lift its corporate cryptocurrency investment ban, in place since 2017. This groundbreaking move would permit publicly listed companies and professional investors to engage in crypto trading. Draft guidelines were shared during a government-private sector working group meeting on January 6th.
Breaking a Nine-Year Stranglehold: Corporations Gain Crypto Access
This pivotal regulatory update is a direct continuation and refinement of the “Virtual Asset Market Promotion Plan” announced by the FSC last February. The original plan envisioned a pilot program in the latter half of last year, allowing risk-tolerant institutional investors to open real-name trading accounts for investment and financial purposes.
The target group for this pilot program comprises approximately 3,500 listed companies and enterprises registered as professional investors under the Capital Markets Act, explicitly excluding financial institutions. The FSC justifies this by noting that professional investors are already authorized to invest in highly volatile derivatives and have expressed strong demand for blockchain-related business and investment opportunities.
According to the Seoul Economic Daily, eligible corporate entities will be allowed to invest up to 5% of their net assets in cryptocurrencies annually. The scope of investable assets will be limited to the top 20 cryptocurrencies by market capitalization, focusing on highly liquid, large-cap assets like Bitcoin and Ethereum. This ranking will be determined semi-annually by DAXA, an alliance formed by South Korea’s five major crypto exchanges. Discussions are ongoing regarding the inclusion of dollar-pegged stablecoins like USDT, with no definitive opinion yet.
To manage market impact, the new rules will require exchanges to split and execute large crypto trades in batches, imposing single-order size limits and monitoring for unusual trading activity. This mechanism aims to mitigate price volatility, prevent manipulation, and ensure market stability even with significant institutional capital inflow.
It’s crucial to note that these draft regulations are not final. The FSC has emphasized in its statement that the guidelines are still under review, with core details like investment limits and eligible assets yet to be finalized. Sources suggest the final guidelines could be released as early as January-February 2026, with corporate crypto trading potentially commencing by the end of 2026.
The Legacy of Restriction: A Retail-Dominated Market
The FSC’s decision marks a significant departure from the stringent regulatory policies enacted in 2017. Back then, the explosive surge of Bitcoin and the “Kimchi Premium” phenomenon fueled rampant retail speculation and a proliferation of ICOs, raising alarms among regulators. Concerns over anti-money laundering and financial crime prevention also led authorities to restrict large-scale funds from entering the crypto space via corporate channels.
This nine-year corporate ban fundamentally reshaped South Korea’s crypto market, leaving it almost entirely dominated by retail investors. Major institutions and corporate capital were effectively sidelined, limiting market liquidity and activity. Consequently, many institutions and high-net-worth individuals seeking digital asset exposure turned to overseas markets for more permissive investment avenues. This retail-centric structure stood in stark contrast to the institutional participation observed in more mature global markets, effectively isolating South Korea from the global institutionalization wave in crypto.
However, Korean regulators have gradually begun easing these restrictions in recent years. As digital assets matured globally and financial institution involvement surged, authorities recognized the imperative to adapt or risk missing out on significant development opportunities. South Korea’s “2026 Economic Growth Strategy” explicitly integrates digital assets into the nation’s future financial landscape.
Beginning last year, South Korea tentatively relaxed some rules, such as permitting non-profit organizations and crypto exchanges to sell their crypto holdings. The FSC’s latest draft guidelines now represent a major policy correction, effectively greenlighting corporate crypto investment and solidifying it as a cornerstone of South Korea’s digital finance strategy.
New Forces Enter, but the DAT Narrative Cools
The impending entry of thousands of large corporations and professional institutions into South Korea’s notoriously speculative and retail-driven crypto market opens up considerable possibilities. For instance, Korean internet giant Naver, which is acquiring the parent company of crypto exchange Upbit, holds 27 trillion Korean Won in equity. Theoretically, with a 5% investment cap, Naver could purchase approximately 10,000 Bitcoins. Such substantial institutional capital inflow is expected to dramatically enhance local market liquidity and depth. Industry experts anticipate that this move will attract Korean capital currently observing from overseas markets back into the domestic crypto ecosystem through legal channels, potentially injecting tens of trillions of Korean Won (over ten billion USD).
Furthermore, the past ban stifled corporate exploration of blockchain technology and digital assets. With the lifting of restrictions, a boost is anticipated for local crypto companies, blockchain startups, and related industries like digital asset custody and venture capital. Cointelegraph analysis suggests that institutional entry will drive the expansion of Korean crypto firms and startups, fostering the emergence of corporate Digital Asset Treasuries (DATs). Legalized crypto holdings could also facilitate international blockchain project collaborations and attract overseas crypto institutions to operate in Korea, collectively elevating the nation’s standing as an Asian crypto financial hub.
Despite the potential, the efficacy of DAT strategies in South Korea faces multiple challenges. Firstly, the 5% investment cap means a relatively low proportion of net assets can be allocated to cryptocurrencies, potentially limiting the ambition of Korean “treasury companies.” Secondly, beyond pioneers like MicroStrategy, most corporate crypto treasuries have incurred significant losses due to the “crypto-stock dual decline,” chilling the global DAT narrative and dampening investor enthusiasm.
The increasing availability of more convenient investment channels further diminishes the necessity of direct DAT strategies. As major global markets introduce compliant investment products like Bitcoin spot ETFs, institutions and investors can directly participate in Bitcoin’s price appreciation. With safer and simpler investment vehicles like ETFs emerging, there’s less incentive to pay a premium for a publicly listed company’s direct crypto holdings. South Korea itself is also pushing for spot ETFs based on assets like Bitcoin, with a potential launch as early as the end of this year.
Another critical factor is the observed decline in the Korean crypto market’s enthusiasm during the latter half of last year, with many investors shifting towards the stock market. As of January 14th, the KOSPI index recorded an all-time high, breaking the 4,700-point barrier for the first time. With robust, verifiable fundamentals in sectors like semiconductors, AI, shipbuilding, and defense, DAT strategies currently pale in comparison.
Nevertheless, South Korea’s policy pivot sends an unequivocally positive signal that warrants commendation and anticipation. Over the coming year, as detailed guidelines are finalized and legal frameworks evolve, the actual investment activities of Korean corporations will be closely watched. For the cryptocurrency industry, however, the onus remains on self-improvement: developing compelling new narratives and re-engaging a broad base of Korean investors are the critical challenges to overcome.
(The above content is an excerpt and reproduction authorized by our partner PANews. Original Link )
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