South Korea is home to a significant cryptocurrency market, and its regulatory landscape is actively shaping the industry. While cryptocurrencies aren't legal tender, their use and trading are permitted under a stringent regulatory framework.
A key development in 2025 is the anticipated opening for institutional participation. Nonprofit organizations like charities and universities can already open real-name verified accounts on crypto exchanges since the second quarter. Furthermore, a pilot program is set to launch in the third quarter allowing around 3,500 corporations and professional investors to trade on crypto platforms for the first time. This move aims to bring more established players into the digital asset space while adhering to anti-money laundering (AML) mandates and KYC (Know Your Customer) requirements.
On the taxation front, a planned 20% tax on crypto gains has been postponed until 2025, with the government citing the need for more robust investor protection measures. Currently, there's no specific regulatory framework for taxing virtual assets directly, though capital gains tax applies once cryptocurrencies are sold as investments.
South Korean regulations for cryptocurrency exchanges are rigorous, involving mandatory registration with the Financial Services Commission (FSC) and adherence to various procedures monitored by the Financial Supervisory Service (FSS). Since 2018, the government has been tightening reporting requirements for banks dealing with crypto exchanges. Moreover, the use of anonymous accounts in cryptocurrency trading has been restricted since 2017 to combat money laundering and illicit activities.
In July 2024, the Virtual Asset User Protection Act was introduced, focusing on curtailing unfair trading practices and safeguarding user deposits. Crypto firms now have the responsibility to monitor and report suspicious transactions, and regulators have the authority to supervise and inspect virtual asset trading platforms.
Overall, South Korea's crypto policy in 2025 is geared towards balancing innovation with investor protection and AML compliance, marking a significant step towards integrating digital assets into the mainstream financial system while ensuring a regulated environment.