The People Power Party of South Korea announced a new plan to reshape the country's digital currency ecosystem. The proposal includes seven measures to encourage the adoption of digital assets and innovation.
In an emergency committee meeting held at the National Assembly in Seoul, lawmakers Park Soo-min and Choi Bo-yoon presented the framework, part of the 'G2 Global Digital Asset Market' initiative. The proposed framework is the party's commitment to positioning South Korea as a global leader in digital finance through targeted regulatory and financial reforms.
Notable proposals include easing banking restrictions, legalizing institutional participation in crypto markets, and authorizing exchange-traded funds (ETFs).
By 2025
The plan will also allow nonprofit organizations and institutional investors to trade digital assets. Starting from the second quarter, nonprofit organizations will gain access to the market.
By the end of 2025, around 3,500 institutions will be eligible. These include 2,500 listed companies and 1,000 professional investment firms. This move aims to bring more liquidity and legitimacy to the crypto space. Legislators hope this will also drive innovation in the corporate sector.
Spot ETFs pending approval
Furthermore, South Korea is preparing to approve spot crypto ETFs. These funds hold cryptocurrencies directly, such as Bitcoin and Ethereum.
The decision comes in the wake of significant regulatory moves in the US, UK, and Hong Kong. The US Securities and Exchange Commission approved Bitcoin ETFs in 2024. On the first day, they achieved over $4.6 billion in trading volume.
Representative Park stated that South Korea must move quickly to maintain its competitiveness. 'There is no time to delay. Global markets are already opening,' she said.
Crypto policies dominate South Korea's 2025 election agenda as 15M investors eye ETFs, stablecoins
Elections in South Korea are scheduled for June 3rd.
Candidates propose legalizing Bitcoin and crypto ETFs.
Lee Jae-myung of the Democratic Party and Kim Moon-soo of the People Power Party lead pro-crypto proposals.
With over 15 million investors in digital assets—almost a third of the country's population—cryptocurrencies have emerged as a critical issue in the election.
Candidates are competing to win the trust of this tech-savvy demographic by pledging to legalize cryptocurrency ETFs and introduce stablecoins backed by the won, political shifts that could radically reshape the financial landscape of the country.
Amid record capital flows and demand for clearer regulation, both leading candidates have aligned their platforms with the rising crypto movement.
But as political discussions heat up, skeptics wonder if these promises will extend beyond the political stage.
Cryptocurrency ETFs and access to pension funds dominate the discussion.
Lee Jae-myung of the Democratic Party and Kim Moon-soo of the People Power Party lead pro-crypto proposals.
Both have committed to legitimizing exchange-traded cryptocurrency funds (ETFs), currently banned in South Korea.
These instruments would allow for indirect investment in assets like Bitcoin through regulated exchanges.
Currently, cryptocurrency investment in South Korea is almost entirely driven by retail.
Institutional investment is restricted, and local funds such as the National Pension Service cannot legally participate.
This could change under Lee's proposal to open up investment in digital assets to large institutions, provided they meet price stability conditions.
This represents a significant shift in government thinking. So far, South Korean authorities have maintained a ban on corporate exposure to cryptocurrencies.
However, recent comments from leaders in the fintech industry, including the Korean Fintech Industry Association, suggest that the regulated ETF market could serve as a bridge between cryptocurrency markets and capital markets.
Lee pushes for a stablecoin and digital asset law backed by the won
Lee Jae-myung is also pushing for a stablecoin proposal aimed at reducing reliance on US dollar-pegged stablecoins like USDT and USDC.
The plan will propose a supported alternative under a proposed foundational law for digital assets expected to be presented in parliament this week.
The bill will define the legal status of digital assets, their issuance and trading, and set clear guidelines for stablecoin projects.
Under the proposed framework, issuers will be required to register with the Financial Services Commission and maintain reserves of at least 50 billion won.
Recent figures add urgency to the discussion. Between January and March 2025, South Korean cryptocurrency exchanges recorded 56.8 trillion won ($40.8 billion) in outflows, with nearly half linked to dollar-based stablecoins.
These outflows have raised concerns about capital flight and foreign currency risks.
Lee's policy aims to build a local alternative, but critics argue that privately issued stablecoins pose macroeconomic risks by enabling the creation of money outside central bank control.
Analysts at the Korea Capital Market Institute warn that these instruments could effectively function as shadow banks.
The regulatory campaign targets unlicensed exchanges
At the same time, financial regulators are intensifying scrutiny.
The Financial Supervisory Service reported that 52.5% of suspicious cryptocurrency trading reported between July and December 2023 involved investors in their twenties and thirties.
This demographic forms the core of the voter base targeted by pro-crypto politicians.
Regulators also relied on the Virtual Asset User Protection Act to propose criminal penalties for unfair trading practices.
Separately, South Korea recently forced Google to ban 17 unregistered foreign exchanges, reinforcing its strict stance on investor protection.
Alongside the foundational law on digital assets, the government plans to launch the second phase of its regulatory framework for digital currencies in the second half of 2025, expanding oversight and establishing a foundation for compliant digital finance.