The South Korean government is tightening rules on cryptocurrencies: New standards to change...

The South Korean government is tightening rules on cryptocurrencies: New standards to change the entire ecosystem

South Korea is paving the way for institutional investors to enter its cryptocurrency market, but with stricter rules and high oversight standards. On May 20, regulator FSC (South Korea's Financial Services Commission) announced the completion of sweeping measures that will come into effect in June, aiming to increase transparency, safety and stability in the digital asset market.

Tightening rules for non-profit organisations and exchanges

The new guidelines will allow non-profit organisations and crypto exchanges to sell digital currencies under strict conditions. Organizations will need to have a minimum of five years of audited financial history, establish internal committees to review donations, and ensure that all donations come through verified accounts on exchanges trading in Korean won. These measures are intended to minimise the risk of money laundering and increase confidence in the system.

Furthermore, only cryptocurrencies that are listed on at least three major domestic exchanges will be allowed. Liquidation of these assets is to be immediate upon receipt, with exchange sales limited to 10% of the daily limit and only the top 20 tokens by market capitalisation. Exchanges will also not be allowed to sell tokens on their own platforms in an attempt to avoid conflicts of interest.

Stricter listing criteria and restrictions for "zombie tokens"

The revised rules introduce stricter listing requirements for digital assets. Exchanges will have to delist tokens with low liquidity or no clear utility, such as memecoins or "zombie tokens", which have low market capitalisation and low trading volume. The aim is to reduce market volatility and prevent speculative fluctuations.

From June, exchanges can apply for real-name accounts to facilitate transparent selling and buying. The move is part of the FSC's wider plan to extend this option to listed firms and professional investors later in the year.

Looking ahead: the Korean stablecoin and pro-crypto policy

The South Korean government is not only tightening rules, but also looking for ways to support the development of the cryptocurrency ecosystem. Democratic Party leader Lee Jae-myung has proposed the introduction of a stablecoin pegged to the Korean won to help curb capital outflows and strengthen the country's financial autonomy.

Overall, South Korea appears to be pursuing a balanced approach - on the one hand, introducing stricter measures for market stability and transparency, and on the other, seeking innovative ways to encourage the development of digital assets and their integration into the national economy.

Conclusion

With this move, South Korea is strengthening its position as a key player in the cryptocurrency industry, but with a clear focus on regulation and investor protection. Opening the institutional market under strict conditions may bring new opportunities, but also requires greater consistency and transparency from players. We will be watching to see how these changes affect the market and whether they contribute to stability and confidence in the South Korean crypto sector.

*This is not an investment recommendation.

Coingarage team