On June 3, 2025, South Korea's political landscape experienced a significant turning point. The opposition Democratic Party candidate Lee Jae-myung won the presidential election with nearly 50% of the votes (specifically 49.42%), defeating his rival Kim Moon-soo from the right-wing People Power Party (with 41.15% of the votes) and successfully becoming the 21st president of South Korea.
With this new president who holds a positive stance on cryptocurrencies officially taking office on June 4, one of the world's major cryptocurrency markets—South Korea—expects to see a significant shift in its cryptocurrency policy landscape, potentially ushering in a new era of cryptocurrency for this "cryptocurrency powerhouse."
Favorable policies
This year's South Korean presidential election largely became a competition for support from the country's large community of cryptocurrency traders and industry participants. Approximately one-third of South Korea's population holds digital assets, and data from the Bank of South Korea indicates that the total amount of cryptocurrency assets held by the South Korean public reaches as high as $74.5 billion. This large user base and market scale make it impossible for any presidential candidate to overlook the demands of the cryptocurrency community.
In this context, both Lee Jae-myung and his main competitor took a more proactive pro-cryptocurrency stance during their campaigns than ever before, promising to relax cryptocurrency regulations and expand access to digital assets. During the campaign, Lee Jae-myung clearly proposed a series of commitments aimed at promoting the development of South Korea's cryptocurrency industry, with the most market attention focused on:
Promoting the legalization of cryptocurrency spot ETFs:
Lee Jae-myung vowed to promote the legalization of spot exchange-traded funds (ETFs) for mainstream cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) for trading in South Korea. Since the U.S. Securities and Exchange Commission (SEC) approved spot ETFs for Bitcoin and Ethereum, financial regulatory agencies in several countries and regions around the world have been considering following suit. Although South Korean financial authorities had previously expressed similar intentions, progress had been slow during the presidency of Yoon Suk-yeol due to the cautious attitude of the Financial Services Commission (FSC), which had imposed a comprehensive ban on any form of cryptocurrency ETF issuance and trading. Lee Jae-myung's ascension to power is expected to break this deadlock. Notably, his electoral opponent Kim Moon-soo and his People Power Party have also, unusually, reached an agreement with Lee Jae-myung on this issue, with both sides pledging to promote the legalization of Bitcoin spot ETFs within this year.
Allowing the national pension fund to invest in cryptocurrencies:
Lee Jae-myung also proposed to allow South Korea's National Pension Fund, which amounts to $884 billion, to invest in cryptocurrencies. If this significant proposal is realized, it will undoubtedly inject tremendous institutional liquidity into the cryptocurrency market both in South Korea and globally, greatly enhancing the status of cryptocurrencies as a legitimate investment asset.
Accelerating the development of the Korean won stablecoin:
Lee Jae-myung and his party, the Democratic Party, have shown a strong interest in developing a stablecoin backed by the Korean won (KRW). Min Byeong-deok, chairman of the Democratic Party's Digital Assets Committee, believes that against the backdrop of the global stablecoin market (especially US dollar stablecoins) increasingly dominating, South Korea must quickly establish its own won stablecoin system to prevent domestic capital outflow and gain a favorable position in the global stablecoin hegemony competition. Min even believes that the potential of stablecoins in the near future may be "greater than artificial intelligence or semiconductors." Lee Jae-myung himself publicly stated last month that establishing a "won-denominated stablecoin market" is imperative. This initiative is similar to the regulatory pushes for US dollar stablecoins under the Trump administration's STABLE Act and GENIUS Act.
Improving the legal framework for digital assets:
Under the leadership of Lee Jae-myung, South Korea will also strive to complete the second phase of legislation for the Basic Act on Digital Assets. This bill will focus on regulatory details for stablecoins and information disclosure requirements for cryptocurrency exchanges, aiming to provide clearer and more comprehensive legal basis for South Korea's cryptocurrency market.
If the Lee Jae-myung government's pro-crypto policies can be effectively implemented, it is expected to have a profound impact on the cryptocurrency markets in South Korea and globally:
Enhancing market liquidity and maturity: The introduction of spot ETFs and the potential entry of pension funds will bring substantial incremental funds to the market, improving liquidity and depth, and attracting more participation from traditional financial institutions.
Improving regulatory clarity: The completion of the second phase of the Basic Act on Digital Assets is expected to provide clearer legal guidance for key areas such as stablecoins and exchange operations, reducing market uncertainty and benefiting the long-term healthy development of the industry.
The rise of the Korean won stablecoin: If the Korean won stablecoin can be successfully launched and recognized by the market, it will not only help enhance the influence of the won in the digital economy era but may also open new avenues for South Korea in the global digital currency competition.
Increasing industrial innovation and employment opportunities: Government support for the cryptocurrency industry is expected to encourage more blockchain technology research and application innovation, thereby driving the development of related industry chains and creating more job opportunities.
Challenges and expectations
Although the cryptocurrency policy blueprint proposed by Lee Jae-myung is exciting, he may face some challenges in its implementation. Former President Yoon Suk-yeol also once promised to promote the legalization of cryptocurrencies and the relaxation of regulations before taking office, but due to the stringent oversight of regulatory agencies such as the Financial Services Commission (FSC), actual progress in governance has been relatively slow.
However, in recent years, the attitude of the Financial Services Commission (FSC) of South Korea has shown a trend of softening. This may pave the way for the Lee Jae-myung government to promote its cryptocurrency-friendly policies and reduce regulatory resistance.
As one of the major cryptocurrency markets globally, South Korea is known for its high user participation and active altcoin trading. According to statistics from the Financial Services Commission (FSC) of South Korea, by the end of last year, there were about 9.7 million cryptocurrency users in South Korea, accounting for approximately 20% of the total population. This large user base not only represents significant potential for the development of the cryptocurrency industry but also places higher demands on regulatory agencies for investor protection.
The fervor of South Korea's cryptocurrency market ranks among the top globally. A unique phenomenon is the "kimchi premium," where the price of the same cryptocurrency (such as Bitcoin) on local exchanges in Korea often exceeds the global market average price, with premiums sometimes reaching 3% to 5% or higher. This phenomenon reflects the strong buying demand in the local market and certain capital control factors.
In addition, South Korean investors show an unusual preference for highly volatile altcoins. Statistics show that approximately 80% of the trading volume on South Korea's largest cryptocurrency exchange, Upbit, comes from tokens other than Bitcoin and Ethereum, making the South Korean cryptocurrency market appear, in the eyes of some observers, as a "speculative playground."
However, while actively embracing cryptocurrencies, how to effectively prevent financial risks, protect investor interests, and combat illegal activities (such as money laundering and fraud) will remain important issues for the Lee Jae-myung government. The speculative atmosphere in the Korean market is strong, necessitating robust regulation and investor education to guide rational market development.
In summary, with the election of Lee Jae-myung, who supports cryptocurrencies, as the new president of South Korea, this "cryptocurrency powerhouse" with a significant position in the global crypto landscape is on the threshold of opening a new era of cryptocurrency. How South Korea's cryptocurrency policies will evolve in the coming years, how its market landscape will change, and how it will influence global cryptocurrency development trends are all worth our attention.
