Institutional Cryptocurrency Trading Ban in South Korea May Be Lifted, Says Report

South Korea’s Financial Services Commission (FSC) is reportedly planning to lift its effective ban on institutional trading of crypto.

This decision, as reported by Yonhap news agency, aims to gradually enable institutional investors to open trading accounts on local cryptocurrency exchanges.

Currently, South Korean regulations permit only retail traders, verified with their government names, to engage in crypto trading. While there has not been an explicit ban on institutional investors, the FSC has advised banks to restrict such entities from opening accounts on exchanges.

The proposed policy shift aligns with President Yoon Suk-yeol’s election commitments to enhance the local cryptocurrency sector.

The ruling People Power Party has also advocated for the introduction of spot cryptocurrency exchange-traded funds (ETFs) in the country, a financial product that is not available at present.

The FSC plans to initiate this process by first allowing non-profit organizations to participate in cryptocurrency trading. Furthermore, the commission is expected to collaborate with the Digital Asset Committee, a policy advisory group under its jurisdiction, to develop a comprehensive regulatory framework.

As part of this regulatory evolution, the FSC is also looking to amend the Financial Information Act. This amendment will introduce a screening system for major shareholders of virtual asset service providers, aiming to bolster investor protection.

In addition, the FSC is working on follow-up regulations to the Virtual Asset Investor Protection Act, which came into effect in July of last year.

This second phase of regulation will focus on establishing rules for stablecoins, token listings, and the operational requirements for cryptocurrency exchanges.