South Korea's crypto policy is undergoing significant changes under the new president, Lee Jae-myung. He's expected to bolster the crypto industry, having campaigned on promises to introduce spot crypto ETFs, a won-backed stablecoin market, and reduced regulation in blockchain innovation zones.
*Key Policy Changes:*
- *Digital Asset Basic Act (DABA)*: The new administration is likely to enact DABA, which will provide a regulatory framework for digital assets, including stablecoins and crypto service providers.
- *Spot Crypto ETFs*: Lee has pledged to approve spot crypto ETFs, which are currently banned under existing financial rules.
- *Stablecoin Regulation*: The government plans to introduce regulations for stablecoins, including a won-backed stablecoin market.
- *Reduced Regulation*: Lee aims to reduce restrictions in blockchain innovation zones to accelerate local growth.
*Regulatory Requirements:*
- *Travel Rule*: Virtual asset service providers (VASPs) must comply with the Travel Rule, which requires them to share customer information for transactions above KRW 1 million (approximately EUR 800).
- *AML/KYC*: VASPs must establish expanded AML/KYC procedures using a risk-based approach, including customer due diligence and suspicious transaction reporting.
Overall, South Korea's new crypto policy aims to support the growth of the industry while ensuring regulatory compliance and investor protection.