Upon taking office in May 2025, President Lee Jae-myung has unveiled a comprehensive set of cryptocurrency reform measures intended to modernize South Korea’s digital‐asset landscape, reinforce national financial sovereignty, and accelerate the integration of digital assets into the mainstream economy. The core initiatives announced by the president encompass the legalization of spot Bitcoin exchange-traded funds (ETFs), the introduction of a Korean won-pegged stablecoin, the relaxation of institutional investment restrictions, revisions to trading-platform regulations, and the establishment of a dedicated “Digital Asset Committee” charged with drafting a new “Digital Assets Basic Act.” Despite these policy announcements, domestic cryptocurrency trading activity remains relatively low, suggesting that implementation timelines and market confidence will be closely monitored in the coming months.
Legalization of Spot Bitcoin ETFs
Under current regulations, South Korean investors can only access cryptocurrency-related ETFs that track futures contracts, effectively barring any fund from holding Bitcoin or other cryptocurrencies directly. President Lee’s administration has proposed amending the relevant provisions of the Financial Investment Services and Capital Markets Act to permit the listing and trading of spot Bitcoin ETFs on domestic exchanges. The government has indicated that spot ETFs will be subject to strict disclosure, custody, and auditing requirements, aligning with international best practices. A formal amendment bill is expected to be submitted to the National Assembly in the third quarter of 2025. Once the amendment is enacted, asset managers will be able to file for approval of Bitcoin-backed ETF products, and qualified exchanges will be authorized to list them.
The president’s office has emphasized that approval of spot Bitcoin ETFs is intended to channel domestic capital into regulated vehicles and reduce reliance on overseas trading platforms. Institutional investors—currently restricted from holding cryptocurrency directly—will be permitted to gain exposure to Bitcoin via these ETFs, subject to revised investment-limit guidelines. Retail investors will also gain access to regulated, onshore Bitcoin funds, which proponents say will enhance transparency, liquidity, and price efficiency in the domestic market.
Issuance of Korean Won-Pegged Stablecoin
In a parallel measure, the Lee administration has announced plans to allow the issuance of a stablecoin pegged to the Korean won. The proposed stablecoin framework will require issuers to maintain full reserves in bank deposits or high-quality short-term government securities denominated in Korean won. Initial licensing will be restricted to regulated financial institutions—such as banks and licensed fintech companies—under oversight by both the Financial Services Commission and the Bank of Korea. The regulatory framework will establish capital-adequacy requirements, reserve-audit protocols, and guidelines for interoperability with existing banking systems.
Officials have stated that a won-backed stablecoin will facilitate seamless on-ramps and off-ramps between fiat and cryptocurrencies, reduce dependence on U.S.-dollar-pegged tokens, and enable faster settlement within the domestic market. The Bank of Korea will retain oversight of monetary aggregates, with stablecoin issuance data reported daily. The central bank has indicated that it will conduct periodic reviews to ensure stablecoin activity does not conflict with monetary policy objectives. Drafts of the stablecoin regulatory guidelines are scheduled for public consultation in July 2025, with final rules expected by October 2025.
Relaxation of Institutional Investment Restrictions
At present, South Korean institutional investors—including pension funds, insurance companies, and asset managers—are subject to stringent limits on cryptocurrency exposure. Under the revised rules proposed by President Lee, institutional investors will be allowed to allocate up to 5 percent of their portfolios to regulated crypto products, including spot Bitcoin ETFs and other approved digital-asset funds. Corporates will also be permitted to hold up to 2 percent of their balance sheets in digital assets for treasury-management purposes. These limits will be phased in gradually: institutional allocations will begin at 1 percent upon enactment of the law and rise to the full 5 percent over a twelve-month period.
The Financial Services Commission has been tasked with issuing detailed guidelines for risk management, margin requirements, and maximum leverage provisions for institutions investing in crypto products. Insurers will be required to hold additional capital against crypto exposures, and asset managers will need to demonstrate robust internal controls, including segregation of crypto and fiat assets. The Office of the National Pension Service is also reviewing its investment policy statement to determine whether allocations to spot Bitcoin ETFs are appropriate once the products become available.
Revisions to Trading-Platform Regulations
Since mid-2024, South Korea’s Virtual Asset User Protection Act has imposed stringent licensing criteria on cryptocurrency exchanges, including a requirement that each exchange maintain a business relationship with a single bank under the “one exchange–one bank” framework. President Lee has instructed the Financial Services Commission to revise these rules to allow multiple bank partnerships per exchange. Under the proposed revisions, at least two approved banks may partner with each licensed exchange, provided that they meet capital, compliance, and cybersecurity standards established by the FSC.
Additional changes will include a requirement for exchanges to submit to annual third-party audits of their reserve holdings, user-asset segregation, and cybersecurity infrastructure. The FSC will also introduce a tiered licensing structure: exchanges with less than KRW 10 billion (approximately USD 6.5 million) in daily trading volume will operate under a simplified license, while larger exchanges will require a full license. Under both tiers, exchanges must implement real-name verification systems, anti–money laundering (AML) procedures, and customer-asset protection measures. The revised licensing rules are set to take effect in January 2026, with a transition period provided for existing platforms to meet the new requirements.
Formation of the Digital Asset Committee
To coordinate legislative drafting and regulatory oversight, President Lee has announced the creation of a Digital Asset Committee, which will be housed within the Prime Minister’s Office. The committee will comprise representatives from the Ministry of Economy and Finance, the Financial Services Commission, the Bank of Korea, the Ministry of Science and ICT, legal scholars, industry delegates from major exchanges and asset managers, and consumer-protection advocates. Its mandate includes drafting the “Digital Assets Basic Act,” which will consolidate rules on issuance, trading, custody, taxation, and user protection for all forms of digital assets—ranging from cryptocurrencies to non-fungible tokens and tokenized securities.
The committee’s first meeting is scheduled for mid-June 2025. Over the following three months, working groups will develop draft provisions covering digital-asset classification, licensing criteria, reserve requirements, cybersecurity standards, and tax treatment. A public consultation period will begin in October 2025, during which industry stakeholders, academics, and civil-society groups may submit feedback. The Basic Act aims to be presented to the National Assembly by December 2025, with the intent to have the law come into force by March 2026. In parallel, the committee will publish guidelines clarifying the roles and responsibilities of the Financial Services Commission, the Bank of Korea, and the Ministry of Science and ICT in supervising digital assets.
Current Market Activity
Despite the flurry of policy announcements, cryptocurrency trading volumes in South Korea have remained relatively unchanged. As of early June 2025, average daily trading volume across major exchanges—such as Upbit, Bithumb, and Korbit—stands at approximately KRW 7 trillion (around USD 4.5 billion), a level comparable to figures recorded in April and May 2025. The number of active trading accounts has held steady at roughly 9.7 million, while total registered user accounts exceed 20 million. Institutional participation in digital-asset markets remains minimal pending the enactment of the new legal framework.
Exchange officials report that onboarding processes for institutional clients are ongoing, but no large-scale allocations have been finalized. Retail traders continue to focus on existing crypto offerings, including futures and leveraged tokens, while awaiting the launch of spot ETFs and won-pegged stablecoins. Surveys conducted by major exchanges in late May indicate that more than 60 percent of retail users are aware of President Lee’s reform agenda, but only 15 percent expect to adjust their trading strategies before legislative changes take effect.
